The total number of closed-end fund units is fixed, that is, the supply of funds is constant, while the demand for funds is constantly changing. The imbalance between supply and demand leads to a premium or discount in the transaction price. That is, the fund discount is completely caused by the imbalance between supply and demand and the oversupply. However, China's standardized closed-end funds have been trading at a discount since the establishment of 1998. According to the theory of supply and demand, the market demand for funds has always been less than supply, and supply is greater than demand, so funds are traded at a discount. Obviously, this explanation is not in line with the real situation of the fund market. Moreover, the theory of supply and demand can not quantitatively analyze the discount rate of funds in order to find out the changing law of the discount rate of funds in China.

The discount of closed-end funds is a common phenomenon in financial markets all over the world. The phenomenon of closed-end funds is widespread in the global financial market and has always been a difficult problem for researchers. The discount degree of closed-end funds in China is more serious than that in western countries. Before the share-trading reform, investor sentiment affected the discount of closed-end funds in China. After the share-trading reform, investor sentiment still affects the discount of closed-end funds in China. Although the share-trading reform is helpful to the healthy development of listed companies and the standardization of China's securities market, it can't change some irrational factors of speculators when investing. The existence of investor sentiment has led to the long-term discount of closed-end funds in China.

Although closed-end funds with high discount rate can attract more investors, the potential of a fund and its next trend cannot be judged by this index alone. In addition, the high discount rate is also one of the unstable factors in the financial market, and the experience of western countries should be worth learning: closed to open, fund liquidation in advance, fund tender offer, fund share repurchase, fund management and distribution, etc.

I hope my answer is helpful to you.