Several funds managed by China-Canada Fund (中加基金) have significant holdings in stocks that are under regulatory investigation or facing potential delisting, highlighting potential lags in its quantitative models and significant gaps in its internal risk control mechanisms.

The China-Canada Specialized and Innovative Quantitative Stock Selection Mixed Fund (中加专精特新量化选股混合) not only failed to reduce its position in *ST Qingyue after the company was placed under investigation by the China Securities Regulatory Commission (CSRC) for suspected financial fraud but actually increased its holdings. Since receiving the "Notice of Case Filing" in October 2025, *ST Qingyue's stock price has plummeted nearly 85%. Despite this, the fund increased its holdings from 1,073,400 shares as disclosed in its 2025 annual report to 2,196,000 shares in Q1 2026, becoming the company's seventh-largest circulating shareholder.

In stark contrast, other fund managers, including China Minsheng Banking - Yinhua Fund Management (民生加银基金) and Penghua Fund Management (鹏华基金), swiftly exited the list of top ten circulating shareholders after the investigation was announced. Concurrently, the net asset value (NAV) performance of the China-Canada Specialized and Innovative Quantitative Stock Selection Mixed Fund has been mediocre, with a year-to-date increase of 11.72%, slightly below the peer average of 12.97%. This suggests its quantitative model may have serious lags in risk identification. Should *ST Qingyue ultimately be forcibly delisted, the fund's NAV could face a sharp decline, potentially causing significant losses for investors.

Another fund product, the China-Canada Advantageous Enterprises Mixed Fund (中加优势企业混合), presents even more pronounced issues with its holdings. Its top holding, ST Zhenrin (ST臻镭), accounting for 9.44% of the portfolio, has already been penalized by the CSRC for information disclosure violations. Another significant holding, Juli Suoju (巨力索具), representing 3.70% of the fund's assets, was placed under investigation in mid-May for suspected misleading information disclosure.

Notably, this fund increased its position in ST Zhenrin by 103,400 shares in Q1 2026 and initiated a new position in Juli Suoju during the same period. This buying occurred while ST Zhenrin was already under intense regulatory scrutiny. Although the fund's performance has ranked highly over the past three years, its strategy of heavily investing in "problem stocks" deviates from industry norms and the internal risk control requirements of most public funds. This behavior suggests potential major flaws in China-Canada Fund's internal risk controls and information disclosure processes. As a mid-sized public fund manager with assets under management exceeding 160 billion yuan, the robustness of its risk control system warrants market vigilance.

01 — Peers Exit, China-Canada Fund Doubles Down

Recently, several listed companies have faced regulatory investigations or potential delisting. Despite this environment, China-Canada Fund continues to hold shares in these companies, including *ST Qingyue, ST Zhenrin, and Juli Suoju.

On May 23, *ST Qingyue issued its "Third Risk Warning Announcement Regarding the Potential Forced Delisting of the Company's Stock Due to Major Illegal Activities." The announcement stated that the company is under CSRC investigation for suspected falsification of financial data in periodic reports. Based on a "Prior Notice of Administrative Penalty" received on May 8, the company faces the risk of being delisted for major violations.

Timeline analysis shows *ST Qingyue first received the CSRC's "Notice of Case Filing" on October 31, 2025, regarding suspected falsification of financial data. As of May 22, the stock closed at 1.41 yuan per share, down 6% for the day. This represents a cumulative decline of nearly 85% from its closing price of 8.94 yuan on October 31, 2025.

The stock price began its decline immediately after the investigation was announced. On November 3, 2025, it hit the daily limit-down of 20.02%. It fell another 10.91% to 6.37 yuan on November 4. The price fluctuated around 5 yuan until April 30, when it dropped 19.93% to 4.46 yuan. Following the issuance of the "Prior Notice of Administrative Penalty," the stock experienced five consecutive limit-down days from May 12 to May 18.

Data from Tian Tian Ji Jin Wang shows that the China-Canada Specialized and Innovative Quantitative Stock Selection Mixed Fund held 1,073,400 shares of *ST Qingyue at the end of 2025, valued at 6.376 million yuan, making it the fund's second-largest holding at 1.62% of NAV. By Q1 2026, the fund had increased its position to 2,196,000 shares, representing 0.92% of the holding company and making it the seventh-largest circulating shareholder.

While China-Canada Fund was aggressively adding to its position, other fund products took proactive steps after the investigation was announced. Q3 2025 reports showed funds like China Minsheng Banking - Yinhua Sustainable Growth Mixed A and Penghua Select Growth Mixed A among the top ten circulating shareholders. By the 2025 annual report, these funds had disappeared from the list. Nuon Duocelue Mixed A (诺安多策略混合A) entered as the sixth-largest shareholder in that report but had also exited by the Q1 2026 report, leaving only the China-Canada fund as a significant and growing holder.

