Compulsory redemption of funds means that when the fund manager redeems the fund from the user and the minimum amount held in the account is less than the amount required by the fund manager, the system will forcibly redeem the fund share held by the user without the user applying for redemption. Except for voluntary redemption, if the user's account balance in the agency is lower than the minimum holding share for other reasons (transfer custody, non-transaction transfer, etc.), the redemption share is allowed to be lower than the minimum holding share. ), it still needs a one-time redemption. That's what fund foreclosure is all about.

Will the forced redemption of funds lead to a decline in the net value of funds?

The forced redemption of funds will cause fund managers to sell funds to bear the pressure of high redemption, which will lead to the reduction of fund shares, and then lead to the sharing of the proceeds from fund investment with the rest of the fund shares. Therefore, when the fund target falls sharply, resulting in great losses, the compulsory redemption of the fund will lead to a sharp decline in the net value of the fund. On the contrary, when the collateral of the fund rises sharply, resulting in huge profits, the forced redemption of the fund will lead to a sharp rise in the net value of the fund. In the market, fund managers will buy some flexible bank wealth management products or cash to solve the forced redemption situation in the market. In addition to the compulsory redemption of funds, there are other factors that affect the rise and fall of the net value of funds, such as market trends and the investment level of fund managers.

The influence of huge redemption on the fund

1. If the fund redemption is high, a large handling fee will be deducted. According to the terms of the fund contract, part of the redemption fee is included in the fund assets, resulting in a short-term increase in the net value of the fund and a long-term decline;

2. In the long run, if the fund generates a large number of redemptions, the fund manager will have to sell the fund investment target to fulfill the pressure of high redemption. The sharp redemption of the fund will also cause the stock market to continue to fall, further aggravating the decline in the net value of the fund, but further stimulating the redemption will of the fund holders, forming a vicious circle.

This paper mainly writes about the knowledge points of how to force the fund to redeem, and the content is for reference only.