During the market downturn, many fund companies will use self-purchase to convey confidence to investors. In February this year, Vermilion Bird Fund announced that it would purchase 20 million yuan of its equity fund, becoming one of the few public offerings to announce self-purchase at the beginning of this year. However, Silver Persimmon Finance found from the quarterly report of its fund that the Vermilion Bird Fund increased redemption after the self-purchase action.
According to incomplete statistics from Silver Persimmon Finance, in the first quarter, the Vermilion Bird Fund purchased 20.002 million yuan, but the redemption amount reached 24.2903 million yuan.
Self-purchase with the left hand, redeem with the right hand
In February 2024, Zhuque Fund issued an announcement, saying that it intends to use its inherent funds to subscribe for its equity public offering fund of no less than 20 million yuan, and promises to hold it for a long time (more than 1 year). However, at the end of the first quarter, its self-purchased share has shrunk as a whole.
According to the first quarterly report, Suzaku Industrial Selected Mix was subscribed for 10 million yuan on February 6, and 6.45 million yuan was redeemed on February 19; The winning shares of Suzaku Enterprise were subscribed for 5 million yuan on February 5, and 10.37 million yuan was redeemed in three tranches on February 19; The preferred stock of Suzaku Enterprise was subscribed for 5 million yuan on February 5 and redeemed 770,000 yuan on February 8.
In addition, the Vermilion Bird Industry Smart Mix Mix, the Vermilion Bird Ingenuity One-Year Holding Period Hybrid, and the Vermilion Perseverance One-Year Holding Period Mix were redeemed for 5.39 million yuan, 650,000 yuan, and 650,000 yuan respectively in the first quarter. On the whole, in February this year, Zhuque's fund was "reduced" by the company by 24.29 million yuan, and the self-holding share of Zhuque Fund decreased by 2.6553 million.
Silver Persimmon Finance contacted the Vermilion Bird Fund about this, and the relevant person in charge said that the shares purchased by the company are held for a long time (held for more than one year) in accordance with the commitment, and some products are held for more than three years, and the redemption is the shares purchased in 2022 and before. The redemption is a normal operation for the sake of financial arrangements.
Confidence or marketing routine?
Combing through the history of the subscription and redemption of the Vermilion Bird Fund, it was found that it also had a large-scale redemption in September 2023. At that time, six active equity funds under Suzaku were redeemed to varying degrees, with a total redemption amount of 48.42 million yuan. But this redemption is quiet, and it is difficult to find out without looking through the quarterly report.
Yao Xusheng, a partner of Paipaiwang Wealth Management, once pointed out in an interview with the media that the reasons for fund companies to redeem their self-purchased shares are complex, which does not necessarily mean that they are bearish on the market outlook. However, due to the lack of clear provisions on the subscription and redemption behavior of managers in the current fund information disclosure system, fund companies are more willing to disclose fund subscription and subscription behaviors than fund redemption behaviors, resulting in a certain degree of information gap.
In the eyes of many investors, the self-purchase of products by fund companies not only releases confidence in the market and their own products, but also highlights the attitude of sharing risks and benefits with investors. Therefore, there is no shortage of investors who will take the self-purchase action of fund companies as one of the important reference factors for their investment decisions.
However, if you buy it and then redeem it quietly, investors can easily be misled.
In addition to the Zhuque Fund, Zhonggeng Fund has also had a similar action of "buying new and redeeming the old" before. In February 2023, some media found in the 2022 quarterly report disclosed by Zhonggeng Fund that almost at the same time when it announced that it had purchased Zhonggeng Hong Kong Stock Connect managed by its fund manager Qiu Dongrong with a value of more than 60 million yuan, two funds under the management of the same fund manager were redeemed, with a total amount of more than 50 million yuan.
The predecessor of Vermilion Bird Fund was Vermilion Bird Investment, which was a private placement with a management scale of 10 billion yuan. In September 2016, Suzaku Investment submitted the application materials for the establishment of a public fund to the China Securities Regulatory Commission, and in September 2018, Suzaku Fund was approved to be established, becoming the fifth company in the public offering market to "convert private to public".
However, after the "private to public", the development of the Vermilion Bird Fund was not satisfactory. According to Flush iFinD data, as of the end of the first quarter, the total scale of Vermilion Bird Fund under management was only 11.949 billion yuan, which has shrunk by nearly 60% from its peak of 29.429 billion yuan at the end of the fourth quarter of 2021. In terms of investment performance, many of Suzaku's funds have recorded negative returns in the past three years, and their net value has fallen by more than 20%.