The difference between transactional money fund and traditional money fund

What's the difference between transactional money funds and traditional money funds? In fact, the investment objects and styles of transactional money funds are no different from those of ordinary money funds, but their trading mechanism has made more breakthroughs. According to the classification of China Securities Regulatory Commission, Huabao Tianyi and Yin Hua Rili, two transactional money funds in the market, belong to LOF funds, that is, listed open-end funds, which can be purchased and redeemed at designated outlets or traded on exchanges. It is this that makes transactional money funds have new characteristics.

There are two ways to trade.

Traditional money funds mainly trade through the fund company's own channels and the over-the-counter channels of banks or brokers. Buying money funds is called "subscription" and selling money funds is called "redemption".

The main trading channels of the two transactional money funds come from the on-site channel trading of brokers. What's more, unlike ordinary exchange-traded money funds, exchange-traded funds have two trading methods: one is purchase or redemption in the primary market, and the other is buying and selling in the secondary market.

With the help of the mode of floor trading, transactional money funds can better play the role of cash management tools.

For example, investors are not optimistic about the stock market and want to withdraw stock funds to buy money market funds.

In the traditional monetary fund model: investors sell stocks on T-day; T+ 1 day, transfer the funds from the stock account to the bank account and purchase the monetary fund; On T+2, the subscription of the Monetary Fund is confirmed, and the expected annualized expected return is calculated; T+3 callable monetary fund.

For transactional money funds, the process is greatly shortened. Investors can buy money funds in the secondary market after they sell their stocks on T-day, and the fund shares can be confirmed immediately to calculate the expected annualized expected returns. For the purchased fund shares, they can be sold at T+ 1 day.

It is worth mentioning that if investors choose to purchase/redeem transactional money funds in the primary market, the redemption process is the same as that of ordinary funds. In the trading of on-site funds, different trading modes are mainly determined by choosing different fund codes. Taking Huabao Tianyi as an example, investors enter the fund code 5 1 199 1, indicating that they are applying/redeeming in the primary market; Enter the fund code 5 1 1990, which means buying and selling in the secondary market.

Expected annualized expected income distribution is different.

In the primary market, the price of investors' subscription/redemption of funds is the net value of funds. The exception is that the expected annualized expected return distribution of some transactional money funds is different from that of traditional money funds. As we all know, the net value of the money fund has always remained at face value. The Fund distributes the expected annualized expected income of the Fund every day, and the expected annualized expected income is carried forward and distributed to investors when they redeem the Fund. On the other hand, Yin Hua Rili adopts the pricing method of "expected annualized expected income does not carry forward shares" in the monetary fund, that is to say, the net value of fund shares can continue to grow day by day. Investors who apply for redemption can fully see the expected annualized expected return of fund shares during the holding period by changing the net value of fund shares. In the secondary market, you can simply calculate the investment profit and loss according to the bid-ask spread. In addition, every year, Yin Hua Rili distributes all the portion of the net value of the fund share that exceeds the par value of the fund share to investors in the form of dividends.

Another trading fund, Huabao Tianyi, still distributes the expected annualized expected income of the fund every day, and the net value of the expected annualized expected income always remains at face value. The distributed expected annualized expected income is linked to the off-site expected annualized expected income account, and the carried forward expected annualized expected income will participate in the future expected annualized expected income distribution. If the investor redeems the shares, it shall be paid in proportion to the redemption; If the investor chooses to sell, it will be paid in one lump sum when all of them are sold.

There are arbitrage opportunities.

Trading money funds can be traded in two different markets at the same time, and the transaction prices are different.

Among them, in the primary market, subscription and redemption are traded according to the net value of transactional funds, while in the secondary market, the buying and selling of funds are conducted according to the transaction price of the secondary market.

In order to ensure the activity of the secondary market, the two funds introduced market makers in the secondary market. Market makers buy and sell fund shares. The advantage of introducing the market maker mechanism is that it can stabilize the transaction price, control the price fluctuation in the secondary market within a certain range, and strengthen the liquidity of the secondary market. Even in the case of a large number of redemptions, the transaction can be sold through the secondary market to ensure the smooth progress of the transaction.

Therefore, for these two trading money funds, investors may find suitable opportunities to use the price difference to achieve cross-market arbitrage.

For example, when a trading money fund has a discount or parity in the secondary market, investors can carry out the arbitrage operation of buying first and then redeeming according to the characteristics that the expected annualized expected return can be calculated on the day of purchase in the secondary market. There are two kinds of expected annualized expected returns that investors can get: one is the expected annualized expected return on the day after buying in the secondary market; The second is the difference between the net value of the fund and the transaction price when the primary market redeems. From the perspective of capital flow, after the purchase and redemption, T+ 1 can be received and T+2 can be withdrawn for use.

On the other hand, if there is a premium in the secondary market, investors can sell stocks and buy them in the primary market, and earn expected annualized expected returns from the price difference.

However, the two funds have introduced market makers in the secondary market, and the price difference between the two markets is not large. Through the cross-market arbitrage of investors, the price difference between the two markets will be gradually ironed out.

After a period of operation, it is also found that the transaction price of trading funds in the secondary market will increase obviously every Friday and the last trading day before public holidays. The reason is that you can start to enjoy the expected annualized expected return on the day you buy the money fund. At this time, the subscription of OTC money funds has been suspended, and the expected annualized interest rate in the repo market has reached a very low level. For ordinary investors, they can also use this price law to buy trading money funds between Monday and Thursday and sell them on Friday, so as to obtain the expected annualized expected return of the spread.

There may be a commission for buying and selling.

As we all know, money market fund is a kind of fund with low commission rate. Except for the basic management fee of the fund, there is no handling fee for subscription and redemption.

But for trading funds, this problem is slightly more complicated. Because there are two trading methods, the possible rates are different. If the on-site purchase/redemption operation is adopted, there will be no related expenses. When trading on the floor, some brokers may charge a certain trading commission. For example, the historical expected annualized rate of return of money market funds is around 3%~4%, while the brokerage commission rate is above 0.05%, so investors have no room for frequent operation in the secondary market, and the ideal arbitrage model cannot be realized.

However, the two fund companies are negotiating with brokers to reduce the commission rate of trading money funds. On the websites of the two companies, the names of brokerage institutions that have reduced or exempted the commission rate have been announced. Interested investors can learn more about the commissions charged by their brokers for these two trading money funds.