Investigation On "Liquidation Tide" Of Public Offering: The Number Of Liquidations Increased By 152%, And Small And Micro Funds Were Struggling

Public funds ushered in a wave of liquidation.

According to the statistics of 21st Century Business Herald reporters, 116 public funds will be liquidated in 2021, far more than 46 in the same period last year, with a year-on-year growth of 152%.

Different from the previous liquidation of bond funds, the number of equity funds in the funds liquidated this year has increased significantly.

A public offering fund in South China believes that there are two main reasons for fund liquidation. One is poor performance. The decline in net worth caused investors to leave the market, and the decline in size triggered the termination conditions of the fund; The second is that no stable sales channel has been established and the fund pool of high-quality channels has not been selected successfully. He judged that there are still a certain number of mini funds (that is, reaching the liquidation red line of 50 million yuan), and the trend of fund liquidation may continue in the future.

Active liquidation appears

The market shock intensified, and the public funds ushered in a small peak of liquidation.

As of June 17, 2021, from the perspective of the maturity date of the fund, 116 publicly offered fund products have been announced to be liquidated this year.

In fact, this is the second year in the number of funds in liquidation since 2015, second only to 2018. 2018 was the peak of fund liquidation, with 428 funds liquidated throughout the year.

From the perspective of classification, medium and long-term pure debt funds are the most liquidated, and the rest of the liquidation funds also include flexible allocation funds, partial debt hybrid funds and passive index funds.

As for the reasons for liquidation, most of them triggered the contract termination clauses. For example, as of June 15, 2021, the Fund had a net asset value of less than 50 million yuan for 50 consecutive working days. If the above termination conditions agreed in the fund contract are met, the Fund will enter into the fund asset liquidation procedure in accordance with the fund contract, without the need to hold a general meeting of fund share holders.

It was also announced that when the net asset value of the fund was less than 200 million yuan three years after the contract came into effect, the contract would automatically terminate.

However, there are also those, such as Yinhua Multi income Fund, who hold a general meeting of shareholders to vote for approval and choose to actively liquidate.

From the perspective of fund companies, there are 116 liquidating funds involving 46 fund companies, of which the number of South Fund's liquidating funds is up to 13, becoming the "king of fund liquidation" in the first half of 2021.

Among the liquidation products of China Southern Fund, 10 of them were liquidated and decided to terminate by holding a general meeting of fund share holders because of their active choice.

The only funds that triggered the termination of the contract were Nanfang Ronghuan Regular Opening Fund, Nanfang State owned Enterprise Reform Fund A and Nanfang Juli One Year Fund A.

A person from a fund company in Guangzhou said that, generally speaking, some fund products lacking long-term performance and characteristics are prone to marginalization, becoming smaller and smaller, and trigger termination conditions. However, a large number of active liquidations are mostly due to the survival of the fittest products and the concentration of resources in better products.

Jianxin Fund Company and China Merchants Fund Company followed closely, with 6 in each winding up, and 5 in each of Chuangjin Hexin Company and South China.

Industry differentiation is serious

Since this year, two products of Kaishi Fund, Kaishi Chun Industry Selection A and Kaishi Culvert Industry Selection A, have been liquidated successively.

In addition to the two funds liquidated by Kaishi Fund in 2020, so far, half of the eight funds issued by Kaishi Fund have been liquidated, and the longest time of the four liquidated funds is less than three years, two of which were established in 2019, and were liquidated soon after operation.

According to the public data, Keystone Fund was founded in May 2017. Chen Jiwu, the legal representative and chairman of the company, was once the deputy general manager of Fuguo Fund. In 2009, it founded Shanghai Keystone Yizheng Asset Management Co., Ltd., and in 2017, it returned from private placement to public offering, establishing the Keystone Fund held by all natural persons.

The selected industry of Kaishi Chun, which was liquidated this year, is the first product established after Kaishi Fund's "private to public". At the beginning of the fund's establishment in July 2018, the scale was 341 million yuan.

However, after only two years of operation, in June 2019, Kaishichun Industry Selection announced that its net asset value was continuously lower than 50 million yuan.

According to third-party data, the performance returns of Kaishichun Industry Select in 2019 and 2020 were 14.3% and 32.33% respectively, lower than the average return of equity funds.

At the same time, the selected investor structure of Kaishichun industry is also changing. When it was founded in 2018, its institutional investors accounted for 52.26%, more than individual investors. By the mid report of 2020, all institutional investors had withdrawn, and individual investors held 100% of the total, becoming a complete retail base.

After the completion of liquidation, the overall management scale of Keystone Fund still has 847 million yuan, ranking 136 among 145 public fund companies.

Yang Delong, the managing director and chief economist of Qianhai Kaiyuan Fund, said that the fund issuance was cold, and old funds, especially some small and micro funds, were facing redemption risks, which led to the liquidation of related funds. To some extent, it also showed that the overall market trend was depressed and the fund industry was seriously divided.

Channels accelerate the survival of the fittest

A person in charge of product sales at CSC believes that the trend of survival of the fittest in fund products has accelerated in recent years.

"All products of Dagong Public Offering are sold on a commission basis." He said that compared with Dagong Public Offering products, the incentive policy of selling small and micro funds on a commission basis in the past was more advantageous, but now Dagong Public Offering and star fund managers sell better products, so they pay less attention to small and micro funds.

The bank, as the main channel of fund consignment, according to the introduction of the bank's relevant personnel, currently has monthly or quarterly arrangements for the selection of fund consignment, and will decide which funds can be pooled and sold on a commission basis according to the fund's future investment research ability.

According to its disclosure, both state-owned banks and joint-stock banks are increasingly inclined to cooperate with large and medium-sized fund companies, select star fund managers to issue products, and some banks are directly bound to the resources of head fund companies.

At the same time, it is also difficult for microenterprise funds to gain recognition and access to their fund pools in third-party Internet platforms, securities companies and other consignment channels.

Under this trend, many insiders also said that the channel has raised the threshold of fund cooperation in a disguised way, and the scale of large fund companies will become larger and larger, and the strong and polarized trend of the public offering industry will be further accelerated. However, when the fund scale is too concentrated in a few companies and fund managers, it will affect the excess returns for customers.