(Yicai) Jan. 12 -- More than 250 funds have wound up in China in the last 12 months as a sluggish stock market causes them to lose money, according to the latest data.

Over half of these 256 funds were withdrawn because their net asset value had fallen to under CNY50 million (USD7 million) or because they had less than 200 shareholders, according to Wind data released yesterday.

Over 75 percent of them, at 195, were equity-based and co-mingled funds that are tied to the stock market. Half of them were established between 2020 and 2022.

And at least another 20 funds are on the verge of liquidation due to insufficient net asset value, according to Yicai research.

Yesterday, an equity-based Fund of Funds issued by Zheshang Securities entered liquidation, becoming the fourth fund to withdraw this year. The fund, which was established in May 2020, had lost 26.99 percent of its value as of Jan. 9.

"Poor performance is the root cause of fund liquidation," an analyst told Yicai. Other reasons are whether the fund meets the allocation needs of investors and whether continuous marketing can keep up with it, the person added.

In the past three years, due to a downturn in the issuance market, many fund companies have chosen to use sponsored funds. There were nearly 400 sponsored products set up in 2023, accounting for more than 30 percent of the new funds established that year.

In December last year, at least 40 funds said they were looking at ways to improve the accuracy of the net value of shares. A company insider told Yicai that this is a way of dealing with a collapse in net value due to a huge number of redemptions.

"If calculated on a net value to four decimal places, large redemptions lead to more or less actual redemptions, affecting the net value of the remaining shares," the insider said. "In order to protect the interests of investors, fund managers find ways to improve accuracy to ensure that the net value will not change," the insider added.

"Current valuations on the mainland market are at a historic low, and the performance-price ratio is extremely high," a researcher said.

Editors: Shi Yi, Kim Taylor