This is a graded fund.

Simply put, the parent fund is a mother with two sons, A and B. A likes fixed income and B likes venture capital.

Mom usually invests a sum of money in A and B according to 1: 1 (some funds are different, depending on the contract).

A lends money to B for stock trading, and A only charges fixed interest. B is equivalent to investing with twice as much leverage.

Because B has leverage, while A has low income and long cycle, under the influence of the market.

B's secondary market price will be higher than its own value (net fund value).

When the net value of the parent fund exceeds 1, the leverage of B is getting smaller and smaller. If the net value of the parent fund is less than 1, B's leverage will become larger and larger.

The more you fall, the faster you fall. In the extreme market, the decline of net value far exceeds the decline of selling price in the secondary market. Because B has leverage, and the market stipulates that everyone can only fall by 10% at most.

Therefore, when the parent fund falls to a certain extent, in order to protect the interests of A who only gets fixed income, the funds are redistributed.

Suppose the net value of B is 0.2 (but the selling price may be 0.4 yuan, which is the source of risk),

Then you must turn it into 1 and start over, so the number of funds in B will be reduced accordingly, but the overall net value of B will remain unchanged. However, it should be noted that it is calculated according to the net value rather than the secondary market price. Therefore, it will cause greater risks and losses to the holders of B shares in the secondary market.