JD.com found itself entangled in an unexpected predicament following Silver LOF's sharp 31.5% decline on February 2, triggered by an adjustment in its valuation method. The situation escalated when JD Finance, having advanced 80% of redemption amounts to certain "express redemption" customers based on the net asset value from January 30, sent out "supplemental payment notices" after the fund's overnight plunge. This created a surreal scenario in China's fund industry for 2026: investors who had redeemed their holdings received alerts requesting additional funds shortly after the transaction.
On the evening of February 2, after Silver LOF revised its valuation approach, users who had requested express redemptions via JD Finance that day were notified: "The confirmed redemption amount is less than the real-time disbursement. Please supplement XXX yuan by ensuring sufficient balance in your Xiaojinku account or making a transfer." Then, around 2:00 PM on February 3, many investors who held Silver LOF through JD Finance received a text message stating that, to safeguard their capital and avoid future collection procedures, the express redemption ratio had been reduced from 80% of the previous day's NAV to 60%.
For traditional investors accustomed to purchasing funds through banks, brokerages, or direct platforms, JD Finance's actions appeared bewildering. However, a closer examination reveals that JD's unexpected role as a "loss absorber" highlights a broader issue within the mutual fund ecosystem: as internet platforms gain prominence in fund distribution, the balance between efficiency and risk management requires reevaluation.
The incident originated from JD Finance's "express redemption" feature, which allows investors to receive 80% of their redemption proceeds on the same day, bypassing the typical multi-day settlement process. This provides a "T+0" experience for switching between funds. Normally, mutual fund redemptions take T+1 for money market funds, T+3 for hybrid or equity funds, and T+6 or longer for more complex products like QDIIs or FOFs. Silver LOF, for instance, requires T+1 for share confirmation by the fund company, with most major platforms processing payouts in T+2. While similar quick redemption services exist, JD's approach of advancing funds based on the previous day's NAV is relatively uncommon.
JD Finance's express redemption skips the fund company's confirmation step, with the platform providing liquidity upfront. Under normal circumstances, this user-centric practice shoulders the funding burden on the platform while offering investors enhanced efficiency. JD's assumption was that a fund's daily decline would never exceed 20%, making an 80% advance safe. However, Silver LOF's 31.5% single-day drop served as a stark reminder: overconfidence and aggressive strategies carry significant risks in financial markets.
JD.com has its own "scale anxiety." After obtaining its fund distribution license in 2016 through Beijing Kenterui Wealth, it lagged behind specialized players like East Money's Tian Tian Fund and giants like Alibaba and Tencent with their massive user bases. By early 2021, JD's non-monetary fund assets under custody were merely CNY 20.9 billion, ranking 44th among 100 distributors. To expand its market share, JD introduced internet-style innovations, such as fund redemptions for Maotai promotions, though many were halted due to regulatory concerns over implicit guarantees.
In contrast, the T+0 express redemption service represented a technological efficiency push. While not involving regulatory gray areas, the practice carried latent risks from prolonged calm periods. These efforts yielded results: by the first half of 2025, JD's non-monetary fund custody scale reached CNY 141.9 billion, ranking 19th overall and 5th among independent third-party platforms. The Silver LOF incident, however, exposed the pitfalls of this strategy. The exact scale of JD's advances and potential recoveries remains unknown, but the platform's relatively modest market share may limit the fallout.
The episode underscores a fundamental tension: internet platforms prioritize speed and user experience, while traditional finance emphasizes prudence. The question remains: is "faster" always better? Internet-driven fund distribution must grapple with more than just this issue.
Over the past decade, third-party internet platforms have reshaped fund distribution in several ways. They popularized 1% fee discounts, forcing traditional banks to follow suit. They lowered investment thresholds from CNY 1,000 to as little as CNY 0.01, democratizing access for retail investors. They accelerated redemption times, even for complex products, and fostered transparency through interactive content communities where investors engage with fund managers and peers.
However, the internet's focus on traffic and热度 can clash with investment principles. For instance, "top funds by inflows" rankings, intended to aid selection, often amplify noise and lure investors into buying at peaks. When popularity overshadows risk-return assessments, suitability checks fail, as seen in the Debenture Fund compliance incident.
Redemption mechanisms like T+N exist not solely for efficiency but to ensure secure custody and careful settlement. The friction they introduce may actually mitigate risks for investors. Funds are not ordinary consumer goods; long-term success hinges on sustained investor returns, not just short-term convenience.
In JD's case, social media reactions suggest some silver linings—many users discovered JD's express redemption service through the controversy, expressing interest in switching platforms. From a market competition perspective, platforms subsidizing user convenience may seem reasonable, akin to subsidies in other internet sectors. Yet, in finance, zero decision-making costs may not aid sound investing. While price wars benefit consumers in tangible goods, saving money directly, in finance, transaction costs are just one factor; impulsive trading often erodes returns.
The 2021 core asset bubble collapse damaged trust in long-term holding strategies, shifting focus to quicker redemption services. Fund investing risks becoming akin to "online shopping," with platforms competing on subsidies and influencers driving sales, pressuring fund companies to prioritize short-term performance.
If slow turnover were the main barrier to retail investor profits, why not abolish T+1 trading and price limits in A-shares to test whether individuals or institutions would prevail in a more efficient market? The challenges for internet-based fund distribution extend far beyond speed alone.