After five consecutive trading days closed at the daily limit-down, Guotou Silver LOF reopened on February 9 and surged more than 8%, underscoring the volatile tug-of-war between price moves in the underlying silver market and investor reactions. The fund briefly touched the limit-down price on resumption, then swung into positive territory and closed at CNY 3.358, up 8.36%, with turnover of CNY 28.24 billion and a turnover rate above 26%.
The rebound followed a public-relations crisis that began on February 2, when the fund — the market’s only public mutual fund that primarily invests in silver futures — posted a one-day net asset value (NAV) drop of 31% after a late-night valuation adjustment. The fund house’s adjustment widened an initial roughly 14% decline — measured against Shanghai silver futures — by about 18 percentage points, and was announced after 10pm, when many investors had already traded out during the day.
That timing intensified outrage. Retail investors who had redeemed during the trading day based on afternoon published prices found themselves on the hook for the difference, because some distribution platforms such as JD Finance and Tencent Wealth Management had advanced redemption proceeds earlier in the day. Channels of complaint swelled: crowd reports say more than 17,000 investors filed complaints with regulators and some even traveled to the fund manager’s offices in Shanghai seeking answers.
The episode exposed a fragile intersection of fast-growing commodity demand, valuation mechanics tied to futures markets, and retail distribution practices. Guotou Silver LOF’s assets under management ballooned from CNY 21.78 billion at the end of 2024 to CNY 189.44 billion by the end of 2025, a surge that left the product exposed to concentrated flows and heightened intraday liquidity stress.
Investor reactions were predictably polarised. Some retail holders who sold at the lows later lamented “missing” the rebound; others who bought into the fall — including a few who used leverage — reported double-digit intraday gains. Many chose to sit tight, expecting a reversion. The fund manager, China International Trust and Investment (CITIC) Guotou Ruibin, set up a working group and said it would proactively engage in dispute resolution via reconciliation, mediation or arbitration to mitigate investor losses and address grievances.
Beyond the immediate investor complaint resolution, the episode has broader implications for China’s asset-management industry. It highlights the opacity and operational risk that can arise when funds track derivatives markets and when off-exchange distribution platforms pre-fund redemptions. Regulators and market participants will likely scrutinise valuation timetables, platform settlement practices, and disclosure standards to prevent a repeat.
For now, the equity and asset-management community will be watching two things: whether the fund’s price stability holds as silver prices remain elevated, and whether the fund house’s remediation measures calm investors. The episode is a reminder that surging inflows into niche commodity funds can quickly translate into headline risk when valuation adjustments intersect with retail settlement workflows.