A fund manager's decision to increase holdings in a stock facing delisting risks has drawn significant market attention, with other funds under the same manager also heavily invested in companies under regulatory investigation. This situation highlights the challenges smaller fund houses face in avoiding such pitfalls.

On May 29th, the share price of *ST Qingyue fell below 1 yuan, triggering a trading-based delisting risk warning.

Despite being mired in a delisting crisis since last year, *ST Qingyue saw a fund increase its position during the first quarter. The latest quarterly report reveals that the Zhongjia Specialized and Sophisticated Quant Selection Mixed Fund became a new top-ten circulating shareholder, ranking seventh. This fund had already held a significant position in the stock at the end of the previous quarter.

On May 31st, *ST Qingyue issued another announcement warning of potential compulsory delisting. Unlike other funds that held the stock last year but have since exited, Zhongjia Fund chose to remain. Furthermore, two other stocks heavily held by the company's other funds are also under regulatory investigation.

As a typical bank-affiliated fund house, Zhongjia Fund relies primarily on fixed-income products to support its asset base, with equity funds constituting a relatively small portion. Additionally, the company has experienced frequent changes in its senior management in recent years, with both the chairman and general manager replaced last year. The general manager position is currently held on an interim basis by the Chief Information Officer, Chen Xin.

**Increasing Positions Against the Trend**

Suzhou Qingyue Optoelectronics Technology Co., Ltd., established in 2010, is facing delisting risks. The company, which went public on the STAR Market in December 2022, focuses on three main businesses: PMOLED, electronic paper, and silicon-based OLED.

Once attracting investment from numerous medium and large-sized fund houses due to its high-tech profile, the company's financial misrepresentation issues came to light in late 2025. On October 31st, 2025, the company received a formal investigation notice from the China Securities Regulatory Commission (CSRC) regarding suspected false records in periodic reports. By April 30th, 2026, its stock was placed under special treatment (ST), and on May 12th, it was further marked with a delisting risk warning (*ST).

As of May 29th, the stock price had fallen below 1 yuan. If it remains below this threshold for 20 consecutive trading days, it will face a trading-based compulsory delisting.

While many funds chose to exit following the scandal, the Zhongjia Specialized and Sophisticated Quant Selection Mixed Fund increased its holdings. By the end of Q1 2026, the fund held a combined 2.1957 million shares, having added to its position over two consecutive quarters after the investigation was announced. No other public fund appeared on the list of institutional shareholders for *ST Qingyue in Q1, with previous funds from groups like Penghua and Minsheng Jiayin having exited.

If *ST Qingyue is ultimately delisted, the net asset value of the holding fund will inevitably be impacted. Since the investigation began on October 31st, 2025, the stock has fallen nearly 90%.

An industry analyst noted that a fund's stock selection model failing to exclude factors like ST status, regulatory investigations, or delisting risks represents a design flaw at the architectural level. Furthermore, a risk control system that does not promptly trigger stop-loss and liquidation procedures indicates either a design flaw or a failure in the execution of internal controls.

**Omission in Disclosure**

The Zhongjia Specialized and Sophisticated Quant Selection fund is a quantitative product with a relatively dispersed portfolio. Although *ST Qingyue was not among its top ten holdings by weight at the end of Q1, the fund increased its position by over one million shares quarter-over-quarter, entering the company's top ten circulating shareholders. At the end of Q4 2025, the stock constituted 1.62% of the fund's portfolio.

The fund, managed by Lin Muchen, had assets under management of 947 million yuan at the end of Q1. Its strategy leans towards small-cap stocks, with the manager noting in the quarterly report that small-caps offer greater elasticity and, combined with the alpha generated by quantitative strategies in this segment, could lead to superior overall performance. *ST Qingyue's latest market capitalization is less than 500 million yuan.

According to securities investment fund information disclosure regulations, if an issuer of a security among a fund's top ten holdings is under regulatory investigation during the reporting period, the fund must explain its investment decision-making process regarding that stock. However, neither the Q4 2025 report nor the 2025 annual report for the Zhongjia Specialized and Sophisticated Quant Selection fund contained any disclosure regarding the investigation into Qingyue Technology. Both reports stated: "During the reporting period, none of the issuers of the top ten securities held by this fund were under investigation by regulatory authorities or had been publicly censured or penalized within one year prior to the preparation of this report."

