Fund split, also known as split fund. It refers to a method of recalculating the fund assets by changing the corresponding relationship between the net value of the fund share and the total fund share on the premise of keeping the total asset value of the fund investors unchanged.
After the fund is split, the original investment portfolio remains unchanged. The fund manager remains unchanged, the fund share increases, and the net value of the unit share decreases. The split achieves the purpose of reducing the net value of the fund share by directly adjusting the number of fund shares, without affecting the realized income, unrealized profit, paid-in fund, etc. of the fund.
Why Split the Fund
According to the explanation of the fund company, the split of the fund can reduce the sensitivity of investors to the price, which is conducive to the continuous marketing of the fund. It is also conducive to improving the structure of fund share holders and facilitating fund managers to operate funds more effectively, thereby implementing the investment philosophy and investment philosophy of fund operation.
The split funds are mainly funds with better past performance and higher net worth. In order to meet investors’ investment psychological needs, investors can buy good funds at relatively cheap prices. The split of fund shares can also effectively solve the problem of “forced dividends”, reduce transaction costs, and reduce the impact of frequent trading on the securities market.
Therefore, these old funds with good performance and relatively small scale may choose to take the form of fund splitting, which has no impact on the original holders, to attract more investors and improve the holder structure. and fund size. The split fund is generally small in scale, and the expansion of the scale after the split is beneficial to the operation of the fund.
Advantages of Fund Splits
Fund splitting can accurately adjust the net value of fund shares, but large-scale dividends cannot be achieved.
In addition, in order to achieve a large proportion of dividends, it is possible to forcibly sell some stocks and convert unrealized gains into realized gains in a short period of time. There is a risk of harming the interests of investors, which may cause investors to lose investment opportunities.
Splitting does not affect the fund’s realized income, unrealized gains, paid-in funds and other accounting subjects and their proportional relationships, and has no substantial adverse impact on the rights and interests of investors.
