The role of a silver futures fund manager requires more than just quantitative skills.
On February 6th, UBS SDIC Fund finally conceded and issued an announcement regarding actively addressing the concerns of investors in its Silver LOF fund. The firm announced the establishment of a special task force to improve communication channels and study solutions, attempting to quell the controversy sparked by a valuation adjustment.
The trigger for this incident was the fund's record-breaking single-day net asset value plunge of 31.5% on the evening of February 2nd. This sharp decline resulted from UBS SDIC's temporary adjustment to the valuation method for silver futures contracts, which shattered investor confidence in the firm.
While a retrospective review from a compliance perspective suggests the adjustment was not entirely without basis, it nonetheless thrust UBS SDIC into the spotlight of public criticism and exposed several long-standing, underlying weaknesses within the company.
This crisis is difficult to characterize as merely an accidental error in valuation adjustment; it is more likely the concentrated eruption of chronic issues at UBS SDIC. For the firm, this predicament was arguably unavoidable.
The valuation downgrade itself was not an unreasonable maneuver. The core of the controversy traces back to UBS SDIC's temporary adjustment of the valuation method for silver futures contracts, which directly caused the fund's net asset value to plummet by 31.5% that day. Prior to this, the fund had not alerted investors to the possibility of a valuation adjustment or its potential magnitude. The sudden, drastic drop in NAV left investors unprepared and directly sparked the subsequent wave of investor rights protection activities.
Objectively speaking, if reviewing UBS SDIC's valuation adjustment purely from a compliance standpoint, the action was not clearly违规 and possessed a degree of合理性. From the perspective of the necessity for adjustment, a significant price discrepancy of 14 percentage points had emerged between domestic and international silver prices. Had UBS SDIC continued to value the fund's assets using the settlement price of the Shanghai Futures Exchange silver futures contract, it would have led to a severe overvaluation of the underlying assets' true value in the fund's NAV. This could have triggered distorted market behavior where "early redeemers gain an unfair advantage." Astute investors might have redeemed their shares to lock in the artificially higher NAV, leaving remaining investors to bear the full brunt of the subsequent NAV correction, potentially even precipitating a large-scale run on the fund.
Another point of contention was the timing of the announcement. UBS SDIC argued that the deadline for calculating domestic fund NAVs is 3:00 PM. Issuing an adjustment announcement earlier, they believed, could have incited market panic, leading to concentrated redemptions and exacerbating the fund's liquidity risk. According to regulatory provisions, when abnormal price fluctuations in a fund's assets render the original valuation method incapable of fairly reflecting their value, the fund manager is permitted to adjust the valuation method, provided they履行信息披露义务 in a timely manner. Within the framework of regulatory requirements and the fund contract, UBS SDIC's action did have defensible grounds.
However, compliance does not equate to professionalism, and reasonableness does not equate to appropriateness. While UBS SDIC's valuation adjustment did not cross regulatory red lines, it exposed a lack of professionalism in its futures investment operations. This lack of professionalism is not only the core reason for the escalation of this incident but has also allowed investors to clearly see the capability shortcomings of this public fund manager. This deficiency permeates the entire process, including investment decision-making, risk control, and daily operations.
UBS SDIC does have some historical积累 in futures investing, primarily from its earlier years. Established in 2005, the firm experienced steady growth under its early总经理 Shang Jian, who had previously worked at the CSRC, the Shanghai Stock Exchange, Hua An Fund, and Yinhua Fund. The company gained recognition for various product innovations during that period. Notably, its专户业务 secured the industry's first mandates for stock-index futures and commodity futures, and it was the first to launch a fund专户 containing commodity futures arbitrage strategies. This track record was likely why UBS SDIC, then a mid-tier firm, obtained approval to launch the Silver LOF fund in 2015.
While UBS SDIC showed promising momentum and possessed strong shareholder backing at the time, the company experienced significant talent drain after Shang Jian's departure in 2012. Under the subsequent leadership of two general managers, Liu Chunliang and Wang Bin, UBS SDIC failed to advance further. Its ranking in non-monetary fund规模 slipped from the top 20 to outside the top 40. The company's积累 in the futures field also gradually weakened.
