In recent weeks, the performance of various mutual funds has reflected the turbulent nature of market conditions, with many experiencing significant spikes in net asset valuesThis uptick—attributed largely to a wave of risk-off sentiment from investors—has encouraged some participants to redeem their holdings, seeking the safety of realized profits rather than maintaining exposure to potential volatility.

The aftermath of the recent bullish trends is the rising number of funds undergoing liquidationEven those that achieved new peaks in net asset values are finding themselves unable to retain investor confidence, leading to a quiet exit from the marketFor example, on October 21, Changjin Hexin Fund announced that its Changjin Hexin Tianfu Balanced Pension Target Hybrid Fund would enter liquidation due to its assets falling below the required threshold

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This highlights a concerning trend, where the initial success of a fund does not guarantee sustained investor interest or viability.

Moreover, numerous funds find themselves teetering on the precipice of liquidation, constantly facing warnings and the possibility of closureSome funds deliver strong performance just before facing termination, illustrating the unpredictability of investment markets and the delicate balance of fund management.

Examples abound, such as the Changjin Hexin Balanced Pension Target Fund launched in October 2021. It was designed as a long-term investment, yet by October 2024, it faced the inevitability of liquidation when its net asset value slipped below 200 million yuanWith an annual yield of just 0.1% this year and negative returns in previous years, the fund's downfall starkly illustrates the challenges faced by investment vehicles.

From September 13 to October 8, the fund did witness a surge—a return of nearly 9.68%. However, this temporary recovery wasn’t enough to alter its fate

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By mid-2024, its net assets swelled to a significantly higher 54.64 million yuan, but the prior underperformance precipitated an early exit from the market.

The emerging challenge for many of these funds is the tightening of thresholds for launches, which have dropped from 200 million yuan to just 10 million yuanThis makes it easier to start new funds but simultaneously raises the stakes for sustaining growthIf these funds fail to grow substantially within a three-year period, they automatically face liquidation risks.

Similarly, on the same day, Guotai Fund announced that their Guotai CSI 500 ETF Fund, launched three years earlier, had its net asset value fall under the crucial 200 million yuan mark, triggering its liquidation clauseFollowing an impressive bounce back of 22.59% in net value, this was still insufficient to retain faith from investors, many of whom withdrew their funds to gain from recent gains.

Even as certain funds hit new highs, they find themselves exiting the market in a disappointing fashion

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For instance, the Zhongjin Ruihe Flexible Allocation Fund increased its net value by over 20% but was unable to escape liquidationJust two days post a peak on October 8, the fund realized it had maintained below 50 million yuan for 60 consecutive days—one of the critical liquidation triggers.

The stark reality is that, across the board, as of October 21, 391 funds (measured by fund code) faced liquidation this year alone, with many standing at the edge of closureContinuous warnings are flooding in for funds such as the Huatai-PineBridge CSI Hong Kong-Shenzhen Consumption Leading ETF, indicating that should its size remain below 200 million yuan by October 26, liquidation would be unavoidable.

Reports on similar notifications put forth by various funds illustrate a broader issue within the fund market: the volatility is palpable, and for many funds, consistent performance is nothing short of a necessity if they are to avoid the fate of their predecessors.

Rising numbers of funds face mounting pressures, with numerous funds like Debon Fund's Xinxing Value Fund and Quantitative Hedge Fund confronting liquidation risks even while recently achieving over 50% growth in net value

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Questions loom—will their recent recoveries be enough to help them navigate away from certain termination?

Indeed, the market's momentum has sparked renewed hope for some funds, pulling them away from precarious situationsThe Penghua Smart Investment Fund, having issued a warning about potential liquidation, felt a reversal in fortune as net values soared over 18% within a month, allowing it to evade closure threats previously set for early October.

Even funds like Dazhong Fengxiang's Announcement suggest that they need to maintain a net value above the set limits to avoid a forced liquidation— in their case, below 50 million yuan within a stipulated time frameTheir recent increases in value of 6.59% over the month provide some reprieve, maintaining operational status for now.

The overall scenario paints a picture of an increasingly stringent environment for mutual funds where investor confidence is tenuous, and performance is crucial