**A Series of High-Risk Holdings**

Other funds under Zhongjia Fund also purchased risky stocks in the first quarter.

The Zhongjia Advantage Enterprise Mixed Fund's largest holding at the end of Q1 was ST Zhenlei, with a 9.44% portfolio weight. This stock was placed under investigation by the CSRC on December 26th, 2025, for suspected information disclosure violations. By April 17th, 2026, regulatory authorities had confirmed the violations, and the stock was placed under special treatment (ST) starting April 21st.

Another significant holding of the same fund, Julig Suoju, with a 3.70% weight, was placed under investigation by the CSRC on May 13th for suspected misleading statements in information disclosure.

During Q1 2026, the Zhongjia Advantage Enterprise Mixed Fund increased its position in ST Zhenlei by 103,400 shares and newly added Julig Suoju to its top ten holdings. This move is puzzling given that ST Zhenlei was already under investigation, and Julig Suoju had been publicly criticized by the Shenzhen Stock Exchange on March 18th for incomplete information releases and failure to promptly verify and clarify market rumors.

Regarding funds holding ST stocks, the analyst commented that standard public fund risk control requirements typically mandate that once a holding is placed under special treatment (ST), it should be immediately removed from the investment universe and liquidated within a specified period. While quantitative funds or event-driven funds focused on restructuring plays may not entirely exclude ST stocks, they usually require careful case-by-case research and collective decision-making before inclusion. Continuing to increase positions in a stock confirmed to have financial misrepresentation in its prospectus and facing high delisting risk reflects systemic weaknesses in the fund company's internal governance.

The analyst further pointed out two notable issues highlighted by these cases: First, smaller quantitative funds face a natural dilemma—concentrating holdings in small-cap stocks with inherently low liquidity. Coupled with risk models that may lack the ability to identify regulatory signals, this can create a passive situation where risks are "unseen and inescapable." Second, the normalization of delistings presents a new challenge for quantitative models. Historically, with extremely low delisting rates in the A-share market, models did not need to focus on delisting risk factors. However, under the new regulatory framework, the pace of enforcement and delistings has accelerated significantly. Quantitative fund managers must now incorporate factors like regulatory signals and litigation risks into their models; otherwise, similar incidents will become increasingly frequent.

**Weakness in Equity Business**

Zhongjia Fund, established in March 2013, is a typical bank-affiliated fund manager. Its shareholder structure includes Bank of Beijing (44%), The Bank of Nova Scotia (28%), and several other corporate entities.

Wind data shows that by the end of Q1, Zhongjia Fund's public fund management scale reached 160.386 billion yuan. Although its scale has remained stable above 100 billion yuan in recent years, the company heavily relies on a "fixed-income over equity" model. At the end of Q1, the scale of its equity and mixed funds was only 9.61 billion yuan and 4.119 billion yuan, respectively, totaling less than 6 billion yuan for equity-oriented products. In contrast, bond and money market funds accounted for 135.221 billion yuan and 19.54 billion yuan, making up 96.5% of the company's total assets. Against the backdrop of regulatory efforts to promote equity fund development, this structural weakness is one of the bottlenecks constraining the company's growth.

Furthermore, Zhongjia Fund has seen frequent turnover in its senior management team in recent years. In July 2025, Chairman Xia Yuanyang, who had been in the role for less than two and a half years, stepped down and was succeeded by Yang Lin from Bank of Beijing. In December of the same year, General Manager Li Ying, who had served for only about a year and a half, resigned for personal reasons. The position is currently held on an interim basis by Chief Information Officer Chen Xin. Since 2023, the company has experienced multiple changes in its core leadership, including the chairman and general manager.

Inquiries regarding the rationale for purchasing these risky stocks and any planned remedial measures were sent to Zhongjia Fund via its official website contact, but no response had been received at the time of publication.