Arbitrage Fund how to get long-term investment in the short-term profits Money Tips

Category: Money tips Release Date: 2006-06-29

Open-end investment fund, most investors will only choose the short-term speculation in the long-term holders of the fund, or to get certain benefits. In fact, this is just a regular fund investment. Investors can also invest funds in long-term investment value, while making full use of the non-effectiveness of market arbitrage, resulting in zero-risk or low risk cases, to receive the more lucrative short-term profits.

Arbitrage trading, the Fund's investments to make money new tactics

Shenzhen residents Su is a wholly-owned small business owners, but also a sound-based investors. Settlement due to business needs, Su always keeping more of the demand deposits in order to ensure liquidity and safety. However, demand deposits, only 0.576% of the after-tax interest income reckon he was very dissatisfied. Later, Su find the same high safety and liquidity in money market funds and short-term debt funds, was able to reach annual revenues of around 1.8%. As a result, Su started to invest in open-end fund.

In a chance, Su Financially (related: Securities Finance) division Lin Wei was aware of China's investment markets due to regulatory lag, information asymmetry and other factors, when the market price variance, the investment markets will have very many sets of profit opportunities. Investors can invest funds in the medium to long term investment value, while making full use of the non-effectiveness of market arbitrage, resulting in zero-risk or low risk cases, to receive the more lucrative short-term profits. Arbitrage fund investments may be in the know, the Su began to consciously take advantage of market opportunities to arbitrage.

Convert the fund to arbitrage

Since 2005, Su started to invest in money market funds and short bond funds. Because of these two funds as a substitute for demand deposits, have free trade, income tax, revenue stability, and access to convenient features, the annual rate of return is also very close. Therefore, Su that investments there is not much difference between the two, always choose the kind of high-yielding investment. Last year, the early introduction of short-term debt funds, an annualized yield of about 2.2-2.4%, higher than money market funds to 1.8%. As a result, Su will be idle more than 200 million invested in the Yi Fonda (Easy Fonda news, easy to Fonda Well) months on the proceeds of short-term debt fund.

However, after entering in 2006 due to market interest rates rise, bond prices continued falling, Su held the proceeds in short-term debt funds also continued to decline, even lower than the annualized rate of return of 1.5%, while money market funds, income has remained steady at 1.8% of the proceeds. As a result, Su will be on the monthly income fund of funds into money market funds vulnerable Fonda. Su subsequently forget forma earnings, if he has held in money market funds or short-term debt funds, more than a year down and only receive about 36,000 yuan, and 32000RMB benefits, but in such a down pour one hand, the actual earnings were can reach more than 39,000 yuan, equivalent to more than 3,000 yuan gains Ping Kong.

An unintentionally operation, so that Su realized that when market interest rates rise or fall, the bond market Outright prices will fall or rise accordingly, and thereby indirectly affect the money market funds and short-term debt funds in proceeds.

Among them, when market interest rates rise, money market funds, income will be due to the level of market interest rates rise, its investment in the money market interest income on the rise in income of the Fund led rebound, but in the short-term debt held by the fund because of the more extended the duration of Treasury bonds, as bond prices continued to fall will lead to revenue continued to decline and even the possibility of short-term losses. When market interest rates declining trend in the short-term debt the fund was able to rise in bond prices due to higher bid-ask spread of the bond proceeds.

Insight into the money market funds and debt funds in the short-conversion skills, the SU was frequently based on market interest rate changes, in the money market funds and debt funds in the short arbitrage between the operation. When market interest rates rise, the Su redemption of short-term debt in turn invest in money market funds; the other hand, when market interest rates decline when the redemption of money market funds in turn invest in short-term debt funds.

ETF trading characteristics of the use of arbitrage

In March 2006, Su began to get involved with the closed and open characteristics of the exchange-traded index fund ETF. With the same closed-end funds, ETF in exchange for a continuous auction trading trading, through the difference between the transaction price to earn profits, transaction costs are the same, without payment of stamp duty; the same time, ETF can be open with the ordinary Fund subscription and redemption of the same conduct, but it is not redeemed in cash; but also its investment in the corresponding index and the "one basket" ingredients portfolio to track the corresponding index of Change.

Understand the characteristics of ETF, the Su-sensitive aware can make use of ETF and the market price volatility arbitrage. So, he went to understand the market and found that the use of ETF arbitrage operation requires a high amount of money, these cards ETF50, for example, for the amount of money less than one million investors can only participate in the Shanghai Stock Exchange after the market 50ETF transaction, that is the same as the sale of closed-end fund purchased with cash ETF share and sell ETF shares to recover the cash in two steps (Figure 1). However, the amount of funding for the owners of more than one million investors can participate in the Shanghai 50ETF the purchase, redemption and transactions (Figure 2). However, in actual operation, because the ETF price and the net deviations arising from arbitrage opportunities are often fleeting, if the price of the constituent stocks of the use of statistics and then manually converted into ETF net further to determine whether there are trading opportunities, it is difficult to meet the arbitrage operations the timeliness requirements, agencies are generally carried out using a computer to determine arbitrage operation, it is difficult to achieve individual investors.

