Fund discount refers to the operation of setting discount terms for graded funds in accordance with regulations. Under this operation, when the decline of Grade B triggers the set downward horizontal line, the overall graded fund will also trigger the downward discount synchronously. After the discount, the net asset value of the fund will not change, resulting in a corresponding decrease in the fund share held by investors.

Reasons for implementing fund discount

Fund discount, as an important regulation of domestic graded funds in China, is mainly to avoid the phenomenon that default and leverage effect cause investors to lose a lot on the premise of ensuring the income provided by A share. The increase or decrease caused by leverage effect is often extreme, so if the market is not restricted, it will easily lead to zero or default of investors and bond issuance. It is worth noting that the reduction in the discount operation is not simply to reduce the share, but to convert the extra share into the main fund share. When the fund held by the investor is facing a discount, the investor can choose to sell the fund directly or buy A, so that the investor's fund will be merged by the parent fund and will not be affected by the fund discount.