China mutual fund assets reach 38 trillion RMB in Q2

China’s mutual fund assets grew to 38 trillion RMB (approximately US$296.4 billion) in the second quarter, marking an increase of 2 trillion RMB. According to a report by IIC Analytics, the 14,300-plus registered funds saw net inflows of 304 billion RMB, a significant reversal from the 72 billion RMB outflow recorded in the first quarter.

Investor behavior suggests a shift toward defensive positions due to market volatility. Fixed income funds led the growth with 1.07 trillion RMB in net inflows, while international funds attracted 28 billion RMB. Conversely, passive equity funds experienced a massive outflow of 791 billion RMB, which analysts attribute to state-backed institutions reducing positions in exchange-traded funds to temper tech-driven rallies.

This market volatility, partly driven by a global correction in artificial intelligence stocks, has also impacted individual fund managers. Some rookie portfolio managers at firms like Caitong Fund Management saw significant drawdowns in their debut portfolios due to heavy exposure to technology stocks.