Oil and Gas Theme ETFs Attract Over 20 Billion Yuan in Funds This Month, Premium Risk Alerts Frequently Appear

Author: Peng Yansong

Recently, domestic oil and gas themed funds have become the focus of market attention, with a large influx of funds through related products. As net asset values and trading prices surged significantly, secondary market premiums for oil and gas funds reached high levels. In response, fund companies issued risk warnings, imposed purchase restrictions, and took a series of measures to quickly cool down the overheated market sentiment.

The current rally in oil and gas started with the continuous rise of international oil prices. On March 9, ICE Brent crude oil briefly hit a high of $119.50 per barrel, with an increase of over 50% year-to-date. The domestic capital market responded swiftly, with oil and gas themed ETFs becoming the focus of capital chasing.

Wind data shows that as of the close on March 9, the gains of E Fund’s Crude Oil (QDII—LOF—FOF), Southern Oil (QDII—FOF—LOF), and Harvest Oil and Gas (QDII—LOF) all reached 10%. From March 1 to March 6, net inflows into Guotai CSI Oil & Gas Industry ETF, Penghua CSI Oil & Gas ETF, and Huitianfu CSI Oil & Gas Resources ETF amounted to 6.598 billion yuan, 4.847 billion yuan, and 4.014 billion yuan respectively, with the three products collectively attracting over 15 billion yuan. Looking at the fund flows of more than 40 oil and gas themed ETFs across the market, since March, net inflows have totaled 21.828 billion yuan, accounting for 70.64% of the net inflow for the entire year.

In the short term, a large amount of capital has flooded into the on-market trading, pushing up the secondary market prices of related products and causing them to deviate significantly from the fund’s net asset value. In response, fund companies acted quickly. Since March, over 50 premium risk warning notices have been issued for oil and gas themed funds.

For example, on March 9, GF Fund announced that the trading price of its GF S&P Oil & Gas Exploration and Production Select Industry ETF (QDII) in the secondary market was significantly higher than its fund’s reference net asset value (IOPV), showing a substantial premium.

Several fund companies have also implemented purchase restrictions or even suspended subscriptions for their oil and gas funds. For instance, on March 5, Huabao Fund suspended subscriptions and regular fixed-investment plans for Huabao Oil & Gas LOF to “protect the interests of fund shareholders and ensure the smooth operation of the fund.”

Regarding how fund managers should handle the influx of funds and manage risk, Yang Delong, Chief Economist at Qianhai Kaiyuan Fund, stated that in terms of diversified holdings, active fund managers can diversify upstream, midstream, and downstream targets along the oil and gas industry chain, strictly control the position limits for single targets, and for commodity funds, diversify crude oil contract expiration dates to hedge rollover risks. For stop-loss and take-profit strategies, set strict dynamic profit and loss thresholds, realize gains on short-term overbought targets promptly, and decisively exit when stop-loss lines are triggered. In duration and position management, commodity funds mainly use short-duration contracts to weaken price volatility, while equity funds can adjust positions flexibly and reserve cash to handle large redemptions, avoiding passive adjustments that could amplify volatility.

Morningstar (China) Fund Research Center analyst noted that for individual investors, it is necessary to consider personal risk tolerance and reasonably control positions. After market sentiment eases and premiums return to a reasonable range, investors can consider re-entering the market, avoiding irrational operations.

(Edited by: Xu Nannan)

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