"Reserved Advisor Fees, But the Fund Was Still Sold" - How Can Yingmi Funds Forcibly Redeem Customer Holdings?

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 deduction of advisory service fees.

Several users commented with similar experiences, with one investor 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 account, 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 transfer of fund shares, all recognized by regulatory authorities. Industry practice generally involves deducting advisory fees from client accounts based on service agreements using different methods.

Common methods include: Mode 1—transferring from the client’s designated money market fund account (such as various “Bao” products); Mode 2—direct deduction from the client’s investment portfolio (as in this case); Mode 3—if the above are not feasible, fees are deducted when the client redeems funds.

Yenmi Fund further explained that initially, the company prioritized modes one through three in that order. However, because the “ChangYing Plan” advisory portfolio is somewhat special—lacking money market funds and because feedback indicated Mode 2 affected investment experience—they had to redeem non-money fund assets within the portfolio to deduct fees. As a result, the company adjusted the rules, prioritizing Mode 1 and Mode 3, and canceled Mode 2.

“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 canceled Mode 2—deduction from non-money funds—was mistakenly re-enabled,” Yenmi Fund said.

Yenmi Fund emphasized that regarding fund safety and fee collection, both are strictly regulated, similar to 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 deduction or overcharging, nor did it infringe on investors’ interests. The fee deduction method—“deducting 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. But even this isn’t ideal, so we started testing a new approach: if there are no money funds 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 “handling of fund sales due to insufficient Yenmi Bao balance for advisory fee payment,” 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 due to this incident,” and promised, “Such incidents will not happen again. Even in the most extreme cases, holdings will not be automatically sold again.”

However, practical issues persisted. An investor 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 account, and still redeemed my funds.”

Additionally, some investors publicly shared their redemption records on social media, showing that most of the sold funds were stock and mixed funds within the advisory portfolios, such as GF Consumer Theme Mixed, 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.

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 deduction time, the system will automatically reattempt deduction after funds are deposited into the account. Additionally, since net asset values are only disclosed after fund sales, the actual charged amount may differ from the planned fee, and any remaining unpaid advisory fees will be collected at the next billing.

Industry experts pointed out that this incident exposes operational risks in fund advisory institutions’ fee system updates and personalized strategy configurations. The setting of fee priority, system parameter changes, and discrepancies with customer expectations could still trigger concerns over 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 Plus, Money Market Three Best), switching from a model of fee deduction via transaction costs 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 practice of deducting advisory fees from transaction costs, entering a new phase of independent fee collection. Regulators clarified that advisory fees should be separately calculated and collected, prohibiting double charging. If technical issues prevent removal of trailing commissions from fund companies after fee collection, full refunds must be issued to investors.

Industry practice shows that fund advisory products mainly fall into two categories: management and recommendation. 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. Recommendation-type fund advisory involves investment managers providing signals and reasoning, helping investors track market changes and reducing their research burden. Investors can choose whether to follow these signals, satisfying their autonomy.

Different fund advisory types may have different fee deduction methods. 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. Recommendation-type funds, since the manager cannot directly access investor funds, do not require mandatory money market 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’e Bao when investors sell fund shares, then deducting fees from Yu’e Bao.

Industry insiders said that management-type advisory fees, due to dedicated deduction accounts, usually do not involve redeeming non-money fund shares. In contrast, recommendation-type advisors lacking such arrangements may trigger passive redemption of non-money funds if the system executes deductions in the original order, affecting investment continuity. While Yenmi Fund’s approach avoids direct fee collection from investors’ principal, the incident highlights room for improvement in fee transparency and prior notification of system changes.