What do you mean by fund discount?
Funds can be divided into on-site funds and off-site funds through different investment channels. On-site funds are traded in the secondary market, and off-site funds are redeemed in banks and other institutions. The trading of OTC funds is similar to that of stocks, and its price changes in real time, while OTC funds calculate the net value of funds according to the closing price.
Then closed-end funds can be purchased off-site or traded on-site, which leads to price differences. When the transaction price of closed-end funds in the secondary market is lower than the actual net value, this situation is called "discount". We can also calculate the discount rate of the fund according to the following formula.
Discount rate = (unit net share-unit market price)/unit net share.
According to this formula, when the discount rate is greater than 0, that is, the net value is greater than the market price, it is a discount, and when the discount rate is less than 0, that is, the net value is less than the market price, it is a premium.
Discount rate is an important factor in evaluating closed-end funds. When the fund is at a discount, it means that investors are pessimistic about the fund's later trend, but if the market turns upward, then the discount fund can expand our income. However, the risk of discount funds will be relatively large, and they may be suspended due to asset restructuring, or face a continuous downward trend.