"Reserve advisory fees, but the fund was still sold anyway" - Why can Yingmi Fund forcibly redeem customer positions

Yenmi Fund’s Qieman platform was exposed for “selling investors’ funds without authorization.”

Recently, an investor posted on social media claiming that Yenmi Fund’s Qieman platform “sold investor funds without permission.” The message content showed that their “Changying Plan” was mistakenly redeemed due to system issues, resulting in the partial redemption of constituent funds to deduct advisory service fees.

Several users commented with similar experiences, with some investors stating, “Their funds were sold while still in a loss.” Another investor told The Paper that, “I knew they would deduct the advisory fee, so I left some money in Yenmi Bao, but now they say they only charge from the dedicated Yenmi Bao, and still redeemed my funds.”

System Configuration Error

In response, Yenmi Fund stated that, according to the advisory service agreement, fees can be collected through fund transfers, designated fee accounts, or fund share transfers approved by regulatory authorities. Industry practice generally involves deducting advisory fees from client accounts based on service agreements, using different methods.

Common methods include:

1. Transferring from the client’s designated money market fund account (such as various “Bao” products);
2. Deducting directly from the client’s investment portfolio (the situation reported by the investor);
3. If the above are not feasible, deducting at the time of fund redemption.

Yenmi Fund further explained that initially, the company prioritized these methods in order: Method One, then Method Three, and avoided Method Two due to its impact on investment experience, which required redeeming non-money funds from the portfolio during fee deduction.

“However, in March this year, Qieman upgraded its fee system to help clients reduce advisory costs. During the upgrade, due to configuration errors, the previously eliminated Method Two—deducting from non-money funds—was mistakenly re-enabled,” Yenmi Fund said.

Yenmi Fund emphasized that regarding fund security and fee collection, these are strictly regulated, just like fund management fees. Besides statutory charges, no organization or individual has the right to deduct funds from clients for any purpose.

Changying Plan Manager Promised “No Automatic Sale of Holdings Again”

So, is it compliant to sell funds without informing investors? How should the losses caused by redemption be assessed? Can costs incurred from repurchasing fund shares be reimbursed? These questions are now the focus of investor concern.

Yenmi Fund stated that this incident was not due to illegal fee collection or overcharging, nor did it infringe on investors’ interests. The method of deducting fees “from the client’s investment portfolio” is a common industry practice, clearly outlined in the advisory service agreement.

“We have previously designed rules to minimize impact on clients’ portfolios, such as prioritizing deduction from bond funds, mixed funds, or equity funds when no money market funds are available. Even then, it wasn’t ideal, so we started testing a new approach: if no money funds are in the portfolio, we won’t deduct from the portfolio at all. This new design is better, and once the system is fully improved, we will gradually expand it to more advisory strategies,” Yenmi Fund said.

According to screenshots provided by investors, in December 2025, regarding “selling funds to pay advisory fees due to insufficient balance in Yenmi Bao,” the manager of the Changying Index Investment Plan, “ETF Saves the World,” published an article. It stated, “All friends who automatically sold holdings of the Changying Plan this month to pay advisory fees will receive a full refund of the advisory fee paid for this event,” and promised, “Such incidents will not happen again. Even in the most extreme cases, holdings will not be sold automatically.”

However, practical issues persisted. Some investors told The Paper, “I knew they would deduct the advisory fee, so I left some money in Yenmi Bao, but now they say they only charge from the dedicated Yenmi Bao, and they still redeemed my funds.”

Additionally, from some investors’ publicly shared redemption records on social media, most of the sold funds were stock and mixed funds within the advisory portfolios, such as GF Consumer Theme Mixed Fund, E Fund CSI Overseas Connect RMB, Bank of Communications Schroder CSI Overseas China Internet Index, Bosera CSI Dividend Low Volatility 100 ETF Link, with redeemed shares ranging from 0.74 to 15.16 units.

At the same time, the fee details page for redeemed funds shows that advisory service fees will be prioritized to be charged from Yenmi Bao (or dedicated Yenmi Bao). If the balance is insufficient at the time of deduction, the system will automatically reattempt deduction once additional funds are deposited into the client’s Yenmi Bao account (no manual operation needed). Since fund sale transactions are only disclosed after net asset value (NAV) is available, the actual charged amount may differ from the planned fee, and any remaining unpaid advisory fees will be collected in the next cycle.

Industry experts pointed out that this incident exposes operational risks in how fund advisory institutions handle fee system upgrades and strategy customization. The setting of fee deduction priorities, system parameter changes, and customer expectations may still cause concerns about account security and transparency.

Differences in Fee Deduction Methods for Various Fund Advisory Types

In November 2025, Qieman officially launched its first batch of advisory fund portfolios (including Changying Plan, Chunhua Qiushi, Weekly Partners, Marathon Fixed Income Enhancement, Southern Dream, and Money Market Three Best), switching from a fee deduction model to a regular monthly fee collection.

This adjustment was closely related to the reform of public fund fee rates. After the 2026 reform, the industry fully abandoned the previous “transaction fee offset advisory fee” practice, entering a new stage of independent fee collection. Regulations clarified that advisory fees must be calculated and collected separately, prohibiting double charging. Advisory institutions are not allowed to receive trailing commissions from fund companies after collecting advisory fees; if technically unavoidable, they must fully refund investors.

In practice, fund advisory products are mainly divided into management and suggestion types. Management-type fund advisory involves investors authorizing the advisor to directly operate the account, including fund selection, timing, and position adjustments, without manual confirmation each time. Suggestion-type fund advisory involves investment managers providing signals and reasoning, helping investors track market changes and reducing the burden of market analysis. Investors retain autonomy to follow or not, satisfying their independence needs.

The fee deduction methods may differ between these types. Management-type funds often set up a small amount of money market funds as a “deduction account” to facilitate automatic fee deduction without interfering with the main strategy. Suggestion-type funds, since the institution cannot directly access investor funds, do not require mandatory money fund allocation for fee collection.

A public fund professional told The Paper that management-type advisory fees are generally charged annually, accrued daily, and collected quarterly or upon redemption. Since the portfolio always includes a fee-eligible money fund, fees are deducted via the money fund, avoiding redemption of non-money fund shares. Another example is Alipay’s “Help You Invest,” where fees are deducted by first transferring funds into Yu’ebao upon sale, then deducting fees from Yu’ebao.

Besides Qieman’s “Changying Plan,” Tianhong Fund’s “Config Wizard Pro” is also a typical suggestion-type fund advisory product. Its fee strategy involves daily accrual, with monthly or lump-sum collection upon termination or redemption, primarily through transfer from money funds. If no funds are available, fees are settled at the time of sale or termination. Investors may also have a “pending investment” balance, which is client assets not yet allocated to specific products, used later for fee payments or adding positions.

Industry insiders said that management-type advisory funds, with dedicated deduction accounts, usually do not trigger redemption of non-money funds. Suggestion-type funds lacking such arrangements may, if the system follows the original order, trigger passive redemption of non-money funds, affecting investment continuity. While Qieman’s approach reduces actual client loss by avoiding fee collection, it also highlights the need for further transparency and prior disclosure in the fee process.