CFIC Introduction
Recently, a QDII product doubled its fund share in only 5 trading days, and it was suspended in the secondary market for many consecutive days due to premiums, which attracted market attention. Previously, only about a month after the product was established, its share shrank by more than eighty percent, and it once became a mini fund, close to the brink of liquidation.
Original title: The unpopular base becomes "fragrant and sweet"! What happened?
In just 5 trading days, the exchange trading price has increased by more than 20%; doubling of fund shares; Four premium risk warnings were issued in a row, and the premium rate soared to more than 22%; Trading was suspended for one hour for three consecutive days...... Recently, a cross-border investment fund staged a magical scene. What's even more magical is that the fund has been quite neglected before, and its share has shrunk by about 80% in only about a month after its establishment, and the scale of the fund has been hovering near the liquidation line for a long time.
The unpopular base has turned into a market sweetheart, what happened in it?
The former unpopular base staged a soaring market
It is reported that the fund is CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Select ETF (hereinafter referred to as Asia Pacific Select ETF). Since July 3, the fund has suddenly risen sharply, and it has risen by more than 7% in a single day for two consecutive days on July 8 and July 9. From July 3 to July 9, in just five trading days, the fund's trading price has increased by more than 20%, and the premium rate has exceeded 20% during this period. On July 10, the fund's trading price hit a record high of 1.594 yuan. Subsequently, the trading price retreated, and as of the close of trading on July 19, the trading price was 1.313 yuan, but there was still a 2.3% premium.
With the sharp rise in the trading price of the exchange, the share of the fund has also risen. Wind data shows that on July 8, stimulated by a single-day rise of more than 8%, the fund's circulating shares soared by 20 million on that day, and continued to increase thereafter. In just five trading days, the fund's share has doubled, from 114.7 million to 254.7 million.
The soaring premium and the doubling of the share undoubtedly reveal the enthusiasm of investors for the fund. Taking the premium as an example, industry insiders said that due to the restrictions on foreign exchange quotas for cross-border investment QDII funds, it is easy to lead to restrictions on subscription in the primary market, and ETFs can only be purchased through the secondary market.
However, what is quite surprising is that this fund, which is now being robbed by everyone, was once in an embarrassing situation that few people cared about. On December 30, 2022, the Asia-Pacific Select ETF was listed for trading, but in just about a month, the fund's shares have shrunk by about 80%, with a net redemption of more than 1 billion shares. The net asset value of the fund has hovered around the liquidation line of 50 million yuan for a long time. At that time, some fund people believed that investors' limited recognition of QDII products was one of the reasons why it was easy for such products to attract gold and difficult to retain money.
Since the beginning of this year, QDII funds have become a popular product type in the market, and many QDII funds have staged a rare scene of being "coaxed" by investors. As a member of the QDII fund, the Asia-Pacific Select ETF seems to have ushered in a new situation of "keeping the clouds open and seeing the moon", and the previous unpopular base has quickly turned into a "sweet and sweet" market.
A number of companies have made moves to avoid voluntary liquidation of funds
Perhaps attracted by this shift, China Southern Asset Management seems to cherish its mini funds more. Recently, it has repeatedly adjusted the automatic termination clause of the fund contract to avoid the automatic liquidation of the fund, so as to continue the operation of the mini fund.
According to incomplete statistics, since July alone, China Southern Asset Management has successively issued a number of announcements, announcing that it will hold a general meeting of holders of its CSI All-Index Power Utilities ETF, CSI Science and Technology Innovation Board Chip ETF, CSI Online Consumption ETF, CSI Major Consumption ETF and other funds to review and approve relevant proposals, adjust the automatic termination clause of the fund contract and revise the fund contract.
And the Southern Fund is far from an isolated case. A number of fund companies such as GF Fund and Tianhong Fund have also issued similar announcements. In July, GF Fund announced that it would hold a general meeting of holders of its GF CSI 2000 ETF and GF CSI Major Consumer ETF to revise the termination terms of the fund contract, and the modification of the termination terms of the contract of GF CSI Science and Technology Innovation and Entrepreneurship 50 Enhanced Strategy ETF has officially taken effect. Tianhong Fund announced that it would hold a general meeting of holders to revise the termination terms of its Tianhong CSI 1000 Enhanced Strategy ETF.
According to the relevant proposal, the conditions for the termination of the above-mentioned fund contract will be adjusted from the previous "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 within 50 consecutive working days, the fund contract shall be terminated without convening a general meeting of fund share holders" to "if the aforementioned situation occurs within 60 consecutive working days, the fund manager shall report to the China Securities Regulatory Commission within 10 working days and propose solutions, such as continuous operation, conversion of operation mode, Merger with other funds or termination of fund contracts, etc., and convene a general meeting of fund unit holders within 6 months".
In other words, these funds will no longer face the situation of being automatically liquidated due to the number of holders and the size of the fund, and will be able to propose solutions by the fund management, which will then be submitted to the general meeting of holders for consideration. The time limit has also been further relaxed, from 50 consecutive working days to 60 working days.
According to industry analysts, this revision to some extent reveals the increase in the tolerance of fund companies for the scale of mini funds, as well as a strong tendency to protect the fund. After all, combined with the previous new requirement that mini funds need fund companies to bear all kinds of fixed fees independently and no longer be paid from fund assets, the expenses incurred by the insurance company need to be paid by the fund company.
"More still want to keep the product line, the fund plate is still there, and when the market outlet comes, it will not be without a base." Some industry insiders believe that this is usually a key factor in the reluctance of fund companies to liquidate. Especially for index funds, because a fund company will often only lay out one product for an index, once it is liquidated, the fund company will lose the layout of the corresponding index. In addition, the investment value of the fund is still there, the low level of liquidation is easy to damage the interests of holders, and the relatively high cost of new issuance are also important reasons for the reluctance of fund companies to liquidate.
Source of this article: China Securities Journal
Author: Zhang Yun
WeChat editor: Wang Qian
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