Silver LOF resumes trading with a limit-up, premium breaks 40% again; Guo Investment Capital discusses the impact of the compensation plan for the first time

21st Century Business Herald Special Correspondent Pang Huawei

Encouraged by the sharp rise in international silver prices during the Spring Festival holiday, Guotou Silver LOF (161226), which was caught in a “valuation adjustment” controversy, experienced a strong rebound on the first trading day after the holiday.

On February 24, after resuming trading, the fund opened high and continued to rise, ultimately hitting the daily limit and closing at the limit price, showcasing a robust “recovery rally.”

By the close, Guotou Silver LOF’s premium rate rose again to 40.37%, with market enthusiasm remaining high.

Regarding the highly watched investor compensation plan, the parent company Guotou Investment announced for the first time that the expected impact of this incident on net profit attributable to the parent in 2026 is less than 5% of the audited net profit attributable to the parent in 2024. Industry insiders estimate this figure to be less than 135 million yuan. Based on the equity ratio, the maximum compensation amount that Guotou Ruixin Fund needs to bear is no more than 431 million yuan.

Foreign market surge ignites the rally

The strong performance of Guotou Silver LOF was primarily driven by the impressive performance of the international precious metals market during the Spring Festival holiday.

During the recent Lunar New Year holiday (February 15 to February 23), Wind data shows that as of the close on February 23 local time, London silver closed at $88.144 per ounce, up 13.97% during the holiday, demonstrating a strong “initial decline then rise” trend.

Analysts point out that the factors driving this silver price increase are complex. On the macro level, recent U.S. economic data show signs of stagflation—Q4 GDP growth significantly below expectations, while core PCE inflation unexpectedly rose, causing real interest rates to decline and supporting non-yielding precious metals assets. Additionally, geopolitical risks have intensified, especially tensions between the U.S. and Iran, greatly boosting market risk aversion and further pushing up gold and silver prices.

In response to the impressive foreign market performance, domestic silver investors actively bought on the first trading day after the holiday. On February 24, Guotou Silver LOF quickly surged after resuming trading in the morning, reaching the daily limit at one point, and ultimately closing at the limit, reflecting strong market enthusiasm.

By the close, the premium rate of Silver LOF rose again to 40.37%, from 27.61% the previous trading day.

An industry insider told 21st Century Business Herald that the daily limit increase of Silver LOF was not an isolated event but a reflection of the contradiction between scarce assets and incremental funds. “There are no direct tools for overseas silver investment, so as long as Silver LOF is trading, this game will continue. The same logic applies to the S&P Oil & Gas ETF, which also nearly hit the daily limit today due to the exhaustion of QDII quotas. This is a typical market feature today.”

In response, Guoshang Fund researcher Guan Xiaomin commented, “Currently, the secondary market price of funds is far above the net asset value, and its price trend is mainly driven by market sentiment and liquidity battles.”

It is worth noting that on the night before trading resumed, Guotou Ruixin Fund announced a suspension and resumption of trading, citing significant premium deviations in secondary market trading prices. To protect investors’ interests, the fund was temporarily suspended from market opening on February 24 until 10:30 a.m. that day. The fund had previously issued over 30 temporary suspension notices, with premiums once exceeding 100%, reaching 109.92% on February 2.

In response to the surge in market buying after trading resumed, regulators and the fund company closely monitored the high premium risks.

After the market close on February 24, Guotou Ruixin Fund again announced that Silver LOF would be suspended, stating, “To protect investors’ interests, this fund will be suspended from market opening on February 25, 2026, until 10:30 a.m. on the same day. Trading will resume at 10:30 a.m. on February 25, 2026.”

Notably, over the past three months since December 2024, Guotou Ruixin Fund has issued 50 risk warning notices regarding premium deviations in Silver LOF secondary market trading prices, including 33 “suspension and resumption” notices.

