Encouraged by the increasingly active financial investment market, many domestic funds can realize long-short two-way trading. The fund share of long-short classification consists of three parts: parent fund, multi-party share and empty share. According to the leverage comparison of long and short shares and whether it is related to the fluctuation of the net value of the parent fund, the fund is divided into two modes.
Mode 1-equal leverage, long and short share linked index, has nothing to do with the investment income of the parent fund. In this model, if the leverage is n times and the index increases R, then the daily net increase of multiple parties is NR and the empty party is -NR, and the two add up to 0, forming a hedge. The daily net value of both long and short sides is determined by the size of N on the one hand and R on the other hand, which has nothing to do with the income of the parent fund. In the initial stage, the leverage of the long-short classification of funds is generally not more than 2 times, and the leverage is inversely proportional to the trend of the net value of the parent fund.
The parent fund of this model usually chooses to invest in low-risk assets, earn income and discount regularly. Sub-funds have a wide range of investment targets, which can be domestic indexes or foreign indexes.
Mode 2- There are more parties than empty parties. Although the long-short linked index has nothing to do with the income of the parent fund, its income distribution is determined by the parent fund. In this model, the leverage of long and short stocks is n+ 1/n, and the sum of the profits of both long and short stocks is always equal to the income of the parent fund R. The investment of the parent fund mainly chooses high-risk assets.
Generally speaking, the tools launched by the fund can be short. It has changed the situation that investors can only do more, and investors have more opportunities, but opportunities are often accompanied by risks. Investors should know more about fund knowledge, and be careful to guard against risks while seeing the benefits.