Usually, according to the existing grading fund product model, there is a disassembly mechanism for the leverage end (B) share, that is, once the disassembly point is triggered, the net value of Class B share will be split (reduced) and its net value will be unified. Such a mechanism design mainly considers the following two points:
First, protect the Class A share with the characteristics of stable and fixed expected annualized income, and prevent the Class A share principal and expected annualized income from being distributed first and then the Class B share according to the agreed expected annualized income distribution mechanism under extreme market conditions. Then, if the net value of B returns to zero, there will be extreme losses in Class A shares, and the guarantee of the principal and expected annualized income of Class A shares will also be lost.
The second is to restrain the leverage ratio of the B-side of the lever, because once the net value of the B-side share is very low (such as 0.25), the leverage ratio of the B-side share will be very large, and the smaller the net value of the B-side, the greater the leverage ratio, even to dozens of times.
Extended data
Mandatory addition of related concepts
The net value of the money fund is always unique, so your income does not come from the price difference, but will have a certain income every day;
Money funds can only choose dividend reinvestment as the dividend distribution method, that is, your income will be automatically converted into stocks and then credited instead of cash.
It is impossible for a fund company to liquidate the income it receives every day, and it usually arrives at the account once in a while. The income is collected once a month (of course, many money funds now settle the income every day), and the compulsory increase of money funds here means that this part of the income converted into shares is received.
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