On May 7, the general meeting of FOF (fund in fund) fund unit holders under Qianhai United Fund and Ping An Fund carried out equity registration and proposed to hold it by means of communication to review relevant proposals for continuous operation. This is a new batch of products that "show the attitude of leaving or staying" after the introduction of the new regulatory requirements for mini funds. Both fund companies prefer to "stay". Data shows that there are not a few public offering FOFs facing the risk of liquidation, and more companies may need to make the decision of "going or staying" in the future. People in the industry believe that liquidation is not a huge disaster. Let nature take its course and make a decision based on the company's own situation.
Two FOFs tend to "keep the order"
Qianhai United Intellectually Selected 3-month holding period hybrid FOF is partial debt hybrid FOF, which was established in October 2020. The total number of effective subscriptions is 230, and the initial raised amount is about 205 million yuan. However, less than half a year after its establishment, its net asset value plummeted from about 200 million yuan to less than 2 million yuan at the end of the first quarter of 2021. As a three-month holding period product, that is to say, in the first open redemption period, a large amount of funds left the market, making the FOF a mini product on the verge of liquidation. In the following three years, the scale of the FOF was below 4 million yuan.
Although the product scale has been hovering below the liquidation line, Qianhai United Fund has never given up the FOF, but has been taking "guarantee" measures. Relevant announcements show that since July 2021, Qianhai United Fund Co., Ltd. has held several general meetings of the holders of this FOF. This general meeting of the holders of equity registration on May 7 is the fifth general meeting of the holders of this FOF, all of which are to consider the proposal to continue the operation of this FOF. The relevant expenses for the first four meetings of the general meeting of shareholders have exceeded 100000 yuan in total.
Ping An Yingrui six-month bond FOF was established in May 2022, with 1721 effective subscriptions and an initial offering amount of 219 million yuan. Perhaps it is because the structure of subscription customers is relatively scattered, and the scale of the FOF declines relatively gently. However, about one year after its establishment, by the end of the third quarter of 2023, the scale of the FOF fell below the liquidation line of 50 million yuan. By the end of the first quarter of 2024, the latest scale of the FOF was 35.8624 million yuan, still below the liquidation line.
According to the prospectus, if the number of fund share holders is less than 200 or the net asset value of the fund is less than 50 million yuan for 60 consecutive working days, the fund manager shall report to the CSRC within 10 working days and propose solutions, such as continuous operation, conversion of operation mode, merger with other funds or termination of the fund contract, And convene a general meeting of fund share holders to vote within six months. From the relevant announcement of Ping An Yingrui's six-month holding period bond FOF, similar to the three-month holding period hybrid FOF selected by Qianhai United Intelligently, it also chose to hold a general meeting of shareholders to "guarantee".
Retain product line or main cause
From the perspective of performance, as of May 7, the yields of the two FOFs mentioned above since this year are near the top 15% quantile of similar products. However, from the perspective of share change, the performance does not seem to bring more net subscriptions. Since performance cannot reverse the scale dilemma, why do fund companies not directly liquidate, but both choose to "guarantee"?
From the perspective of the products under management of Qianhai United Fund, it is the direct reason for the FOF to be retained or for the "guarantee" of its holding meetings for many times. According to the data, Qianhai United Intelligent Selection's three-month holding period hybrid FOF is the only FOF product under the management of the company at present. In case of liquidation, Qianhai United Fund may lose its FOF product line completely within a period of time without new issuance.
Although there are several FOF products under Ping An Fund, the yield level of Ping An Yingrui's six-month bond FOF in the past six months, nearly one year and since its establishment has been in the forefront of the company's FOF product line, which can be regarded as the "performance responsibility" in the FOF product line, which may also be an important reason for the company to choose "guarantee". Moreover, according to the disclosure of the first quarter report, a single institution holds more than 40% of the share of the FOF, and the choice of "guarantee" does not exclude that the institution still has a configuration demand for this product.
According to an analysis made by a fund person in an interview with China Securities Journal, in general, the choice of "guarantee" may be due to the company's desire to retain relevant product types. After all, it may take more time and energy to re declare products. And if the number of liquidation products is too large, it may also affect the approval of new products.
However, some fund company personnel believe that "liquidation is not a scourge", and some products may have their special birth background. When they are not suitable for the current market environment, and the survival cost is higher than the value, they should go ahead with liquidation. The survival of the fittest should become the normal state of fund development. Proper cleaning up of some mini products will also help fund companies to concentrate resources on high-quality products.
The number of liquidation FOFs may increase in the future
Wind data shows that there are many similar mini products among the publicly offered FOF varieties. By the end of the first quarter, about a quarter of the more than 500 public offering FOFs in the whole market were less than 50 million yuan. Excluding the initiating products that decide whether to liquidate three years later, there are still more than 20 FOF mini products facing the risk of liquidation.
Among the promotive products, many of them are facing liquidation risk due to their scale being less than 200 million yuan three years after their establishment. It is reported that initiating products usually require a scale of more than 200 million yuan after three years of establishment. If the net asset value of the product is less than 200 million yuan after the fund contract takes effect three years ago, the fund contract will automatically terminate. Data shows that more than 20 of the products established in 2021 will have a scale of less than 200 million yuan at the end of the first quarter of 2024, and even some of the products have a scale of less than 10 million yuan, which is quite different from the scale required for survival.
According to the analysis of insiders, from the situation of other promotional products in the past, there was no shortage of examples of "guarantee" by purchasing or seeking new institutional funds from the company nearly three years ago to achieve the scale of more than 200 million yuan on the date when the fund contract came into effect three years ago. However, for those initiating products far away from the scale of 200 million yuan, it is more difficult to "guarantee". Superimposed by the new regulatory requirements, the number of FOF products going to liquidation is likely to increase in the future.
According to the new regulatory requirements, fund companies can independently bear all kinds of fixed costs involved in mini products; If the fund company does not bear the expenses related to the mini product, it needs to provide a solution before the end of June this year, and change the mini status or liquidate the product by the end of this year. At the same time, it is strictly prohibited to use "help funds" and other forms to evade the payment of fixed fees for mini products and other violations.
