1. What is the discount phenomenon of closed-end funds?
Closed-end funds have market value and net value. When the market price is lower than the net value, it is called discount. Discount rate is an index to measure the discount degree of closed-end funds.
Generally speaking, the calculation of discount rate can be expressed as: discount rate = (net value-market price)/net value * 100%.
2. Why do closed-end funds discount?
Then, why is there a phenomenon of closed-end fund discount? In fact, the discount of closed-end funds is a common phenomenon in the international market.
On the one hand, it is the mood of traders, that is, the influence of investors' investment attitude. Irrational people's expectation of future expected income is easily influenced by unpredictable changes; When they are pessimistic about the expected return, the relationship between supply and demand changes, and the transaction price of the fund will fall, resulting in a large discount relative to the net asset value of the fund.
On the other hand, the risk of portfolio held by closed-end funds is greater than that of open-end funds. Under certain conditions or circumstances, closed-end funds will have impact costs in the process of asset changes, which will lead to the discount of closed-end funds.
What is the discount phenomenon of closed-end funds and why it happens are all here. I hope it helps you. Warm reminder, financial management is risky and investment needs to be cautious.