The top-performing LOF fund of the past year has been suspended for the entire trading session for the 5th time since June.
A temporary announcement from Chutong Fund, disclosed on the Shanghai Stock Exchange website on the evening of July 9th, revealed that the secondary market trading price of the Chutong Multi-strategy Fuxin Flexible Allocation Hybrid Fund (场内简称: 财通福鑫定开混合, Code: 501046) was severely higher than its net asset value per share, indicating an extremely large premium.
Consequently, Chutong Fund explicitly warned investors in the announcement about the risks associated with the high premium in the secondary market price, stating that "investors may suffer significant losses if they invest blindly." The company also indicated that if the premium does not effectively decrease, it reserves the right to implement measures such as intraday temporary trading halts or extending suspension periods to warn of risks.
Simultaneously, Chutong Fund emphasized in the announcement that the fund is currently in a closed period, with subscription and redemption services temporarily unavailable. However, off-exchange holders can transfer their fund units to the exchange via the cross-system transfer service and then sell them on the exchange.
Wind data shows that after a one-hour trading halt on the morning of July 9th, the price of Chutong Fuxin Dingkai Hybrid initially fell over 2% upon opening but gradually narrowed its losses. Approaching the market close, substantial buy orders pushed the price to its daily limit-up, closing at 14.121 yuan. The fund's net asset value per share for that day was only 10.7193 yuan, representing a premium of 31.73%.
Chutong Fuxin Dingkai Hybrid is the exchange-traded abbreviation for Chutong Multi-strategy Fuxin. In other words, this fund is a listed open-ended fund (LOF) that can be traded on the exchange, with only 19.87 million units in circulation. It is also a flexible allocation fund with periodic open periods and is currently operating under a closed period, with all off-exchange subscriptions and redemptions completely suspended.
Market analysts note that while new subscriptions are unavailable off-exchange, existing off-exchange holders can still transfer their units to the exchange via the "cross-system transfer" process, moving them from the registration system to the securities clearing system, and then sell them on the exchange at the high premium.
Data indicates that before May 25th, the fund's circulating units saw little change, remaining stable below 16.70 million units for several consecutive months. However, from May 26th to July 8th, the number of circulating units on the exchange increased from 16.6965 million to 19.8678 million, a cumulative increase of 3.1713 million units. This suggests that some existing holders have successfully realized profits by "selling at high levels" using the premium, while those acquiring these units are likely speculators chasing the rally.
In fact, premium risk warnings have become routine recently. Since June, the fund has issued a total of 49 warnings about premium risks in its secondary market price and 39 suspension announcements, including 3 notices for intraday temporary halts and 5 for full-day suspensions.
However, the frequent warnings have not dampened market enthusiasm. The secondary market price has continued to experience sharp volatility, with the premium rate once reaching a peak of 51.35%. According to Wind data, the fund's low price over the past year was only 2.02 yuan, while its high reached 18.60 yuan—a price difference exceeding 8 times—with a cumulative increase of 820.79% over the period.
Industry insiders believe the strong upward momentum in the exchange-traded unit price is supported by the fund's outstanding off-exchange performance. As of July 9th, Chutong Multi-strategy Fuxin has achieved a year-to-date return of 133.01%, ranking sixth among 2,333 similar funds. Its one-year return stands at 388.84%, making it the top performer in its category. This stellar performance has undoubtedly attracted significant market attention.
"Some investors mistakenly view the exchange-traded units as the 'only available closed-end product.' Seeing the high performance and the suspension of off-exchange subscriptions, they rush to buy on the secondary market, overlooking the fact that the price has severely detached from the net asset value. The high premium they pay is not for asset value but purely for sentiment," an industry insider pointed out.
In reality, the fundamental difference between exchange-traded and off-exchange funds lies in the counterparty. Off-exchange fund subscriptions and redemptions are based on the net asset value, with the fund company always being the counterparty. Buying means subscribing from the company, and selling means redeeming to the company, with prices fluctuating around the net asset value. In contrast, exchange-traded funds are traded on the secondary market, involving transfers of units between investors, similar to stock trading. Investors buy units sold by other investors, and the price is determined by the interplay of buyers and sellers, which can deviate significantly from the net asset value.
"Once the premium contracts, even if the underlying asset price remains unchanged, holders will directly bear the book loss from the premium convergence," emphasized an insider from a public fund. As the closed period ends and off-exchange subscriptions resume in the future, the supply channel will open. Arbitrage capital will then quickly flow in to suppress the premium, making the collapse of the high premium an almost inevitable event.
As of the end of the first quarter this year, Chutong Multi-strategy Fuxin had an asset management scale of 335 million yuan. Its top ten holdings, in order, were Shenzhen Han'S Cnc Technology Co.,Ltd. (301200.SZ), Zhongji Innolight Co.,Ltd. (300308.SZ), Shengyi Electronics Co.,Ltd. (688183.SH), Eoptolink Technology Inc.,Ltd. (300502.SZ), Guangdong Dtech Technology Co.,Ltd. (301377.SZ), Yuanjie Semiconductor Technology Co.,Ltd. (688498.SH), Wus Printed Circuit(Kunshan)Co.,Ltd. (002463.SZ), Jiangsu Etern Company Limited (600105.SH), Shengyi Technology Co.,Ltd. (600183.SH), and Fiberhome Telecommunication Technologies Co.,Ltd. (600498.SH).
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