A significant shift in the delisting mechanism for exchange-traded open-ended index funds (LOFs) is on the horizon. On August 7, the Shanghai and Shenzhen stock exchanges released a public consultation on the LOF delisting rules, clearly defining three categories of products that must be terminated from listing.

According to Wind data as of August 7, the total number of listed LOFs in the market stands at 402 (calculated by different share classes), with an aggregate on-exchange size of approximately 54.97 billion yuan. Among these, the new rules specifically identify about 34 LOFs involving QDII and commodity futures as mandatory delisting candidates, representing an on-exchange size of about 24.638 billion yuan.

Within the mandatory delisting list, there are currently 33 QDII LOFs, involving 18 fund companies including E Fund Management, Fortune SG Fund Management, Harvest Fund Management, China Southern Asset Management, China Universal Asset Management, and Dacheng Fund Management. Harvest Fund Management has three products facing delisting, with an on-exchange size of 1.613 billion yuan and a total fund size of 1.718 billion yuan.

The Harvest Crude Oil LOF (160723), co-managed by Jiang Yiqian and Zhang Qin, has an on-exchange size of 1.355 billion yuan. Influenced by international geopolitical tensions, crude oil prices surged, and as of August 12, this fund achieved a year-to-date return of 54.11%, with a net inflow of 579 million yuan. Due to an excessively high premium, the fund has issued 14 risk warning announcements since July and has been suspended from trading four times.

In stark contrast, the Harvest Gold LOF (160719), managed by Zhang Zhongyu, has posted a year-to-date return of -3.85%. While the crude oil LOF surged, the gold LOF remained sluggish. Another fund managed by Zhang Zhongyu, the H-shares LOF (160717), also performed poorly, with a year-to-date return of -8.23% and a cumulative return since inception of -27.4%. Both funds recorded negative returns, with the on-exchange size of the latter falling below 30 million yuan.

It is important to emphasize that the notice provides a sufficient transition period for commodity futures LOFs and QDII LOFs, stipulating that the latest termination date for listing is December 31, 2027. During the transition period, risk warnings for related products will be further strengthened. After the rules take effect and before the termination of listing, on-exchange abbreviations for commodity futures LOFs and QDII LOFs will be prefixed with an asterisk (*). Fund managers are also required to disclose the risk of delisting and related arrangements at key milestones, reminding investors to choose between selling, redeeming, or transferring on-exchange shares to off-exchange markets via cross-system custody. The relevant funds must submit delisting-related documents to the exchange by November 12, 2027, at the latest.