What does graded fund leverage mean?
In fact, the graded funds in China are mainly financing graded funds, which are divided into two shares: A and B. A is steady and B is enterprising. A is the provider of funds and provides funds to B, so B has leverage. There are three kinds of levers for graded funds, namely initial lever, net value lever and price lever.
1 initial leverage: the initial leverage is the leverage ratio at the time of fund issuance, that is, the ratio of the sum of A share and B share to B share. At present, the proportion of mainstream products in the market is mostly 1: 1 or 4:6, so the initial leverage is 2 or 1.67.
2 net leverage: net leverage is the ratio of the net growth rate of the progressive part of the graded fund to the net growth rate of the parent fund.
3 price leverage: it is the change multiple of B share price relative to the parent fund's net value performance, that is, the total net value of the parent fund divided by the total market value of B share.
When the ratio of the sum of the net value of share A and share B to the net value of share B rises or falls to a certain extent, the graded fund will fold up and down. If the market is not good and the net value continues to fall, the leverage will be too great. At this time, the leverage will be reduced by discounting.