What is the decline in the net value of large redemption funds?
The decline in the net value of large redemption funds is mainly caused by two factors: investors, the scale of funds invested and liquidity. When investors redeem a large amount of funds, fund managers need to partially sell their stocks to complete the redemption requirements. At this time, if the liquidity of the stock market invested by the fund is poor, he will face the risk of high selling cost and failure to sell in time.
When investors need to make a large redemption, fund managers will sell their own stocks. At this time, if there is a large-scale decline in the stock market, the price at which the fund manager sells shares will be lower than the purchase price, thus reducing the net value of the fund.
When these unfavorable factors such as serious economic recession or declining employment rate appear in the market, it will also bring fatal impact to the investment market, thus causing the shrinkage of funds, bonds and stocks. At this time, the net value of related funds will also drop significantly.
Faced with the above situation, investors need to comprehensively consider the fund size, liquidity, market risk and investment strategy risk when redeeming the fund, so as to avoid the situation that the net value of the fund has been falling when the fund is redeemed in large amount.