In tiered funds, investors will encounter downward or upward discounts. Generally speaking, fund discount means that when fund B continues to fall, measures need to be taken to ensure that fund A will not lose money. On the contrary, the fund's discount means that the fund continues to rise. So what are the reasons for fund discounts? What is the purpose of fund discounts?

What are the reasons for fund discounts?

1 When a fund falls to a certain level, the classification The fund as a whole will trigger a downward discount to preserve the safety of funds invested in Class A shares.

2 In order to avoid substantial losses for investors caused by defaults and leverage effects on the premise of ensuring the income provided by the A share.

3 The fund discount is mainly to restrict the fund market and prevent investors and bond issuers from falling to zero or being delisted due to default.

The above reasons are the reasons why the fund discounts, mainly to reduce losses. Investors need to understand that the reduction in the discount operation is not a simple reduction of shares, but the conversion of the extra shares into main fund shares. The increase in earnings of the company behind the normal fund will drive up the stock price, thereby driving the fund to rise in the long term.