The so-called upward discount is one of the irregular conversion methods of the fund, which is essentially equivalent to the income distribution of B shares when the parent fund achieves a large increase. The current policy is that the net value of the parent base reaches 1.5 or 2 yuan will discount it, and the net value will return to 1 yuan, and the share will increase. In the bull market, the net value of the parent fund and the net value of the leveraged share both rose sharply, which made the B share leverage smaller and smaller, even appeared? Lever failure? Phenomenon.
Through upward conversion, the net value of the parent fund is equal to the net value of A and B shares, and B shares resume trading function, which also provides an effective exit mechanism for B shares.
Irregular conversion is divided into upward conversion (referred to as upward conversion) and downward conversion (referred to as downward conversion). Folding up is actually a process of leverage callback. Upward conversion refers to the process of reclassifying the net value of Grade A and B as 1 when the net value of the parent fund reaches a certain set level (such as 1.500 or 2.000), and converting the part with net value exceeding 1 into the share of the parent fund respectively. ?
The reasons for folding up and down are as follows:
1, the discount is because in the bull market, when the net value of the parent fund increases, the net value of the B share also increases synchronously, and its asset scale accounts for an increasing proportion of the assets of the A share, and the leverage will become smaller and smaller. But through conversion, you can restore the net share value to one and reload the leverage.
2. The advantage of discount is that the net value of the parent fund falls to a certain extent, and the net value of the radical share may fall to zero, and the agreed income of the steady share cannot be realized. If the net value of the aggressive share is reduced to 1 through discount, the obligation to pay the agreed income can continue, and the agreed income of the stable share can still be guaranteed after conversion.
3. As an investor, to treat graded funds, we must first understand the fund contract. Not all graded funds have conversion mechanisms. Secondly, it should be noted that the conversion distance of graded funds with conversion mechanism is also different. This conversion distance refers to the distance between the net value of B shares and the threshold point that triggers the conversion.