The China-Canada Specialized and Innovative Quantitative Stock Selection Mixed Fund is managed by Lin Muchen. Its latest fund size is 217 million yuan. Its year-to-date NAV increase of 11.72% is slightly below the peer average of 12.97%, ranking 2316 out of 5052. Its one-year increase of 43.49% also trails the peer average of 44.14%, ranking 2011 out of 4532, indicating mediocre performance.

02 — Buying Despite Known Investigations?

The portfolio issues are more pronounced for another China-Canada Fund product, the China-Canada Advantageous Enterprises Mixed Fund, which holds two stocks that are either under investigation or have been penalized by regulators.

Data shows the fund's top ten holdings include ST Zhenrin, Sunway Communication (信维通信), FiberHome Telecommunication Technologies (烽火通信), Maxwell Technology (迈为股份), Super Jie (超捷股份), China Information Communication Technologies Group (信科移动), Western Metal Materials (西部材料), Weichai Power (潍柴动力), Aerospace Hi-Tech Holding Group (航天电子), and Juli Suoju.

The fund's Q1 2026 report shows it held 229,500 shares of ST Zhenrin and 927,100 shares of Juli Suoju, with fair values of 34.0203 million yuan and 13.3502 million yuan, representing 9.44% and 3.70% of its NAV, respectively. Its 2025 annual report showed it held 126,100 shares of ST Zhenrin, valued at 15.3925 million yuan, or 9.42% of NAV. This indicates the fund added 103,400 shares of ST Zhenrin and initiated a new position in Juli Suoju in Q1 2026.

It is important to note that the top holding, ST Zhenrin, received a "Decision on Administrative Penalty" on May 9. The company had initially received a "Notice of Case Filing" from the CSRC on December 26, 2025, for suspected information disclosure violations. It received a "Prior Notice of Administrative Penalty" from the Zhejiang Regulatory Bureau on April 17, 2026, followed by the final penalty decision on May 8, resulting in total fines of 5.2 million yuan for the company and related individuals.

ST Zhenrin's stock price closed at 133.50 yuan on December 25, 2025. It later peaked near 228 yuan before trending downward, closing at 129.20 yuan on May 22.

The other significant holding, Juli Suoju, announced on May 16 that it had received a "Notice of Case Filing" from the CSRC on May 15 regarding suspected misleading information disclosure, with the investigation formally initiated on May 13. Additionally, the company's Q1 2026 report showed a 38% year-on-year decline in net profit attributable to the parent company.

Juli Suoju's stock price was 19.43 yuan on May 15. After the announcement, the stock experienced four consecutive limit-down days from May 18 to May 21, closing at 13.17 yuan on May 22.

The China-Canada Advantageous Enterprises Mixed Fund A is managed by He Yinghui, with a latest size of 77 million yuan. Year-to-date, its NAV has increased 10.76%, below the peer average of 12.97%, ranking 2401 out of 5052. However, its three-year increase of 58.13% significantly outperforms the peer average of 36.75%, ranking 970 out of 3539. Its two-year increase of 85.35% also far exceeds the peer average of 54.89%, ranking 1011 out of 4102, indicating strong long-term performance.

Although the NAV performance of the funds holding *ST Qingyue, ST Zhenrin, and Juli Suoju ranges from mediocre to strong, their investment choices reveal apparent flaws in the fund company's internal risk controls and information disclosure processes.

According to industry norms and the internal risk control requirements of most public funds, managers typically avoid actively investing in ST stocks or targets under investigation, though specific fund contracts may dictate otherwise.

However, the China-Canada Specialized and Innovative Quantitative Stock Selection Mixed Fund's decision to increase its position in *ST Qingyue after the investigation was announced, even if permitted by its contract, exposes potential lags in its quantitative model's risk identification and insufficient response from internal controls to abnormal signals. Furthermore, if *ST Qingyue is forcibly delisted, the fund's NAV will face significant impact, potentially harming investor interests.

As of May 22, China-Canada Fund's total assets under management exceed 160 billion yuan, reaching 161.140 billion yuan. Bond funds constitute the majority, with assets nearing 120 billion yuan by the end of Q1. The fund's shareholders include Bank of Beijing (44%), The Bank of Nova Scotia (28%), Beijing Ganrong Investment (Group) Co., Ltd. (12%), Zhongdi Seed Industry (Group) Co., Ltd. (6%), China General Research Institute for Nonferrous Metals (5%), and Shaoxing Yuehua Development and Operation Co., Ltd. (5%).