QDII funds face a "purchase restriction wave," with cross-border investment products encountering dual constraints

[Source: Global Times]

[Global Times Finance] Recently, the public mutual fund market has seen a “crackdown on new purchases” for cross-border investment products, with the trend intensifying throughout late March. According to exchange announcements, multiple QDII funds, including the S&P 500 LOF, S&P Biotechnology LOF, and S&P Information Technology LOF, collectively announced that, starting March 19, they would suspend subscription and regular fixed-amount investment services, while redemption would continue as normal.

It is worth noting that although the total QDII investment quota most recently approved by the State Administration of Foreign Exchange has reached USD 170.869 billion, given the growing global allocation needs of investors within China, the situation of quota tightness has never been fundamentally alleviated. After the quota was expanded by USD 3.08 billion in June 2025, a new round of intensive purchase restrictions soon followed; today, the rate at which foreign-exchange quota is consumed under “sold out in a single day” has become the norm.

In addition, from Southern Oil LOF to Fullgoal S&P Oil & Gas ETF, from Huaan France CAC40 ETF to Cathay S&P 500 ETF, multiple products have issued consecutive risk warning announcements due to high premiums. In some cases, the premium rate of certain oil-themed LOFs has at one point exceeded 50%. Just on March 19 alone, more than 10 QDII funds, such as E-Fund Oil LOF, China-South Korea Semiconductor ETF, Invesco NASDAQ Technology ETF, and Huaan Nikkei 225 ETF, issued premium risk warning announcements on the same day.

Going further, cross-border investment products face dual constraints: first, the hard constraint of foreign-exchange quota; second, the soft constraint of overseas market positions. Taking the oil LOF as an example, it is not only limited by foreign-exchange quota; some products are also restricted by the upper limit on futures contract positions.

Faced with the surge in subscriptions and elevated premium rates, on March 25, Manulife Fund announced that its Manulife India Opportunity Equity Securities Investment Fund (QDII) will resume subscription, redemption, and regular fixed-amount investment services on March 27 due to India’s trading market holidays. On the same day, Yongying Fund announced that its Hang Seng Consumer Index Index-initiated Securities Investment Fund (QDII) and other funds would suspend services such as subscriptions and redemptions on non-Hong Kong Stock Connect trading days. This series of announcements reflects the operational difficulties of QDII funds under the dual pressures of quota constraints and volatility in overseas markets.

With QDII funds seeing concentrated purchase restrictions, in essence, when fund companies’ scale grows rapidly, they take standard measures to keep product operations stable and protect existing investors. Investors should view this rationally and avoid turning cross-border allocations into short-term thematic speculation; they should truly examine the long-term value of QDII products from the perspective of asset allocation. (Nanmu)