What is "grading"?
Under a portfolio, according to investors' different risk and income preference needs, a fund is divided into two parts: A share and B share. A share and B share * * * together constitute the parent fund, in which A share is the priority and is responsible for lending money to B share, and the agreed rate of return is generally the market agreed rate of return plus a fixed coefficient. This one earns a fixed income and is more suitable for conservative investors with low risk tolerance. B shares are radical. By investing in the price of A share, that is, obtaining investment leverage through financing, the risks and benefits are amplified. B share can be traded in the secondary market, which is more suitable for investors who prefer high risk. Moreover, regardless of whether share B is a profit or a loss, share A needs to pay interest. ..
What is the conversion of graded funds?
Because the net fund value of B share is fluctuating, the leverage is changing. If the leverage is too high, it is not good for investors with A share, and if the leverage is too low, it is not attractive to investors with B share ... so there is a fund conversion.
The conversion of graded funds can be divided into regular conversion and irregular conversion.
Regular conversion: Similar to dividends, the agreed income of Class A shares (more than 1 yuan) will be paid to investors in the form of parent funds after each interest period, that is, the income due to Class A shares will be converted into basic shares and distributed to the original holders.
Irregular conversion: it is divided into upward conversion and downward conversion, and the lever of downward conversion is no more than 5.3 times. When the net share of B is less than 0.25 yuan, the net share of A and B will return to 1 and the leverage will be doubled. To point, the minimum conversion lever is not less than 1.33 times. When the net value of base share is greater than that of 2 yuan, the net value of A and B shares will return to 1, and the leverage will be doubled.
What are the risks of graded funds?
Compared with ordinary funds, graded funds are more complicated. On the one hand, they provide investors with opportunities to make profits through leverage. On the other hand, because the market is not standardized and the mechanism is complex, many investors can't really understand its mechanism, which affects their investment decisions. The risks of graded funds mainly include several aspects.
Investment operation risk: the graded fund divides the parent fund into sub-shares with different income characteristics, but the fund still operates as a whole. Therefore, it is easy to face various investment and operation risks.
Risk of principal loss: A share of graded fund has the characteristics of relatively stable expected return and low risk coefficient, but it may still face the risk of principal loss.
Risk of loss amplification: investment leverage is a double-edged sword, which can amplify both income and risk. When the fund falls, the leverage characteristic of B share will amplify the loss. Therefore, it will suffer greater investment losses.