Closed-end fund discount trading is not only a phenomenon in China capital market, but also in developed foreign capital markets.
Foreign closed-end funds are generally discounted, and the specific discount rate varies from fund to fund, and the value of each fund at each time point is also different. The general discount rate is between 10%-20%. Some funds trade at a premium.
Why do closed-end funds trade at a discount? Why is the discount rate 10%-20%?
The main explanation of domestic textbooks is that the total number of closed-end fund units is fixed, that is, the supply of funds is constant, while the demand for funds is constantly changing, and the imbalance between supply and demand leads to a premium or discount in the transaction price. That is, the fund discount is completely caused by the imbalance between supply and demand and the oversupply. However, China's standardized closed-end funds have been trading at a discount since the establishment of 1998. According to the theory of supply and demand, the market demand for funds has always been less than supply, and supply is greater than demand, so funds are traded at a discount. Obviously, this explanation is not in line with the real situation of the fund market. Moreover, the theory of supply and demand can not quantitatively analyze the discount rate of funds in order to find out the changing law of the discount rate of funds in China.
The explanation of closed-end fund discount trading in western countries is that holding stocks and bonds by buying investment funds has some disadvantages compared with holding these securities directly. The main disadvantages are:
1, management fee. The value of securities assets held by the Fund is the value of investment funds after deducting management fees. According to the management rate of foreign funds (generally 0.5% of the fund assets), the management fee alone accounts for about 10% of the fund's annual net income. If investors buy securities directly, it will save huge management costs.
2. Poor market liquidity. When the fund is small and the stock plate of the invested company is large, the liquidity of the fund is not as good as that of the invested company.
These unfavorable factors caused the discount transaction of the fund. Furthermore, the discount rate of each fund is different, which is caused by the market's different evaluation of fund managers, the different rate level of each fund and the different degree of specialization of each fund's investment. Finally, whether the whole capital market is in a bull market or a bear market has the most fundamental influence on the discount rate and discount rate of funds. There are two situations abroad, the discount of funds will suddenly disappear: first, institutional investors take over the whole closed-end fund company (referring to foreign corporate funds). Second, the fund manager decided to "unitize" the fund, that is, convert it into a unit trust fund (a kind of open-end fund). Due to the discount rate of closed-end funds, investors will not buy them enthusiastically when they are issued. Because closed-end funds are purchased at face value, they are traded at a discount after listing and soon fall below the net value. Therefore, when foreign closed-end funds are issued, they often provide incentives to new investors, such as giving away subscription warrants.
For the reasons of closed-end fund discount trading, referring to foreign explanations, I think:
First, the management cost of closed-end funds in China is high. Last year, the first batch of 10 large funds were issued, which reduced the management fee and increased the performance-based compensation system. The fixed management rate of closed-end funds in China has always been 1.5%. But compared with the average level of 0.5% of foreign fund management, it is still on the high side. Considering the huge scale of fund assets, the actual expenditure varies greatly.
Second, the realized value of closed-end funds is less than the net asset value. This is due to the liquidity of fund assets. The net asset value of a fund is calculated according to the market value of securities held by the fund, but the market value of securities assets is not equal to the cash value. If closed-end funds are liquidated and assets are realized, the realized value of assets is generally lower than the book value. What investors finally get is the liquidation value (realized value) of the fund, not the published net asset value. So the net asset value can only be a reference indicator. Investors trade according to the realized value, and the market price of the fund is bound to be discounted relative to the net asset value.
Third, the net asset value of closed-end funds should be discounted. As the fund is distributed once a year (or half a year), it will be liquidated at maturity. There is a continuous cash flow in a certain period of time, so the market price of the fund should be the discounted value of this future cash flow. This is similar to bond valuation. Because the net asset value of closed-end funds is obtained in the future, such as 12 years later, the net asset value will be discounted. Therefore, the current market price of funds is generally lower than the current net asset value. If the net asset value is high and the expected distribution is good, the market price of the fund will be high and the discount rate will be small. On the contrary, the market price of the fund is low and the discount rate is high. This is the general explanation of closed-end fund discount trading.
The discount rate of large closed-end funds in China has probably gone through five stages in more than a year since 2000:
(1), last year1October 65438+5%;
② It rose rapidly to10% in February;
③ After climbing to 15% in March, it remained around 15% until May;
④ From June to the beginning of 65438+February, the fluctuation of about 20% is very small;
⑤ Since June 65438+February last year, the discount rate has been shrinking.
According to the data, my explanation is that the discount rate of the fund is affected by some factors.
These factors are: market trends. When the market rises rapidly, the stock price and net asset value of fund portfolio rise, while the change of fund market price lags behind the fluctuation of stock price, the spread between market price and net asset value widens and the discount rate rises. On the contrary, the market fell rapidly and the discount rate fell.