What is a discount?
Folding is an irregular transformation. According to the issuance documents of the graded fund, when the net value of the parent fund of the graded fund rises to a certain price (such as RMB), the graded fund will be discounted, which is caused by the sharp rise of the index corresponding to the parent fund. At this time, after the B share rises sharply, the leverage will be reduced, and the net values of the A share and the B share will be folded back to the initial net value 1, and the part exceeding 1 will be distributed to A in the form of the parent fund. There are many cases of bull market rising.
conversion method
According to the agreement, after the graded fund is folded, the net value of share A and share B will return to the initial net value 1, and the part exceeding 1 will be distributed to the holders of share A and share B in the form of parent fund.
The net values of the parent fund, A share and B share are all classified as 1 yuan, and the difference is converted into the parent fund share. For example, if you hold 1 0,000 high-speed rail B shares, the net value will be converted into 1 0,000 high-speed rail B shares and 800 parent funds.
Benefits of folding
In a bull market, the increase in the net value of graded B will reduce the leverage of graded funds. After folding, the lever can be restored to its original level. Bring a richer expected annualized expected return.
After the discount, investors who originally only held Grade B will hold Grade B and the parent fund. Therefore, you can not only redeem the parent fund, but also enjoy the annualized expected return of the leverage of Grade B..