The conversion of graded funds means that every time (regularly or irregularly), the fund company will adjust the share of the fund according to a certain proportion, so that the net value of the fund is equal to 1 or close to 1, so that the share of investors will increase or decrease accordingly, but the proportion held by everyone remains unchanged, which has no impact on everyone's rights and interests.
Folding up and folding down are actually two kinds of conversion situations, but the purpose is different. Discount is when the net value of the parent fund rises to a certain extent (for example, 1.5), at which time the share of B may have exceeded 2, in order to restore the high leverage of the fund.
First, the purpose of grading fund discount and discount.
The discount and discount of graded funds are often to restore the leverage of graded funds, realize the expected annualized expected income and protect the rights and interests of A share holders. If there is no conversion, the leverage of graded funds will become larger or smaller. Therefore, in a certain period of time, the fund company will adjust the fund share according to a certain proportion, so that the fund net value is equal to 1 or close to 1, thus increasing or decreasing the investor's share accordingly. After the graded fund is folded up or down, the share ratio of investors holding the fund remains unchanged, which has no effect on the total assets of the holders holding the fund.
Two, the classification of funds discount and discount.
The conversion of graded funds can be divided into regular conversion and irregular conversion.
1. Graded funds are converted periodically.
Funds that are not listed and traded can only be converted periodically.
Regular switching means switching at a fixed time. Generally, there are two situations: the first working day of each year or the open day after the fund completes 1 operation cycle. Some funds convert AB shares separately; Some funds switch parent funds and A shares, but not B shares (only on a regular basis). When the fund is converted regularly, it will be converted regardless of the net value of the fund. When switching from time to time, the upper fold and the lower fold are handled differently. When and how the graded fund will be converted will be explained in the fund prospectus.
2. The graded funds are converted irregularly.
Usually, only classified funds that are listed and traded will be converted irregularly.
Graded funds need to have trigger conditions from time to time. The irregular folding of graded funds is usually when the net value of the parent fund rises to a certain extent (for example, 1.5), at which time the B share may have exceeded 2, so the purpose of folding at this time is to restore the high leverage characteristics of the fund; The discount of graded funds is usually that the net value of B shares falls to 0.25, mainly to protect the interests of holders of A shares. Simply put, rising too well or falling too badly will lead to irregular conversion of graded funds.