Chinese fund industry AuM falls for second quarter

Chinese lanternsTotal assets under management (AuM) of the Chinese mutual fund industry fell by 2.4% in Q2, following a drop of 4.3% in Q1.

Shanghai-based Z-Ben Advisors noted that AuM was still 11.4% higher than one year previously, but that this was due to aggressive product issuance over the period.

The Q2 fall in AuM was predominantly attributed to a drop of almost 5.56% in the CSI 300 index, which tracks 300 stocks trading on the Shanghai and Shenzhen stock exchanges, having an impact on equity valuations.

Organic outflows, on the other hand, were lower than in Q1, though this is thought to be due to investors’ unwillingness to redeem during a downturn, suggesting that improved markets could bring about severe redemptions.

Bright spots were bond and guaranteed products, which saw increased AuM due to product issuance. Guaranteed products in particular are expected to remain popular due to market volatility.

Top-tier managers continued to have an advantage in their ability to use multiple launch channels, while a distribution bottleneck in China means that smaller players have been struggling to gain market share via product launches and need to rely more on strong outperformance.

©2011 funds europe