Assets of China’s retail mutual fund industry has reached RMB 17.8trn ($2.63trn) as of the end of August, up 20.6% since the the end of December, according to data from the Asset Management Association of China (AMAC).
Mixed-asset funds saw a substantial increase in AUM this year, up by 83%, followed by equity fund assets, which increased by 38.5%. On the flipside, AUM levels of bond and money market funds remained relatively flat during the year, AMAC data shows.
Fund breakdown, total AUM (in RMB trn)
| Equity | Bond | Money market | Mixed asset | |
| Dec-19 | 1.3 | 2.8 | 7.1 | 1.89 |
| Jan-20 | 1.34 | 2.83 | 7.5 | 2.05 |
| Feb-20 | 1.4 | 2.96 | 8.08 | 2.13 |
| Mar-20 | 1.41 | 3.08 | 8.2 | 2.11 |
| Apr-20 | 1.49 | 3.43 | 8.62 | 2.32 |
| May-20 | 1.5 | 3.37 | 8.43 | 2.41 |
| Jun-20 | 1.54 | 3.12 | 7.57 | 2.67 |
| Jul-20 | 1.75 | 2.88 | 7.61 | 3.21 |
| Aug-20 | 1.8 | 2.82 | 7.35 | 3.46 |
Source: AMAC
“Investor appetite for equity products is now back on the rise in 2020 after seeing a strong bull year of 2019 and market rally in recent months,” Chloe Qu, manager research analyst at Morningstar, told FSA.
“While equity products have become more attractive to investors, bond funds generally suffered from redemptions, as yield on 10-year government bonds went up since May amid the rising concerns on tightening liquidity and unchanged interest rates.”
She added that money market investors also redeemed their shares and looked for alternative opportunities in equity-linked products during the first half this year, as yields in money market funds were also down.
“We started to see money market funds gaining traction in July as their yield is back in the uptrend again, but the overall investor appetite remains strong for equity products despite that it has become more volatile in August,” she noted.
Newly launched products
Ivan Shi, director of data analytics at Z-Ben Advisors, added that the increase of equity and mixed-asset product AUM was a result of the huge inflows coming from newly-launched products.
“The main reason for the increase is that a lot of new funds were launched due to the bullish A-share market, especially from June-August,” Shi told FSA.
“For example, five blockbuster funds all collected assets of RMB 20bn in June and July during their initial offering period,” he said.
That means that firms that offer actively managed equity and multi-asset products are expected to profit more this year, given that they have higher management fees than fixed income products, Shi noted.
The management fees of equity-focused products range from about 1.2-1.5%, while bond funds only have a fee of around 0.6%, according to Shi.
He also noted that most investors have preferred actively managed products this year. Out of the RMB 5.2trn of combined assets in equity and multi-asset products, only RMB 900bn are from passive products.
