Economic Observer reporter Li Qin Under the in-depth adjustment of the A-share market since the beginning of the year, not only hundreds of private fund products have hit the warning line, but some public fund products have also sounded the liquidation alarm.
Judging from the fund announcement in February 2022, there are more than 30 public funds that have issued liquidation warnings, among which, in addition to the products of small and medium-sized fund companies, there are many head fund companies. Liquidation warnings were particularly frequent in late February. Among them, from February 21 to February 25 alone, as many as 13 funds issued warning announcements because the fund’s net asset value was lower than 50 million yuan/100 million yuan for several consecutive days. only. In the first week of March, 4 funds issued indicative announcements that their products may face liquidation.
The reason is that in addition to the impact of market conditions, the redemption of institutional customized products is also one of the important influencing factors. For fund investors, from the front-end point of view, it is a safe choice to avoid “mini funds” as much as possible; and for investors who hold such funds, choose funds with the same strategy and style with a scale of more than 200 million yuan Doing replacement can effectively hedge risks. In addition, buying a fund is a long-term investment process. Don’t be overly pessimistic due to short-term market fluctuations, and don’t judge short-term performance based on short-term performance. This is the correct way to open a fund.
Intensive Liquidation Tips
Since February, more than 30 public funds have issued liquidation reminder announcements, especially in late February, with as many as 13. Especially since February 23, relevant announcements have become more frequent. On the 23rd alone, 4 funds issued liquidation warnings. On February 24 and 25, 3 and 4 funds respectively issued reminder announcements.
Specifically, on February 23, 4 fund companies successively issued reminder announcements, indicating that the net asset value of their products was lower than 50 million yuan/100 million yuan for several consecutive days.
Debon Quantitative Preferred Equity Securities Investment Fund (LOF) stated in the announcement that the fund’s net asset value is less than 50 million yuan for 40 consecutive working days, which may trigger the termination of the fund contract. It also stated that, according to the provisions of the Fund Contract, if the number of fund share holders is less than 200 or the net asset value of the fund is less than 50 million yuan for 60 consecutive working days after the Fund Contract takes effect, the fund manager shall The fund contract stipulates that the liquidation procedure will be entered into and the fund contract will be terminated without the need to hold a general meeting of fund share holders.
Subsequently, the leading home appliance trading open-end index securities investment fund of Bosera China Securities issued an announcement stating that if the fund has a net asset value of less than 50 million yuan for 50 consecutive working days as of March 22, 2022, it will be based on the fund contract. It is agreed that the liquidation procedure is entered into, and there is no need to convene a general meeting of fund share holders for voting.
The Southern China Securities Internet Index Securities Investment Fund (LOF) issued a reminder announcement that the net asset value of the fund was continuously lower than 100 million yuan, and indicated that the number of fund share holders was less than 200 or less than 30 consecutive working days after the fund contract came into effect. If the net asset value of the fund is less than 100 million yuan, the fund contract shall be terminated, and there is no need to hold a general meeting of fund share holders.
CCB China Securities Internet of Things-themed traded open-end index securities investment fund reminds that as of February 22, 2022, the fund has been under 50 million yuan in net asset value for 46 consecutive working days. If the net asset value of the fund is less than 50 million yuan within the next working day, the fund contract will be terminated, and there is no need to hold a general meeting of fund share holders.
On February 24, Bosera Hengrong One-Year Holding Period Hybrid Securities Investment Fund, China-Europe Credit Enhancement Bond Securities Investment Fund (LOF), and Minsheng Jiayin Huili Hybrid Securities Investment Fund all released information on the net asset value of the fund. Under certain circumstances of less than 50 million yuan, the liquidation procedure will be entered according to the agreement of the fund contract.
On February 25, E Fund CSI Shanghai-Hong Kong-Shenzhen 300 Trading Open-ended Index Securities Investment Fund, TEDA Manulife Performance-Driven Quantitative Equity Securities Investment Fund, GF Hang Seng China Enterprise Smart Index-based Initiated Securities Investment Fund (QDII), Yinhua Foresight Hybrid Sponsored Securities Investment Fund and Penghua Zhongzheng 0-4 Year Local Government Bond Trading Open-Ended Index Securities Investment Fund have also been suspended due to the fact that the net asset value of the fund or the number of fund share holders have not met the requirements of the fund contract for several consecutive days. Publish relevant informative announcements. On February 25, the China Europe Credit Enhancement Bond Securities Investment Fund (LOF) officially entered the liquidation process.
Behind the warning
Regarding the frequent occurrence of liquidation warning announcements in February, a fund industry person pointed out that the intensive issuance of liquidation warning announcements by funds includes two factors. First, some smaller equity funds may be affected by market conditions, resulting in a continuous decline in scale. , and disclose the relevant risks according to the contract; second, some funds may always be lower than the various lines stipulated in the fund contract (fund net asset value or number of unit holders), and an announcement must be made if they want to continue to operate; Or customize products for institutions, and the scale is too small to trigger liquidation after expiration and redemption.
Judging from the types of fund products that have issued liquidation warning announcements since February, most of them are passive index products. A large-scale public fund practitioner said that in general, active equity funds and index funds are “double kills”, and investor redemption and net worth withdrawal will affect the scale. The reason for the frequent issuance of liquidation warnings may be the delayed reaction to poor market conditions.
An institutional fund researcher added that, compared with active equity funds, passive index funds have higher requirements for scale and more factors that trigger liquidation, which may be related to the index itself. Because the way the index is compiled and the underlying objects in it are constantly updated, there have been many “unpopular indices” in history. When a fund tracks a similar index, it is also at risk of liquidation if the investment value in the future is low and investors are not willing to buy.
For investors, if they buy a fund with liquidation risk, they may face the result of forced redemption of the fund. At this point, investors have two options. One is to wait for the fund to be liquidated; the other is to sell when the fund frequently issues liquidation warnings.
Which option is better? The above-mentioned fund researchers believe that, from the perspective of historical data, there is not much difference between the two options. In the final analysis, the fund is facing liquidation because it is a matter of scale. The short-term behavior of individual investors will not cause large-scale fluctuations, and it is difficult for investors to predict the scale risks faced by the fund earlier. However, if you choose to wait for the fund to wind up on its own, the settlement process and time for the fund will be slightly longer.
From the front-end perspective, the aforementioned industry insiders suggested that individual investors should try to avoid relatively small funds (for example, less than 200 million in size) when choosing funds. In the case of no improvement in performance in the short term, it is easy to encounter a redemption tide and reduce it to a mini fund. From an investment point of view, funds with a scale of less than 200 million usually encounter situations where fund managers increase their shareholding concentration or industry concentration, which increases the volatility and risk of the fund to a certain extent. In addition, if investors buy similar funds, they can consider replacing them with funds with the same strategy and style.Return to Sohu, see more
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