Huabao Oil & Gas LOF Net Asset Value Estimate and Today's Discount Arbitrage Strategy

Today is March 12th. The Eastmoney platform has officially announced that the net asset value of Huabao Oil & Gas on March 10th was 0.8553. Based on the actual trend of the U.S. upstream oil and gas index and exchange rate fluctuations last night, I have estimated today’s fund net value to be approximately 0.883. This estimated net value can serve as a key reference for today’s on-market price and is an important benchmark for assessing premiums and discounts as well as formulating trading strategies.

Since the fund is currently under subscription limits and the regular subscription channels are temporarily closed, premium arbitrage cannot be executed. We can only focus on discount arbitrage strategies. Considering the current market environment and risk appetite, I still use a 2% discount as the entry criterion for this arbitrage. Converted, if today’s on-market price is below 0.865, I will choose to gradually enter some positions in batches, strictly following the planned approach.

Regarding the specific approach to discount arbitrage, I have previously explained it in detail. Here, I will provide a complete summary for your understanding and reference. Discount arbitrage involves entry costs and redemption mechanisms, which directly impact the final returns. Therefore, operational timing is very important and there are two mature strategies:

1. Buy and hold, waiting for redemption. The process is to buy on the market on day T, and initiate redemption on day T+1. If the fund remains at a discount during trading hours, we can add positions gradually and build up our holdings step by step. Pay special attention to the redemption fee: if held for less than 7 days, the redemption fee is as high as 1.5%, which increases costs and significantly compresses profit margins; after holding for 7 days or more, the redemption fee drops to 0.5%, greatly reducing costs and making arbitrage more attractive.

2. Discount dollar-cost averaging, selling on the market. The discount itself provides a natural safety cushion, effectively allowing us to buy below intrinsic value. We do not need to wait for redemption; as long as the on-market price gradually returns to the net value and the premium/discount narrows or turns positive, we can sell on the market for profit. This method is more flexible and aligns closely with the logic of discount dollar-cost averaging.

Finally, I want to emphasize today’s operational discipline: if the on-market price does not fall below 0.865 today and does not meet our entry condition, then we should decisively abandon this operation. Do not force entry, chase high, or break the rules. Stay rational and patient, and wait for a more suitable opportunity next time.