Source of this article: Times Finance Author: Liu Ziqi
Continuing the trend of previous years, the liquidation crisis seems to continue. Many funds are teetering on the verge of liquidation, and have repeatedly issued early warning information that the net asset value is less than 50 million yuan.
On April 18, six institutions, including ICBC Credit Suisse, GF Fund, Tianhong Fund, Guotai Fund, China Commercial Fund and Bank of China Securities, issued an announcement on the early warning of the liquidation of their funds.
The day before, three companies also issued fund liquidation warnings, namely ICBC Credit Suisse Fund, Wells Fargo Fund, and Debang Fund. It can be seen that within two days, ICBC Credit Suisse Fund has 2 funds on the edge of the red line of liquidation.
Times Finance noticed that most of the funds that issued liquidation warnings were because the net asset value was less than 50 million yuan for 30 consecutive days, including some funds that had not been established for a long time. Some industry insiders told Times Finance that due to the unoptimistic market environment, some new funds are not large, so they will join the "mini-base" array.
In addition, there are some funds that perform better because the number of fund unit holders is less than 200 in 40 working days, and they are on the verge of liquidation.
Source: Diagram Worm
There is a fund that has only been established for 4 months
On April 17, ICBC Credit Suisse Fund announced that as of April 16, the net asset value of its fund ICBC CSI 100 ETF had been less than 50 million yuan for 40 consecutive working days. According to the relevant regulations, if the number of fund unit holders is less than 200 or the net asset value of the fund is less than 50 million yuan for 50 consecutive working days, the fund manager shall terminate the fund contract after performing the liquidation procedure, and there is no need to convene a general meeting of fund unit holders for deliberation.
ICBC CSI 100 ETF was established on December 22, 2023, just 4 months ago. As of April 18, the fund's cumulative return this year is 5.90%, and the returns in the past 1 week, 1 month, and 3 months are all positive.
At the beginning of the fundraising (as of December 28, 2023), the asset size of ICBC CSI 100 ETF was 269 million yuan. According to the announcement, the fund has been below 50 million yuan for 40 consecutive working days. In other words, since the end of February, more than 80% of the fund's funds have been redeemed and gone.
The fund manager of ICBC CSI 100 ETF is Shi Baojun, who joined ICBC Credit Suisse Fund Management in 2019 and has served for more than two years. At present, he currently has 14 funds with a total management scale of 3.063 billion yuan. In addition to the ICBC CSI 100 ETF, he also has 6 funds with a scale of less than 50 million yuan as of the end of December last year.
Backed by the Industrial and Commercial Bank of China, ICBC Credit Suisse Fund is the leader of public funds in terms of scale and comprehensive ranking, and its scale is only about 10 billion yuan lower than that of CCB Fund among the five major bank holding fund companies. Up to now, the total scale of ICBC Credit Suisse Fund is 724.315 billion yuan.
On April 17, another large-scale public offering of 100 billion yuan was issued by Wells Fargo Fund. As of April 18, the company's total management scale was 895.450 billion yuan. On April 17, Wells Fargo Fund announced that it plans to convene a general meeting of shareholders of Wells Fargo Securities Information Innovation ETF to consider the proposal for the continuous operation of the fund.
According to the announcement, as of January 8, 2024, the number of fund share holders or the net asset value of the fund is less than 50 million yuan for 60 consecutive working days.
According to the relevant regulations, if the aforesaid situation occurs within 60 consecutive working days, the fund manager shall report to the CSRC within 10 working days and propose solutions, such as continuous operation, change of operation mode, merger with other funds or termination of fund contracts, etc., and convene a general meeting of fund unit holders for voting within 6 months. In this regard, Wells Fargo Fund chose to continue to operate the Wells Fargo Securities Information Innovation ETF.
Founded on September 14, 2023, the initial scale of the establishment was 339 million yuan, and as of the end of 2023, the scale is only 30 million yuan, with a loss of more than 13% since its inception.
Yang Delong, chief economist of Qianhai Open Source Fund, told Times Finance that small and micro funds have been regulated in the near future, including some related expenses of small and micro funds need to be borne by the fund company itself, and if the scale of the fund is too small, the management fees generated may not be enough to cover the relevant costs, and trading may be suspended.
During the year, more than 100 funds issued liquidation warnings
As of April 18, among all funds, there are more than 2,500 funds with a management scale of less than 50 million yuan, and there are not a few funds with a scale of less than 10 million. According to incomplete statistics from Times Finance, since 2024, more than 100 funds have issued liquidation warnings.
According to the product type, the products of the fund liquidation warning announcement cover almost all fund types, but they are still mainly equity funds.
Some funds have issued indicative announcements that the net asset value of the fund is continuously less than 50 million yuan in a short period of time, such as E Fund CSI All-Index Building Materials ETF, which has issued three indicative announcements of the fund's net asset value of less than 50 million yuan in December 2023, and two more indicative announcements of the fund's net asset value of less than 50 million yuan this year.
In addition, many ETF funds such as Huatai Pineapple CSI Nonferrous Metals Mining Theme ETF, Tianhong CSI 1000 Enhanced Strategy ETF, JPMorgan CSI Carbon Neutral 60 ETF, GF CNI Xinchuang ETF, and CSI Online Consumer ETF have also prompted a scale of less than 50 million more than once this year.
However, there are also some funds that do not cause liquidation warnings because of their small size. On April 17, Debang Fund announced that as of April 15, the number of fund share holders of Debang Ruihong Bond has been less than 200 for 40 consecutive working days.
Deppon Ruihong Bond was established in September 2019 with a scale of only 200 million yuan, and the scale has increased to 5.323 billion yuan by the end of 2023. At the beginning of its establishment, the number of valid subscribers to the fund was 318, and the number of holders decreased to 203 by the end of 2023. Among them, institutional investors held 5.106 billion shares, accounting for more than 95%. Up to now, the fund's A share has returned more than 18% since its inception and more than 12% in the past 3 years.
Source: Tiantian Fund Network
Morningstar Direcr's previous statistics on the survival of all liquidated funds in history found that most funds closed early in their lives, and about 85% of those funds in the sample did not even survive to their fifth year. Morningstar Direcr pointed out that part of the reason was that the overall market was relatively sluggish, which led to the dual pressure of redemption and net value decline of fund products, and eventually many products were liquidated.
Yang Delong believes that the fund liquidation mechanism is equivalent to the survival of the fittest, which can filter out some products that are too small and not recognized by investors, and at the same time allow some products with good long-term performance and large scale to develop and grow.