China’s fund industry is ushering in its best era. In the structural market over the past three years, the development of China’s fund industry has been advancing all the way. The latest data shows that the total asset management scale of public and private equity funds exceeded 44 trillion yuan, a record high. Among them, the scale of public equity funds exceeded 25 trillion yuan, ranking fourth in the world; the scale of private equity funds exceeded 19 trillion yuan, and the number of established products exceeded 30,000 this year.
The scale surge of public and private equity exceeded 44 trillion yuan
Data show that as of the end of November 2021, the scale of public fund asset management reached 25.32 trillion yuan, a net increase of 5.43 trillion yuan from 19.89 trillion yuan at the end of last year, setting a record high again. At the end of 2019, this data was 14.8 trillion yuan. This also means that in less than two years, the scale of public fund asset management has increased by more than 10 trillion yuan.
From the perspective of global rankings, Chinese public funds have also stepped onto a new level. According to data from the Institute of Investment Companies (ICI), as of the end of the third quarter of 2021, China’s public funds are second only to the United States, Ireland, and Luxembourg, ranking fourth in the world and number one in the Asia-Pacific region.
The explosive growth of public equity funds, and the development of private equity are not uncommon. 2021 is the most rapid year for private equity development. As of the end of November, the overall scale reached 19.73 trillion yuan, a substantial increase of 3.76 trillion yuan from the end of last year. From the perspective of private equity companies, there are currently more than 100 private equity funds with assets under management of more than 10 billion yuan. From the perspective of the number of private equity fund products filed, more than 32,000 have been filed this year, which has historically exceeded 30,000 in a single year.
According to the latest data from the China Securities Investment Fund Association, the total asset management scale of public and private equity funds exceeded 44 trillion yuan.
In the view of Fan Yonghong, a veteran of the public fund industry, the key to the development and growth of public funds lies in performance. Wind statistics show that from the beginning of 2019 to the present, among the more than 2,800 partial-equity hybrid funds that have been established for more than 3 years, more than 1,600 funds have doubled their net worth, and nearly 500 funds have a total return of more than 200%. For investors, the money-making effect of public funds is particularly eye-catching among all major types of assets.
Correspondingly, in the significant structural market in the past few years, only some high-quality companies’ stock prices have repeatedly hit record highs. Many investors found that stocks are not as good as buying funds, so they have borrowed funds to enter the market.
Fresh wind blows across the face, innovation fund products emerge in endlessly
In the fund industry in 2021, not only the scale of management will grow rapidly, but also various innovative products will be launched, including public REITs, interbank deposit index funds, and FOF-LOF funds. As an instrumental product, index funds also ushered in a concentrated outbreak.
In May of this year, the first batch of publicly offered REITs officially went on sale. The first batch of products attracted the participation of many banks, insurance, private equity and other institutional investors, and the placement ratio of many products was less than 10%. In November, the second batch of 2 publicly offered REITs products were issued, which also attracted the attention of many investors. From the perspective of industry insiders, as alternative investment tools, public REITs have both the characteristics of stocks and bonds, filling the gaps in the domestic capital market and providing investors with more choices.
In order to comply with the trend of net worth management in the asset management industry, interbank certificate of deposit index funds with both liquidity and security are favored by fund companies. Due to the large scale of the current monetary fund, the amortized cost method adopted by it has the hidden danger of a mismatch in the time of return and risk. The inter-bank certificate of deposit fund uses the market value method for valuation, which is more in line with the net value management reform of the cash management market. So have launched interbank certificate of deposit index fund products.
It is worth noting that, as an instrumental product, index funds have also ushered in a big explosion. With the rapid increase in the number of listed companies, stock selection has become more difficult, index funds are welcomed by more investors, and fund companies are also taking advantage of the opportunity to issue new products. The latest statistics show that among the more than 9,000 public offering fund products in the entire market, there are more than 1,200 index funds, and the total asset management scale is about 1.46 trillion yuan. Although the absolute value is already considerable, it still accounts for a relatively small proportion relative to public funds with a total scale of more than 25 trillion yuan. According to data from the American Association of Investment Companies, American equity index funds account for as much as 30% of equity funds. In contrast, China’s index funds still have ample room for development.
Since the beginning of this year, innovative products in the fund industry include MSCI China A50 Interconnection ETF, Beijing Stock Exchange Theme Fund, FOF-LOF Fund, etc. Among them, FOF-LOF funds have the advantages of both FOF and LOF products. It can not only provide fund allocation plans for holders, but also be listed and traded like LOF, bringing a better liquidity experience.
Bestune Forward Fund leads the era of big asset management
In many respects, my country’s fund industry is ushering in its best era.
From the perspective of macroeconomic policy, in the past few years, the decline in risk-free yields and the breaking of new redemptions have drastically reduced the yields of bank wealth management and trust products; the state’s rectification of illegal Internet finance has made many P2P platforms no longer exist; The continuous strengthening of the policy of “no real estate speculation” has made the investment properties of real estate weakened. Residents’ wealth has begun to shift from the real estate market to the capital market, and the capital market has ushered in a source of fresh water.
From the perspective of the development environment of the capital market, the supervisory authorities have issued a series of policies to clean up the source, and the development environment of the capital market has undergone major changes. A-shares and the international market are interconnected, and with it comes the evolution of investment philosophy. A series of measures such as comprehensive implementation of the registration system for stock issuance, strengthening of the information disclosure system for listed companies, and advancing the reform of the delisting system have allowed the popular bad behaviors such as speculation in small businesses, speculation in new information, and speculation in news to be abandoned by the mainstream market. The concept of value investment has brought development opportunities to the fund industry, which has a strong research force.
From the perspective of the development trend of the asset management industry, the transition period of the new asset management regulations will end at the end of this year. With the formal implementation of new asset management regulations next year, the asset management industry will usher in a new stage of development. The public and private equity fund industry can provide highly net worth and standardized products, relying on its own investment management advantages, and will lead the future development wave of the asset management industry. Especially public funds, which have the advantages of openness and transparency, mandatory disclosure, independent custody, and diversified investment, will surely become the preferred choice for ordinary investors to maintain and increase their wealth.
Specific to the public fund industry, the regulatory authorities have also issued new policies one after another. Optimizing the public offering license system, advancing fund investment advisory pilot projects, strengthening fund sales requirements, and increasing fund product innovation will all help the public offering fund industry to achieve stability and long-term development.
The sea is wide and leap. The new voyage of China’s asset management industry has begun. Judging from the development of the past few years, funds have become the most rapidly developing sub-industry, and will continue to lead the era of large asset management in the future.