Priority shares enjoy priority distribution rights, and graded funds can provide various income distribution and principal guarantee mechanisms for priority shares. However, the fund's income distribution meets the priority share, and most of the income distribution will be allocated to the ordinary share. The priority income distribution paid to preferred shares is equivalent to the borrowing cost of common shares.
Ordinary shares will be listed and traded on the exchange, while preferred shares can be arranged to enter or exit through other off-site means.
From the results, the cash flow of preferred stocks will be relatively stable and continuous, and its risk-return characteristics are similar to those of low-grade bonds. Common stock gains a higher proportion of excess income distribution right by transferring the priority distribution right of priority share benchmark income.
According to experts' analysis, in the bull market environment, the discount of common stock after listing can be greatly suppressed, and it is very likely that there will be a premium transaction. This is because the common stock in the hierarchical structure includes call options. But if the market is bearish, the average share is also easy to discount.
Because leveraged funds use structured grading technology, they can be integrated into short-term funds at a lower cost and invested in longer-term capital that can generate higher returns. In this way, we can get higher investment income for investors. Graded funds should be simple in structure, clear in objectives (such as index investment), and ensure moderate liquidity and leverage. From this point of view, graded products are more suitable for passive investment, completely copying the index, and investors only need to grasp the market trend.