China’s retail mutual fund industry assets have reached RMB 19.9trn ($3.1trn) in December, up 35% since the end of 2019, according to latest data from the Asset Management Association of China (AMAC).
Assets of mixed-asset products saw the largest increase during the year at 131% in 2020, followed by equity funds (58%). On the flipside, fixed income funds assets were down 1.4% during the year.
Mixed-asset funds assets now account for 22% of China’s retail mutual fund industry, which compares to just 12.8% in 2019.
Fund AUM breakdown(RMB trn)
| Equity | Mixed asset | Bond | Money market | |
| as of the end of 2019 | 1.3 | 1.89 | 2.77 | 7.12 |
| as of the end of 2020 | 2.06 | 4.36 | 2.73 | 8.05 |
The increase in mixed-asset fund AUM was partly driven by fund launches. Out of the 1,435 new funds launched last year, 683 were mixed-asset funds, according to a report from Morningstar.
Around RMB 1.66trn went into these new mixed-asset products, accounting for around half of the total inflows (RMB 3.16) of all funds launched last year, the report added.
Ivan Shi, director of data analytics at Z-Ben Advisors, explained that mixed-asset funds in China have become more appealing to domestic investors because of their flexibility to allocate more into equities compared to pure equity funds.
“In China, most mixed-asset funds adopt similar strategies with actively managed equity funds as they could have more flexible positions that equity funds,” Shi told FSA.
“For example, when the market is bullish, mixed-asset funds can increase the position to equities to 95%. Meanwhile, equity funds have limited equity positions of 80%-95%.
“In a bearish market, mixed-asset funds can decrease equity positions to 60%-0%, [which investors find appealing to caution against downside risks],” he added.
