What is the next fold?

The so-called lower discount, when the net value of B share of the grading fund falls to a certain price (for example, 0.25 yuan), in order to protect the interests of a share holders, the fund company in accordance with the contract agreed to the grading fund downward conversion, the conversion completed, a share and B share of the net return to the initial net value of 1 yuan A share holder will receive a base share, and the share of B share holders will be reduced by a certain percentage. The conversion of the parent fund, a share and B share at the bottom of the discount is as follows:

B Share Equity is 1, the share is reduced. If 1000 net worth of 0.25 yuan of B share, converted into 250 shares of net value of 1 Yuan B share. It is worth noting that the conversion is settled according to the net value of B share, not the transaction price. The actual process of B share of the transaction price tends to be higher than the net value, causing investors greater losses.

A share is converted to a share equal to B, and the remaining share is converted into a parent fund with a net value of 1 yuan. If 1000 shares a, the conversion becomes 250 share a, the remaining 750 will be converted to the parent fund by net value. The actual process of a share of the transaction price is often around 0.8 yuan, it is usually expected to trigger a discount when buying a share will get good returns. (Note: When the market is in the majority of the target is in a drop-off situation, that is, the extreme lack of liquidity when buying a share arbitrage may also suffer losses).

The net value of the parent fund is 1 and the share decreases. For example, 1000 parent funds with a net value of $0.65 are converted to 650 net assets of $1.

Take the investment in the Coal Equal Rights Index classification as an example, as of July 8 (T-1st) Close, coal b reference net value of 0.245 yuan, triggering the next fold. In the near-fold, b share of the net leverage of about 4 times times, the price lever is about 3 times times, high leverage will attract speculators to pay a price rebound.

However, it is worth noting that the July 9 coal B's drop-off price of 0.551 yuan, has a substantial premium over the previous day's net value of more than 110%, at this time buy B shares not only can not profit, but also produce two losses. First of all, B share premium is higher, and the next discount is about 0.25 yuan of the net translation, rather than 0.551 yuan trading price, so the next discount after the investors will lose due to high leverage and other comprehensive factors brought by the super high premium rate; second, the parent fund may continue to fall during the next fold, when investors are unable to operate because of the suspension Could lead to further asset shrinkage.

Therefore, even if the B share has been lost a lot, at this time investors should also be decisive stop, if the B share due to fall stop blocked road can not sell, it is recommended to buy a share merged into the parent fund redemption. It is important to note that some brokers support "T+1 Day Blind", you can buy a share on the day and B share merger, and redemption on the next day.

Although the B-share was once invincible in the bull market because of its leverage, it created a huge wealth effect. But the lever is the "double-edged sword", once the market face, the decline is often unexpected, especially in a a-share market with the limit of the change, investors once full position B share, often due to "fall stop blocked Road" can not stop in time, can only be trampled.

What is the next fold?