Graded funds are also called structured funds. In general, the graded fund is a structured securities investment fund that divides the fund shares into two types of shares with different historical expected annualized expected returns and risks through the arrangement of the expected annualized expected income distribution of the fund, and lists one or two types of shares.
Among the two types of shares divided by fund base share, one is the part with low expected risk and high expected annualized expected return, which is called "Class A share" here, and the other is the part with high expected risk and high expected annualized expected return, which is called "Class B share" here. Similar to other structured products, Class B shares generally "borrow" the funds of Class A shares to amplify the expected annualized expected returns, which has certain leverage characteristics. It is precisely because of the "borrowing" of funds that Class B shares generally pay "interest" on a certain benchmark of Class A shares.
Investment skills of graded funds
What is a graded fund? It is introduced above. Some fund companies describe this operation mechanism as "brothers sharing money". In other words, it is equivalent to the same cake, and it will better meet the needs of investors with different risk expectations and annualized expected returns by using different grading methods. It is equivalent to providing investors with additional choices on the basis of existing investment varieties. By using graded funds flexibly, you can "upgrade" your expected annualized expected return on investment according to your risk tolerance-pursuing a more certain expected annualized expected return on investment in limited risks, or pursuing an expected annualized expected return beyond expectations in higher risks.
The first skill of graded fund investment is to distinguish its unique grading mechanism. The most mainstream approach is to divide the expected annualized expected return of the fund into two parts. One is a low-risk stable variety, such as agreeing on an annual benchmark expected annualized expected return like bonds or time deposits; The second is the leveraged variety with high risk and high expected annualized expected return. Holding this share can get a higher proportion of the distribution right of the expected annualized expected income, but it will also bear more downside risks.
Graded fund investment skill 2: pay attention to whether you can purchase and redeem at any time. The advantage of open subscription and redemption is that it provides short-term arbitrage opportunities for listed graded funds, and at the same time effectively inhibits the overall discount premium of graded fund shares in on-market transactions. In a sense, the open-ended graded fund embodies the advantages of "providing more choices" of graded funds, because you can even regard it as an ordinary stock fund or index fund, but the difference is that it can be transferred to the market at any time to trade separately.
Not all graded funds in the market are open to subscription and redemption mechanisms. For closed-end graded funds, listing is the only way to trade within three to five years of operation. However, with more and more graded funds pouring into the market, open graded funds are gradually becoming the mainstream.
Graded fund investment skill 3: pay attention to the investment management ability of fund managers. As mentioned above, the classification fund is special in the way of "cutting the cake", but if the size of the cake itself is ignored because of the way of "cutting the cake", it is tantamount to buying a gift and returning the pearl.
Therefore, when investors choose graded funds, they also need to pay attention to the overall strength and research ability of their fund managers like buying ordinary stocks or index funds. After all, nothing changes. Only good management performance can better incite the expected annualized expected return of graded funds and give full play to the strengthening effect of highly leveraged operation.