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when a hybrid fund maintained its original fee rate after its positions were reduced to only one stock that accounted for 0.7% of its position, institutional investors were fed up.

securities times and china securities journal reporters noticed that a large public fund in south china announced that a hybrid fund under its umbrella may be at risk of liquidation. the fund previously emphasized that if two institutional investors holding 50% of the shares redeem, the product contract will be terminated. the hybrid fund currently has only 0.7% of its stock positions, and the combined proportion of bonds and bank deposits has reached 95%. it has been operated in accordance with the strategy of a pure bond fund, but the management fee it charges remains at 0.5%. the same fund manager who manages this empty hybrid product also manages a pure bond fund with a management fee rate of only 0.3%.

the two major institutions control 50% of the market share

the liquidation risk warning of a hybrid fund reveals that there is a self-contradiction in the management fee rates of two products managed by the same fund manager, especially for institutional investors who are very cost-conscious.

a large public fund in south china issued an announcement stating that one of its hybrid funds may trigger the termination of the fund contract. after the product takes effect according to the fund contract, 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 for 20 consecutive working days, the fund manager shall disclose it in the periodic report. 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 for 60 consecutive working days, the fund will enter the liquidation procedure and terminate according to the fund contract, without the need to hold a general meeting of fund unit holders for voting.

the above-mentioned fund products emphasize that if as of september 20, 2024, the net asset value of the fund is less than rmb 50 million for 60 consecutive working days, the fund will enter the liquidation procedure in accordance with the provisions of the "fund contract" without the need to convene a meeting of fund shareholders for voting.

securities times and china securities journal reporters noted that the asset size of the product as of june 30 was 52.36 million yuan, and at that time two institutional investors held a total of 19 million fund shares, accounting for 50% of the total fund shares. at that time, the fund company stated in the 2024 fund semi-annual report that due to the situation where unit investors hold more than 20% of the fund shares, if investors holding a relatively high proportion of fund shares redeem the fund in large quantities, it may cause the fund asset size to continue to be lower than the normal operating level after their redemption, and will face the termination of the fund contract and other situations.

the above information means that the fund’s latest announcement regarding the termination of the fund contract may mean that the above two investors, who together hold more than 50% of the fund shares, may redeem their fund shares, thereby triggering the termination of the fund contract.

the same fund manager and the same style have inconsistent fees

it is worth mentioning that this fund product, which only warns of liquidation risk, has not incurred any losses. but why did institutional investors who hold 50% of the fund shares choose to redeem?

wind data shows that the fund's yield so far this year is 0.23%, and its cumulative yield since its establishment in 2017 is 35%. why did such a fund product with stable performance issue a liquidation risk warning two months after institutional investors entered the market?

the semi-annual report released by the fund shows that as of june 30, 2024, the fund's top ten holdings have changed from the previous ten stocks to one stock. in the entire stock details list disclosed by the fund, there is only one stock, zijin mining, and the holding ratio is only 0.7%, which means that the fund is actually short of stocks. at the same time, the fund's bond assets and bank deposits account for 85.43% and 10% respectively, which means that the fund is equivalent to a pure bond fund product.

however, although the operating strategy of this fund is no different from that of a pure bond fund, its current management fee is much higher than that of a pure bond fund product.

securities times and china securities journal reporters noticed that the fund manager who manages this mixed fund also manages a pure bond fund product at the same time. the management fee of the latter is 0.3%, while the management fee of the flexible fund he manages, which is actually a pure bond strategy, is 0.5%.

obviously, when a hybrid fund product is short-positioned, it charges the hybrid fund rate based on the holdings of a pure bond fund, while the pure bond fund managed by the same fund manager only charges a fee of 0.3%. this may not only make institutional investors think about whether the fund is in line with the original intention of selecting the fund, but may also trigger the exit of relevant institutional investors due to fees.

"we have a core logic when selecting funds. for example, we position a certain fund as focusing on bonds, another as focusing on pharmaceuticals, and another as focusing on technology. however, if we find that their holding strategy violates the original fund selection positioning, we will sell it without hesitation." the manager of a large public fof fund in south china emphasized at a fund selection strategy meeting that institutional investors have a clear positioning for each fund entering the fund pool, and continue to observe and track the style of each fund.

what is the reason for short position operation?

it is worth mentioning that the fund manager of the fund explained the reasons for the short position operation in the report.

the fund manager said that in the first half of 2024, the domestic economy continued to weaken due to the drag of real estate and infrastructure. the issuance speed of government special bonds was lower than expected, m1 showed a rare negative growth, the deposit and loan interest rates of banks continued to decline, and the yields of bonds of various maturities also fell sharply, with an average decline of 30bp-50bp. the equity market showed a tortuous trend. after hitting the bottom in february, the market rebounded all the way to late may, and then adjusted again. according to market changes, we reduced the investment in equity-oriented convertible bonds and reduced the proportion of convertible bond investment. however, due to the weak trend of convertible bonds in the first half of the year, a small amount of losses were still caused. at the same time, the allocation of medium- and long-term interest-bearing bonds was increased, and the band operation of interest-bearing bonds was carried out at the right time. the equity market showed an inverted v-shaped trend in the second quarter, with value stocks performing better than growth stocks. the overall market style was defensive, the sector rotation was fast, and the main line was weak in sustainability. considering that the time and magnitude of the market rebound since early february this year have been relatively sufficient compared with previous rebounds in recent years, the portfolio has reduced the allocation ratio of equity assets to low allocation.

the above fund manager believes that looking forward to the next stage, with the deepening of various domestic reforms, the previous loosening of real estate policies and the superimposed impact of the accelerated issuance of special bonds, the domestic economy is likely to stabilize. at the same time, the first interest rate cut by the federal reserve may come in september, the constraints of the international environment on my country's exchange rate will be eased, and my country's interest rate autonomy will be improved. under the above combined influence, the medium and long-term interest rates of domestic bonds may still decline slightly, but there is not much room for downward movement. relatively speaking, the room for decline in medium and short-term interest rates is expected to be larger. equity assets are currently at a lower valuation than bonds, but due to the weak recovery momentum of fundamentals, it is expected that the market will still be based on bottom shocks as the basic tone, and high-dividend assets still have medium- and long-term allocation value. at the same time, we actively pay attention to industries with low expectations and marginal changes.