Top Gains of 97%, Premium of 50%! Quick Visual Overview of Recent Energy LOF/ETF Performance

In the context of recent energy price increases, on March 24, energy sector on-exchange funds surged again, with the premium rate rising further. Several LOFs announced temporary suspensions during midday trading.

The announcement from Harvest Crude Oil LOF states that, due to the secondary market trading price premium not decreasing on March 24, trading was temporarily suspended from the market open to close in accordance with relevant rules; similarly, E Fund Crude Oil LOF also suspended trading from market open to close on March 24 for similar reasons.

Data from Eastmoney Choice shows that many energy on-exchange funds had high premium rates. As of March 24, the secondary market prices of index funds such as Crude Oil LOF, Southern Crude Oil LOF, and Harvest Crude Oil LOF were significantly higher than their net asset values. The premium rate of E Fund Crude Oil LOF even exceeded 50%. The SPDR Oil & Gas ETF, Franklin Oil & Gas Fund LOF, and other oil-related funds also showed obvious premiums, all exceeding 28%.

In terms of market performance, as of March 24, the CSI 300 index declined 5.01% for the month. Harvest Crude Oil LOF surged over 97%, E Fund Crude Oil LOF increased over 84%, Southern Crude Oil LOF rose over 77%, and the SPDR Oil & Gas ETF and Harvest Oil & Gas ETF both gained over 30%. Several other energy ETFs also closed higher for the month. On-exchange energy funds have become a short-term safe haven for capital, significantly outperforming the benchmark index.

Industry insiders point out that, influenced by supply and demand, secondary market trading prices of index funds often deviate from their net asset values. When buying pressure exceeds selling pressure, prices may be higher than the real-time reference NAV, creating a premium. However, prices always fluctuate around value; short-term supply shortages can push prices higher, but they will eventually revert to intrinsic value. Currently, the market is driven by capital; once buying weakens or supply increases, premiums will narrow or even disappear. Those entering at high levels will bear losses, and the risk of premium correction is very high.

Fund companies have also frequently issued risk warnings recently. For example, on March 24, Harvest Crude Oil LOF issued a notice stating that the fund’s secondary market trading price was significantly higher than its net asset value, resulting in a large premium. Investors are hereby reminded to closely monitor the premium risk in secondary market trading prices and make cautious investment decisions. Blindly buying at high premiums far from the actual asset value could lead to significant losses when prices revert.

(Source: Eastmoney Research Center)