The compensation process for investors affected by the valuation adjustment of the SDIC Silver LOF officially commenced today, February 26th. Investors can handle related matters by searching for the "SDIC Silver Fund" mini-program on Alipay and completing online identity verification.
Regarding the source of compensation funds, a representative from SDIC Fund Management Company stated that the compensation would be paid from the company's own assets.
Following a 31.5% single-day net value drop for the SDIC Silver LOF on February 2nd due to a valuation adjustment, which drew significant attention, SDIC Fund announced a compensation plan for affected investors before the Spring Festival holiday.
Investors with losses amounting to less than 1,000 yuan will receive full compensation. For losses exceeding 1,000 yuan, compensation is calculated on a tiered basis: 35% for the portion between 1,000 and 2,000 yuan; 25% for the portion between 2,000 and 3,000 yuan; 15% for the portion between 3,000 and 5,000 yuan; 10% for the portion between 5,000 and 10,000 yuan; and a cap of 5% for any amount above 10,000 yuan.
This compensation plan applies to individual investors who redeemed shares of the SDIC Silver LOF based on the net asset value confirmed on February 2nd, 2026, including those who submitted redemption requests after 3:00 PM on January 30th but before 3:00 PM on February 2nd. Institutional investors are excluded.
Amid a significant surge in international silver prices during the Spring Festival holiday, the SDIC Silver LOF, which had been mired in the "valuation adjustment" controversy, experienced a strong rebound on the first trading day after the holiday break. On February 24th, the fund reopened with substantial gains and hit the daily limit-up price by the close. It continued its upward trend on February 25th. By the close on the 24th, the fund's premium rate had once again exceeded 40%, indicating sustained speculative interest.
On the morning of February 26th, spot silver prices fell sharply, dropping below the $88 per ounce mark by 7:56 AM, representing a decline of over 1.4%. Meanwhile, spot gold was fluctuating around $5,165 per ounce, showing a minor increase of 0.05% at that time.
The valuation adjustment issue originated from a historic plunge in the international silver market. Over two trading days from January 30th to February 2nd, COMEX silver futures fell by approximately 31%. In contrast, domestic silver futures on the Shanghai Futures Exchange, constrained by a daily price limit of ±17%, exhibited much smaller price swings.
On the evening of February 2nd, SDIC Fund announced its decision to adjust the fund's valuation by referencing major international silver futures prices. This adjustment caused the SDIC Silver LOF's net asset value per share to plummet from 3.2838 yuan to 2.2494 yuan in a single day, a record 31.5% drop – the largest single-day decline ever recorded for a public fund product. Because the fund company announced the valuation adjustment after market close, investors who submitted redemption requests during the trading day faced an actual loss of about 31.5%, compared to an expected loss of around 17%. This discrepancy sparked widespread debate among investors.
Consequently, on February 15th, SDIC Fund Management Co., Ltd. issued an announcement detailing a tiered compensation scheme for individual investors who redeemed shares based on the February 2nd net asset value.
The financial impact of this rare industry move was acknowledged by the parent company on February 24th. Sdic Capital Co.,Ltd., the parent company of SDIC Fund, released a statement outlining the potential impact of the compensation scheme on its financial performance.
Sdic Capital stated that preliminary estimates indicate the scheme will have a certain negative impact on the company's net profit attributable to shareholders for the 2026 fiscal year. However, the impact is expected to be less than 5% of the audited net profit attributable to shareholders for the 2024 fiscal year. Sdic Capital emphasized that this matter will not substantially affect the company's overall business development and that it will continue to oversee SDIC Fund's strict compliance and enhanced risk management.
Industry analysts noted that based on Sdic Capital's 2024 annual report, which showed a net profit attributable to shareholders of 2.694 billion yuan, the maximum theoretical impact on the parent company's profit, using the "less than 5%" upper limit, would be approximately 134.7 million yuan.
Given that Sdic Capital indirectly holds a 61.29% stake in SDIC Taikang Trust Co., Ltd., which in turn holds a 51% stake in SDIC Fund, Sdic Capital's effective ownership in the fund manager is approximately 31.26%. Based on this ownership structure, the estimated maximum compensation burden for SDIC Fund itself would not exceed 431 million yuan. For context, the fund company reported a net profit of 376 million yuan for 2024.
One mutual fund industry commentator added, "This settlement amount is expected to put significant pressure on the company's annual profit, potentially approaching SDIC Fund's entire annual net profit (approximately 376 million yuan). However, such expenses are typically not fully recognized in a single year, as that would directly impact annual bonuses and talent incentive mechanisms. Following industry precedents, such compensation is often amortized over three to five years to smooth out the short-term impact on operating profits. Beyond profit fluctuation, the potential risk of talent loss poses a more fundamental challenge to the company's long-term competitiveness. The current scheme appears to be a prudent outcome from working groups considering legal, commercial, and reputational factors, balancing various interests. It is not expected to substantially impact the fund company's capital adequacy or its future stable operations."
As the compensation process enters its implementation phase on February 26th, coupled with the recovery in silver prices, the market is watching closely to see if the SDIC Silver LOF can move beyond the recent period of extreme volatility.
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