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Are individual investors can only carry this tool to feel powerless and frustrated?

On the arbitrage created a strong curiosity, Su, Lin Wei could not help but ask the financial planner. Lin Wei, this year is the equity division reform, the number of shares of listed companies need to change. Therefore, individual investors also can use the ETF for arbitrage operations. When the ETF's constituent stocks of the suspension or daily limit, and can be expected to resume trading after the sharp rise in stock price may be a continuous limit-point, investors can, through continuous purchase and redemption of ETF shares of listed companies was suspended in the stock resume trading after the sell arbitrage.

Understanding of operating skills, the Su began to pay attention to the news of share reform. February, Guizhou Moutai (600,519) due to the forthcoming split share structure reform since February 24 from the suspension, in its stock market rose sharply during the suspension, and the Guizhou Moutai also announced excellent 2005 Annual Report, spirits rise and the ex-factory price plus Major Holders + is + warrants were generous share reform programs, good news, will resume trading is likely to have robust growth. Su seized this opportunity, but the stock has been struggling Maotai suspension, can not be directly purchased in the secondary market.

Thus, from early March Su started buying 1 million copies of the certificate 50ETF, and then turn into a basket in accordance with the provisions of the stock, and then sell other stocks in the basket, leaving only Maotai stock, and then continue to purchase on the card 50ETF. After more than a month repeatedly changed hands, Su hands already holds more than 7,000 shares Moutai stock, at cost only about equivalent to the suspension prior to 62.27 yuan.

April 17, Moutai shares resume trading after trading continued strong rise in three consecutive daily trading limit-closed. April 20 Su at 89.2 yuan will be in the hands of all the throws Moutai shares, net profits nearly 180,000 yuan after fees. Su made a benefit comparison: If they are not the use of ETF funds through this arbitrage mode of operation, he can April 19 Maotai a third was opened when the daily limit to 82.89 yuan Maotai high price to purchase is also a 7000 shares of Maotai, profitability will be shrunk to 4 million. Two

Take advantage of market arbitrage institutional deficiencies

In two consecutive short-term arbitrage profits, the Su more conscious attention to other aspects of the arbitrage opportunities arise. April 25 of this year, the market performance in eye-catching Nanning Sugar (000911) the split share structure reform suspension, during the suspension period has released its results for 1-6 months significantly increased the pre-first-quarter earnings per share were 0.65 yuan, the shareholders of the General Assembly to consider through 10 give 3.3 shares of stock reform program and other major news of the price formation of the substantive good, but during the suspension, the stock market has also accumulated a certain rise in the stock suspension there is compensatory growth momentum, it can be predicted that the stock resume trading, there will be a larger increase. Su therefore very optimistic about the performance of Nanning Sugar Industry after the resumption, but limited to the stock trading has been suspended, he has been unable to buy the stock, while the Nanning Sugar stocks are not ETF's, Su also can not get the ETF arbitrage approach company's stock.

As a result, Su will be transferred to the vision of a large number of securities held by Nanning Sugar Industry Investment Fund, the Fund intends to use the arbitrage operation. Su see a bit of Nanning Sugar Industry of the circulation list of shareholders in the first quarter and found that top-ranking small-cap funds were widely distributed growth, Castrol growth, easy to square up to a positive, golden eagle and other optimization. Eagle One preferred (210001) holders of Nanning Sugar Industry in the first quarter compared with the end of the market value of total net funds of up to 6.96%, the greatest impact on the Fund net.

When he learned that Nanning Sugar Industry will be held on May 17 on resumption of trading news, Su on May 16 to 1.1297 / copies of the net purchase 100,000 copies of Golden Eagle optimization. May 17, Nanning Sugar resume trading transactions, closing 15.50 billion, representing a 1.64% rise before the suspension, the right to conduct re-treatment, in fact Zhang margin of 35.17%. Golden Eagle the same day and therefore preferred equity rose to 1.1984 yuan / copies of the same day or up to 6.08%! Su result in the May 19 to 1.1954 / copy all the redemption of the fund, after deducting the purchase and redemption fee, Su In just three trading days to receive a total of 4179.20 yuan revenue yield up to 3.70%.

This year, the Younger, Moutai shares resume trading, etc. were also holding their Harvest for a number of bonds, Invesco Ding Yi, Yi Fonda positive growth, and the fund has brought a very good short-term arbitrage opportunities. The Su of this shrewd investors, cleverly obtained by arbitrage operations for their own good benefits. After a number of successful arbitrage, the Su realized that for some regular recurring arbitrage opportunities, they can continue to carry out arbitrage operations. Moreover, the single rate of return arbitrage operations may be very low, only by repeatedly changed hands in order to obtain huge profits.

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