Inflows into China’s mutual funds plummeted and assets declined as stocks fell, underscoring diminishing investor confidence amid a property crisis that is dragging down the world’s second largest economy.
Figures compiled by Morningstar Inc for Asia Asset Management (AAM), show that net inflows into the more than 11,000 registered mutual funds in China plunged 39.8% to US$78.4 billion in the first nine months of 2023 from $130.33 billion in the same period of 2022.
Assets under management stood at $1.67 trillion, down 4.32% from September 2022.
New fund launches were also on the decline in the just-ended year. As of December 20, 1,081 funds were launched compared with 1,351 in all of 2022.
Short-term bond funds were the best performing fund type, attracting $35.5 billion of net inflows through the first nine months of 2023.
“With the continuous decline in deposit interest rates and volatile movements in the stock market, coupled with a decrease in market risk appetite and growing risk aversion among investors, there is an increasing focus on short-term bond funds that balance liquidity and returns,” Andy Huang, senior analyst of manager research at Morningstar, tells AAM.
The runners-up were technology and communication funds with $22.83 billion of inflows, and large-cap equity funds with $14.66 billion.
Huang says most growth-biased actively managed equity funds “faced stylistic headwinds and struggled to outperform” as the stock market declined, prompting investors to reallocate to exchange-traded funds, which benefitted firms such as China Asset Management Co. that focus on equity ETFs.
China’s benchmark CSI 300 Index fell around 12% in 2023.
Guangzhou-based E Fund Management maintained top spot as the largest fund manager with $130.89 billion of assets under management as of September 2023, though that was down 7.6% from $141.65 billion in the same month of 2022.
