Dare to arbitrage? China Investment Silver LOF takes action again: A-class regular investment limit reduced back to 100 yuan, effective from December 29

The Guotou Ruijin Silver Futures Securities Investment Fund (LOF) has tightened its subscription restrictions again after severe price fluctuations in the secondary market, announcing that starting from December 29, the upper limit for regular fixed investment amounts for Class A fund shares will be reduced to 100 yuan, down from a previous limit of 500 yuan, in order to guide arbitrage funds to stabilize the premium.

On the evening of December 25, Guotou Silver LOF announced that it would suspend trading from the opening on the 26th until 10:30 and resume trading afterward, warning of significant premium risks in the secondary market trading prices. As of December 25, the closing price of the fund in the secondary market was 2.804 yuan, which is 45% higher than the unit net value of the fund share of 1.9278 yuan on December 24.

After consecutive price increases, the fund's price turned to a limit down today during trading, confirming market concerns about arbitrage risks. Bi Mengni, a researcher at Geshang Fund, stated that after the subscription limit was relaxed, a large amount of arbitrage funds flowed in, and these funds engaging in arbitrage behavior by purchasing off-market and selling on-market are causing the on-market price to decline.

Guotou Ruijin Fund Management Co., Ltd. emphasized in the announcement that the high premium rate of the fund's secondary market price is not sustainable and reminded investors to be aware of potential losses due to market supply and demand relationships, systemic risks, liquidity risks, and other factors.

Subscription Limit Tightened Again, Arbitrage Space Compressed

Guotou Silver LOF announced that starting from December 29, the upper limit for regular fixed investment amounts for Class A fund shares will be reduced from 500 yuan to 100 yuan. This comes just one week after the last relaxation of the subscription limit.

It is noteworthy that the fund has adjusted investment limits multiple times. On October 15, Guotou Silver LOF Fund announced that the upper limits for regular fixed investment amounts for Class A and Class C shares were 6000 yuan and 40000 yuan, respectively; on October 20, Guotou Silver LOF Fund issued another announcement, further tightening the subscription limits, with the upper limits for Class A and Class C shares set at 100 yuan and 1000 yuan, respectively; on December 19, Guotou Silver LOF Fund announced that the upper limits for regular fixed investment amounts for Class A and Class C shares were adjusted to 500 yuan and 500 yuan, respectively.

The fund manager stated in the announcement that it will adjust the subscription limit for Class A fund shares in the future and particularly emphasized that the high premium rate in the secondary market is not sustainable. As of now, the fund is operating normally and will continue to strictly follow relevant laws, regulations, and fund contract provisions for investment operations.

Premium Rate Reaches 45%, Temporary Suspension Warns of Risks

According to the announcement, on December 24, the unit net value of Guotou Silver LOF was 1.9278 yuan, while the closing price in the secondary market reached 2.804 yuan as of December 25, indicating a significant premium Fund managers warn that investors who blindly invest in funds with high premium rates may face significant losses.

To protect the interests of investors, the fund will suspend trading from the market opening on December 26 until 10:30 AM on the same day. The announcement clearly states that if the premium on the secondary market trading price does not effectively decline on that day, the fund has the right to apply for a temporary suspension of trading during the day from the Shenzhen Stock Exchange and extend the suspension time to warn the market of risks.

As of the close on December 25, the Guotou Silver LOF switched from a continuous limit-up to a limit-down. According to Shanghai Securities News, the industry had long anticipated this limit-down. Bi Mengni, a researcher at Geshang Fund, stated:

The subscription limit for Class A shares has been relaxed from 100 yuan to 500 yuan, aiming to increase the supply of on-market shares and guide arbitrage funds to switch from off-market subscriptions to on-market sales, thereby stabilizing the premium. After the relaxation of the purchase limit for Class A shares on December 22, arbitrage funds actively subscribed, and T+2 can be converted to on-market, with these funds rushing to cash out. Arbitrage behavior is likely to reduce the high premium, leading to a decline in on-market prices.

Industry insiders pointed out that although this fund has seen significant gains in the past month, the investment risks are also high. The fund managers emphasized in the announcement that the trading price in the secondary market is subject to risks from fluctuations in the net asset value of the fund shares, as well as other factors such as market supply and demand, systemic risks, and liquidity risks