One day wiped out seven and a half years of interest, money market funds rarely hit the limit down
On February 6th, money market funds with an annualized yield of less than 1.5% experienced a limit down, with China Life Money ETF and Huatai Zijin Tiantianjin ETF hitting the limit down right at the opening, resulting in losses equivalent to seven and a half years of interest income. Due to abnormal price fluctuations in previous trading, these two funds were temporarily suspended from trading on January 27th and were suspended again on February 5th. Other money market funds also saw declines of 3% to 8.8%, with premium risks largely resolved, but volatility risks still remain
The latest annualized return (seven days) of money market funds below 1.5% hit the limit down on February 6.
As soon as the market opened on February 6, two money market funds hit the limit down.
They are China Life Money ETF and Huatai Zijin Tiantianjin ETF, both of which opened at limit down.
Based on the current drop on that day, the two funds lost seven and a half years of interest income in one day.
Today Just Resumed Trading
Both funds resumed trading on February 6.
Previously, due to abnormal fluctuations in the trading price leading to high premiums, the two funds were temporarily suspended on January 27 and were again suspended for the whole day on February 5.
Previous Premium Rate Too High
Additionally, from the observation of the price comparison (premium rate) between the trading price and the fund's net value, China Life Money ETF and Huatai Tiantianjin ETF indeed showed a rare high premium.
Taking Huatai Tiantianjin as an example, after a significant rise on January 25 and 26, its premium rate once reached 17.8%.
Such a high premium almost included more than ten years of interest returns from a money market fund.
Some Other Money Market Funds Also Declined
Excluding the aforementioned China Life Money ETF and Huatai Tiantianjin ETF, as of around 10:40 AM on February 6, the declines of Rongtong Money ETF, Harvest Quick Line ETF, GF Money ETF, Guolian Riying Money ETF, Golden Eagle Enhanced Money ETF, Huatai Money ETF, and Money ETF were also between 3% and 8.8%.
The aforementioned money ETFs also experienced adjustments due to the previous fluctuations in the secondary market prices, which led to increased premium rates.
However, their adjustment magnitude was not as high as that of China Life and Huatai Zijin's money ETFs.
Premium Risk Basically Resolved
As some money ETFs declined and returned to trading prices around 100 yuan, most of the previous premium risks of money market funds have been released.
However, the current prices of Huatai Tiantianjin ETF and China Life Money ETF are still around 105.3 and 102.38 respectively For money market funds, this is equivalent to the yields of 1 to 2 years still being factored into the price. If nothing unexpected happens, there may still be potential for continued fluctuations.
Risk Warning and Disclaimer
The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk