For example, it is easy to understand the mechanism of dividend arbitrage. The net unit value of a closed-end fund before dividends is 2 yuan, and the transaction price is 1.4 yuan, so the discount rate is (1.4-2)/2- 1 =-30%. Assuming that the company pays dividends in 0.4 yuan, the unit net value and transaction price will be deducted from 0.4 yuan, that is, after ex-dividend, the unit net value and transaction price will become 1.6 yuan and 1 yuan respectively, and the discount rate will naturally rise to (1-1.6)1. If the discount rate is to return to -30%, the transaction price needs to rise to 1. 12 yuan, that is, it needs to rise to 12%. If investors buy before dividends, then investors can get the price gains brought by the return of discount rate after dividends. This is the so-called mechanism that the fund has a mandatory increase requirement after a large proportion of dividends.
As can be seen from this example, the higher the unit dividend amount of closed-end funds, the greater the arbitrage space; The higher the discount rate before dividends, the more obvious the dividend arbitrage effect.
At present, most closed-end funds have accumulated a lot of distributable income and a lot of unrealized capital gains. In other words, many closed-end funds have the possibility of paying a large proportion of dividends, no matter from the realistic dividend conditions or potential dividend ability. Once the high dividend is implemented, the dividend arbitrage effect will appear in the secondary market.
The so-called dividend market means that the market has staged investment enthusiasm for closed-end funds because of the large-scale dividend concentration of closed-end funds, thus there is a wave of collective general increase in the secondary market. At the same time, it may become an opportunity for closed-end funds to continue to rise. This kind of market has both the basis of investment value and speculative factors.