“Investors should be cautious with high-premium products. The liquidity of silver markets is not as good as gold markets, and high volatility risks exist. Investors should avoid chasing highs. Any speculative activity is a game, and rationality is essential. Stay away from high-premium traps,” Guan Xiaomin emphasized.

Parent company discusses compensation plan impact

While the secondary market excitement continues, the “valuation adjustment” controversy surrounding the fund is still being resolved.

The controversy originated from an epic plunge in the international silver market. During two trading days from January 30 to February 2, COMEX silver futures fell about 31%, while domestic Shanghai Futures Exchange silver futures were limited by ±17% daily price limits, constraining price fluctuations.

On the evening of February 2, Guotou Ruixin announced an adjustment based on the valuation of silver futures in major international markets. As a result, the net asset value per unit of Guotou Silver LOF plummeted from 3.2838 yuan to 2.2494 yuan on that day, a 31.5% drop, setting a record for the largest single-day net value decline in a public fund product. Since the fund company issued the valuation adjustment after trading hours, investors who submitted redemption requests during the day faced an expected loss of about 17%, but the actual loss was 31.5%. This valuation adjustment sparked widespread investor controversy.

On February 15, Guotou Ruixin Fund Management Co., Ltd. issued an announcement on the related plan, proposing a layered compensation scheme for individual investors who redeemed on February 2, 2026.

According to the plan, for individual investors with an impact amount of less than 1,000 yuan (accounting for over 90% of redemptions that day), full compensation will be provided based on the actual impact. For impact amounts exceeding 1,000 yuan (including), compensation will be proportional on the excess over 1,000 yuan. Eligible investors can handle the process online via a designated Alipay mini-program starting February 26.

Regarding the source of compensation funds, a Guotou Ruixin Fund official told 21st Century Business Herald that the funds come from the company’s assets.

This rare move, often called “crossing the exemption zone” in the industry, was finally confirmed on February 24 at the parent company level. Guotou Ruixin Fund’s parent company, Guo Investment Holdings Co., Ltd. (600061), issued an announcement explaining the potential impact of this compensation plan on its performance.

The company stated that, based on preliminary estimates, the plan is expected to have a certain negative impact on the company’s net profit attributable to the parent in 2026, with the impact amount being less than 5% of the audited net profit attributable to the parent in 2024. Guo Investment Holdings emphasized that this matter will not have a substantial impact on the company’s overall business development and will continue to supervise Guotou Ruixin Fund to operate within compliance and improve risk management.

Industry experts pointed out that according to Guo Investment Holdings’ 2024 annual report, its net profit attributable to the parent was 2.694 billion yuan. Based on the “less than 5%” maximum estimate, the impact of this compensation event on the parent company’s net profit could be up to approximately 134.7 million yuan.

Since Guo Investment Holdings indirectly owns 61.29% of Guotou Taikang Trust Co., Ltd., which holds 51% of Guotou Ruixin Fund, the company’s stake in the fund is about 31.26%. Using a simplified equity calculation, the maximum total compensation Guotou Ruixin Fund might bear is no more than 431 million yuan, while its 2024 net profit was 376 million yuan.

“This settlement amount is expected to exert significant pressure on the company’s profit for the year, possibly approaching Guotou Ruixin’s net profit (about 376 million yuan). However, such expenses are usually not amortized in a single year; otherwise, they would directly impact annual bonuses and talent incentives. Based on industry precedents, such compensation is often spread over three to five years to smooth short-term impacts on operating profits. Compared to fluctuations in net profit, the risk of talent loss caused by this is a fundamental test of the company’s long-term competitiveness,” a public fund industry analyst further explained. “From the current plan, it appears to be a cautious result after considering legal, commercial, and reputational factors, balancing various interests. It is unlikely to significantly impact the fund company’s capital adequacy ratio or subsequent stable operations.”

As the compensation plan is set to officially commence on February 26, coupled with the rebound in silver prices, market attention is focused on whether Guotou Silver LOF can recover from its previous “roller coaster” ride.