Strong growth seen in China's mutual fund industry in Q2

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China’s mutual fund industry made a strong rebound in the April-June period as market sentiment stabilized, latest industry data shows.

The net value of equity and balanced funds jumped 7.3 percent quarter on quarter to reach 6.34 trillion yuan (US$940 billion), statistics from the Asset Management Association of China (AMAC) showed.

Thanks to hot subscriptions for interbank deposit funds and bond funds in the second quarter, the scale of non-money market investment funds was up 10.1 percent, or 790 billion yuan, compared with the previous three months, to total 8.68 trillion yuan.

Due to fluctuations in the A-share stock market and virus-induced uncertainties, retail investors exercised greater risk aversion and raised their allocations to fixed income-plus products for stable returns, an officer at Broad Fund said.

That strategy echoed with Helen Tu, a civil engineer in Shanghai who hoped to gain a higher return from fund investment than bank deposits and wealth management products.

She made her fund investments on Alipay, a popular mobile-payments network mostly used in her daily life for almost everything.

Tu picked balanced funds which invest in both stocks and bonds among the so-called “golden funds” touted by Ant Hangzhou Fund Sales Co, an online third-party fund sales platform on Alipay.

Boasting massive numbers of users, Ant Fund leapfrogged banks, once again, to top China’s non-money-market mutual funds in the second quarter.

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Outstanding non-money-market mutual funds sold by Ant’s fund sales arm were worth 1.32 trillion yuan, followed by China Merchants Bank and Shanghai Tiantian Fund Distribution Co, another independent fund adviser, according to AMAC’s ranking.

Sales of equity and balanced funds by China Merchants Bank totaled 709.5 billion yuan, which made it the largest seller of fund products excluding money market funds.

In the April-June period, domestic mutual funds reversed the defensive stance of the first quarter, said Meng Lei, China Equities Strategist at UBS Securities.

Sectors with the largest weighting gains were beverage, electrical equipment, automotive and non-ferrous, while electronics, banks, chemical pharma and power recorded the largest weighting declines, he added.

“For equity investment in the next few years, opportunities far outweigh risks,” said Cao Mingchang, a fund manager at Zhong Ou AMC in a quarterly report.

Industries like real estate, infrastructure and finance have the potential to bring positive returns in the future, he advised.

For second half, Shan Kun, a bond fund manager with Schroder Investment Management (Shanghai) Co, said that they held a relatively cautious investment attitude toward the bond market, and were relatively optimistic about the performance of bonds with high quality and short duration.

A total of 324 funds were newly launched in the second quarter, raising a combined 411.1 billion yuan.

As of June, 153 licensed fund houses managed 9,872 mutual funds with 26.2 trillion yuan worth of assets under management, according to the industry association.

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