What is a graded fund? What are the misunderstandings of graded funds? How to operate the graded fund? Here, I share some information about graded funds for your reference.
Grading fund
Many investors believe that the priority share of graded funds, like bank deposits, can not only ensure the safety of principal, but also ensure a certain income. In fact, the priority share of graded funds in the domestic market is not a product with guaranteed income. For the holders of preferred stock rights, the assets of positive equity provide a guarantee for the realization of benchmark income and the security of the principal of preferred stock rights. However, due to many risks faced by the market, the distribution of benchmark income and the protection of principal securities are uncertain. When the net asset value of aggressive stocks falls sharply, preferred stock investors may still face the risk of investment damage.
Lever mechanism of graded funds
When investing in graded funds, the word that investors hear the most is leverage. So, what is leverage? Take a graded fund product X as an example. When its parent fund X's net value decreases, its share (enterprising) net value decreases more than its parent fund X, and when its parent fund X's net value increases, its share (enterprising) net value increases more than its parent fund X. Due to the above-mentioned grading fund mechanism, the change of enterprising share will be greater than the change of its parent fund's net value and priority share. We call this feature of active sharing the leverage mechanism of graded funds. Because aggressive stocks face greater risk of net value fluctuation, they are only suitable for investors with higher risk tolerance.
What are the misunderstandings of graded funds?
1. thinks that graded funds are risky. Classified funds are actually divided into a share with agreed income and b share with leverage effect. A shares are less risky. Due to the imperfect development of China's securities market, the CSRC only requires brokers to sign risk disclosure statements when customers trade stock index futures, warrants and growth enterprise market, but does not require brokers to prepare risk disclosure statements for leveraged ETF and graded fund leveraged share trading, nor does it require brokers to educate investors and conduct risk assessment on leveraged fund products. Just blindly in the "Guidelines for Graded Funds", investors were restricted by the "lazy politics" of asking the parent fund for a threshold of 50,000 yuan in the market, but investors were not restricted from trading in Class B graded funds, which led to complaints from investors such as Yin Hua Xinli, Yinhua Xinrui and Resource B who did not understand the principle of graded funds about the "high risk and fraud" of fund companies. In fact, except for Class A (Shenwan Income, Yin Hua H-share A) which has no guarantee of B-share discount, the risk of other sustainable Class A stocks is not higher than AAA credit bonds, even the same as national debt.
2. It is considered that all Class A graded funds are guaranteed to be poly. In fact, according to the terms of the graded fund contract, the agreed income, commonly known as "capital preservation and interest protection", is generally converted into equivalent value, and the parent company fund can be guaranteed by redemption. For a class A graded fund with a term, the net value of "principal and interest" due can be converted into the redemption of the parent company's fund. However, after being converted into a parent company fund, the net value of the parent company fund fluctuates, and it is necessary to bear the risk of the rise and fall of the parent company fund during the suspension period of the transition period, and it is not guaranteed. You can sell the locked principal and agreed income of Class A funds 2-3 months before maturity. For Class A graded funds with sustainable agreed returns, due to its eternal existence, when the agreed returns of Class A are lower than the market bond yields, there is a risk of principal discount trading; When the A-type agreed rate of return is higher than the market bond interest rate, once the downward conversion occurs, 75% of the original excess value will be damaged. If Class B funds corresponding to Class A funds have no downward conversion clauses (deep bay income and Yin Hua H shares A), there is a risk of "white bars" in the agreed income.
3. The sub-fund whose parent fund is LOF graded fund is mistaken for closed-end fund. I mistakenly thought that Class A or Class B of single _ should be discounted. The parent fund is actually a hierarchical fund of LOF, and the sub-fund is also an open-end fund, but the sub-fund is a part of the parent fund, so the price of the sub-fund must meet the price of class A sub-fund, the ratio of class XA+the price of class B sub-fund, and the ratio of class XB = the net value of the parent fund. If A shares are at a premium, B shares are at a discount; On the contrary, A shares are discounted and B shares are premium. If the parent fund is a closed-end fund or a semi-open and semi-closed fund, then the sub-fund is considered as a closed-end fund, such as Ruifu enterprising, Huili A Huili B and so on.
4. I mistakenly think that the premium rate and leverage ratio of Class B leveraged funds are linear (proportional). In fact, for graded funds, after the priority share and enterprising share of graded funds are listed and traded, the difference between the agreed income of Class A sub-funds and the market bond yield leads to the discount or premium transaction of Class A sub-funds. Because of the share matching conversion mechanism of open-ended graded funds, the whole discount premium arbitrage can be carried out. Then determine the premium or discount transactions of Class B sub-funds. For example, if A agrees to deal with real estate A, medicine A and Jianxin 50A at a yield premium higher than the market-recognized interest rate, then the B shares corresponding to real estate B, medicine B and Jianxin 50B will still be traded at a discount even if the leverage ratio is higher.
How to operate graded funds?
1. Pay attention to the leverage ratio. The ratio of robust part to aggressive part is 1: 1 or 4:6. Graded funds are funds that adopt structured grading technology. Through the decomposition of fund income or net assets, the fund varieties with secondary (or multi-level) risk-return performance with certain differentiated fund shares are formed. For example, the E Fund's small and medium-sized board index grading fund is divided into three types of stocks, among which the fund share ratio of small and medium-sized board A and small and medium-sized board B remains unchanged in the grading operation, and both are listed and can be converted in pairs.
2. Pay attention to Class A interest rates. At present, the stable stocks in the market are mostly floating interest rate products, and the annual income is mostly 3% or 3.5% of the one-year interest of banks in the same period. The data shows that among the three major index grading funds in recent years, the stable stocks graded by ICBC Shenzhen Stock Exchange 100 index and the CSIA- share resource industry of Penghua all adopt floating interest rates, which may reduce the agreed rate of return with the benchmark interest rate in the future. The agreed rate of return of E Fund's small and medium-sized board A is 7% of the fixed interest rate, and the agreed rate of return is high. Because it is not affected by future interest rate changes, the relative advantage of such stocks in the interest rate reduction cycle will become larger and larger, which can be used as a substitute for time deposits or government bonds and is more suitable for low-risk investors.
3. Pay attention to the stock conversion. At present, the graded funds in the market are generally designed to convert shares from time to time when the net value of the parent fund reaches 2 yuan or the progressive net value is less than 0.25 yuan (slightly different). This conversion can keep the leverage of high-risk stocks within a certain range.