Fund discount rate refers to the degree to which the market price of closed-end funds is lower than the net asset value. Because closed-end funds trade in securities, the transaction price is affected by the relationship between market supply and demand and does not reflect the net value of funds. Compared with its net value, the transaction price of closed-end funds has the phenomenon of premium and discount. When the transaction price of closed-end funds in the secondary market is lower than the actual net value, there will be a discount phenomenon. Why is the fund discount rate formed? Let's have a look.

I. Liquidity loss

The high concentration of fund ownership and cross-shareholding between funds have affected the liquidity of fund holdings. In the eyes of investors, the fund calculated by the market value of the fund's share cannot reflect the true value of the fund, but the net loss that may be caused by insufficient liquidity needs to be deducted, which directly leads to the price of the fund in the secondary market being lower than its net value;

Second, the double transaction cost.

When buying and selling stocks, funds need to pay transaction fees. On the one hand, transaction fees include commissions paid for buying and selling stocks, on the other hand, they include net losses caused by stock price decline caused by selling stocks.

Third, the irrational behavior of investors.

Investors who buy in the secondary market generally don't want to realize asset appreciation after realizing cash, but want to sell at a high price in the secondary market to obtain the difference income. Company performance, market supply and demand, market environment and other factors will affect its price.