Specifically regarding this event, UBS SDIC's lack of professionalism is first evident in its insufficient积淀 in大宗商品投研, leading to serious deficiencies in price forecasting and market understanding. Silver, an asset with both commodity and financial attributes, sees its price influenced by macroeconomic factors like global economic growth, inflation levels, and the US dollar exchange rate, as well as microeconomic drivers such as global supply and demand, industrial demand, and speculative fund flows. Furthermore, the trading mechanisms and patterns of international silver futures contracts differ significantly from domestic markets. This demands that fund managers possess a global perspective, keen market insight, and solid fundamental analysis capabilities. UBS SDIC's investment research team fell short of these requirements. Prior to the recent international silver price crash, clear bearish signals had emerged in the global silver market: the Fed maintaining high-interest rates, a strengthening US dollar index pressuring dollar-denominated silver, weaker-than-expected industrial consumption growth for silver, and speculative funds significantly reducing long positions while short positions accumulated. These signals were not difficult to detect. Some domestic institutions focused on commodity investing had begun warning of silver price correction risks as early as mid-January and had adjusted their strategies by reducing silver exposure. UBS SDIC, however, failed to make effective price forecasts, lacked a pre-established risk预案 for a price crash, and took no hedging measures even as international prices fell sharply and the price gap widened, ultimately leading to severe short-term losses for the fund.
More notably, the投研团队 displayed insufficient understanding of the operational patterns of international silver contracts, failing to fully account for features like the absence of daily price limits and more volatile price swings in overseas markets. They did not anticipate the magnitude of the NAV drop during the valuation adjustment nor promptly warn investors of the associated risks. This cognitive gap is a direct manifestation of unprofessional futures investing.
Secondly, liquidity management was absent, and investor exit rights were disregarded, exacerbating market panic. In futures investing, liquidity management is a core risk control component, especially for public funds where ensuring asset liquidity and normal redemption processes is a fundamental duty. UBS SDIC exposed its shortcomings in this area during the incident. On January 30th (Friday), as international silver prices fell sharply and panic began to spread, UBS SDIC announced an emergency trading halt for the Silver LOF fund, overlooking investors' need to exit. Friday, being the last trading day of the week, is when some investors typically redeem to avoid weekend market risks. The emergency halt blocked these exit attempts. By February 2nd (Monday), liquidity in the fund was nearly exhausted amidst the decline; investors wishing to redeem found it impossible to execute trades, forced to passively absorb the massive NAV loss. Fund managers should maintain sufficient liquidity buffers based on market volatility and arrange liquidity provisions in advance during异常波动, promptly informing investors of redemption risks, rather than evading issues through emergency halts. UBS SDIC's approach not only failed to manage liquidity risk but effectively transferred the risk onto investors.
Beyond this specific event, the Silver LOF's long-term operations have lacked effective optimization strategies, with rollover costs persistently dragging down performance, failing to demonstrate professional capability. For funds investing in futures contracts, the rollover process is a core daily management task. Due to the expiration feature of futures contracts, managers must close out expiring positions and establish new ones before maturity, a process known as "rolling" or "移仓." This operation inherently incurs some costs (rollover costs or "损耗"), which can amplify significantly during markets with large price discrepancies or high volatility. Competent managers can minimize these costs through optimized rollover strategies, selecting appropriate timing and adjusting proportions. However, UBS SDIC has lacked effective rollover optimization strategies for the Silver LOF, passively incurring the associated损耗. This operational lack of professionalism has directly resulted in the fund's long-term significant underperformance against its benchmark, causing sustained losses for investors. According to the fund's periodic reports, as of December 31, 2025, the fund's cumulative NAV growth rate since its inception in August 2015 was 103.20%, while its benchmark's cumulative growth was 297.47%. This means the fund has underperformed its benchmark by a staggering 194.27 percentage points over its lifespan.
Futures funds do possess certain peculiarities. During the rolling of futures contracts, the price difference between near-month and far-month contracts (the term structure) leads to roll yield, which can be negative (a cost) particularly in a contango market structure, where long-term rolling incurs significant cumulative costs. Futures trading commissions and slippage further increase transaction costs, widening the gap with the benchmark. However, these factors seem insufficient to fully justify underperformance of 194.27 percentage points over more than a decade. A significant portion of the损耗 likely stems from the rollover operation itself. Poor timing—concentrating rollovers just before expiration when market liquidity is low and bid-ask spreads are wide—can lead to high transaction costs and slippage. Employing fixed rollover ratios and methods without adapting to market price movements and spread changes can also cause rollover costs to surge during extreme volatility.
The root cause of these issues lies in an imbalanced investment research team configuration and a shortage of professional futures talent. Futures investing places extremely high demands on a fund manager's professional background and experience. A competent futures fund manager needs in-depth knowledge of commodity markets and futures trading mechanisms, coupled with sharp risk awareness and strong adaptability. UBS SDIC has only 32 fund managers and only one commodity futures fund, managed by a single manager. The lack of sufficient specialized personnel in futures trading is a fundamental reason for its capability gap in this area.
The manager of the Silver LOF fund is Zhao Jian. Originally a software engineer, he moved into quantitative investment at UBS SDIC, with experience primarily focused on equity index fund products. He lacks relevant experience in futures investing and a background in commodity investment. Assigning a quantitative fund manager without futures experience to manage a product primarily invested in silver futures constitutes an unprofessional arrangement, leading to an inability to accurately forecast silver price trends or formulate effective investment strategies and risk预案.
In fact, the Silver LOF fund was not always managed solely by Zhao Jian. It was previously co-managed by Zhao Jian and Zou Lihu. Zou Lihu had previously worked as a researcher at Hualian Futures, Ping An Futures, and CITIC Futures. He joined UBS SDIC in June 2015, served as an assistant manager for the Silver LOF for two years, and then co-managed the product with Zhao Jian for nearly four years. His background suggests a deeper understanding of the operational patterns and price fluctuation logic of the silver futures market. Unfortunately, Zou Lihu left UBS SDIC in 2021 to join Invesco Great Wall, where he has since gained significant prominence as a cyclical fund manager, currently managing over 60 billion yuan in assets. His departure directly created a断层 in the fund's futures investment capability.
The Silver LOF fund had long maintained assets under management below 2 billion yuan, only surging to nearly 20 billion yuan by 2025. For the company, allocating a professionally qualified, futures-background manager might have seemed cost-ineffective for such a fund. Consequently, after Zou Lihu's departure, UBS SDIC did not recruit another fund manager with a futures background.
The deficiency in investment capability stems from shortcomings in the fund manager team, which in turn根源 from UBS SDIC's long-standing challenge of talent retention.回顾 the firm's development history, talent drain has frequently hampered progress. Around 2021, a group of key personnel, including Zou Lihu, Li Yiwen, and Dong Han, collectively moved to Invesco Great Wall, impacting the company's fixed-income business and dealing a blow to its futures investment capabilities. UBS SDIC's talent loss is not an isolated case. Prominent figures like Zhu Hongyu (now a top equity manager at China Merchants Fund), Wu Xiao (Deputy Director of Multi-Asset Investment at China Merchants Fund), Liu Jiawang (a well-performing "fixed-income+" manager at Fullgoal Fund last year), and Sun Wenlong (Deputy Director of Equity Investment at BDO Fund) also previously worked at UBS SDIC.
The company's current core investment research team revolves around individuals like Qi Fupeng and Ji Li. Compared to other mid-tier public fund peers, this lineup appears somewhat thin. Shi Cheng, who previously achieved strong performance by heavily weighting upstream new energy mineral resources and was an early example of a concentrated, thematic tool-type manager, subsequently suffered significant losses in the new energy sector for three years before improving performance last year by shifting focus to AI computing.
UBS SDIC's ultimate controller is the state-owned enterprise China SDIC Group, primarily engaged in investment and operations in energy, transportation, and raw materials—a typical industrial SOE. Its financial sector is concentrated in the listed company SDIC Capital. Most fund companies have financial institutions like securities firms or banks as major shareholders, particularly the leading firms, which are predominantly securities-affiliated. Fund companies under industrial SOEs are fewer and often influenced by their parent companies in terms of management models, compensation structures, and incentive mechanisms, creating differences compared to securities or bank-affiliated fund houses. Among the higher-ranked industrial SOE-backed fund companies currently is Hua Bao Fund under Baosteel, ranked 25th in non-monetary规模. UBS SDIC follows at 34th. Another example,宝盈基金, also controlled by an industrial SOE, is known for being a significant talent exporter within the public fund industry.
Prior to UBS SDIC's approval to launch the Silver LOF in 2015, top-tier firms like Hua An, Bosera, E Fund, and Guotai had obtained approvals for Gold ETFs. Gold ETFs are generally easier to manage, not only due to gold's相对较小 volatility but also because they invest in physical spot gold rather than futures. The approval for UBS SDIC to issue the Silver LOF might have been seen as a form of recognition for its earlier布局 in the futures领域 at that time. However, in hindsight, such high-risk products demanding strong投研能力 are perhaps better suited for larger, more comprehensive leading firms.
As long as the shortcomings in investment research capabilities remain unaddressed, similar issues with the Silver LOF fund could recur. UBS SDIC might temporarily appease public anger with an announcement, but to genuinely navigate out of the current situation, it must fundamentally address its talent deficit and enhance its professional capabilities.
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