China mutual fund data reveals gap between fund returns and investor profits

New disclosure requirements for Chinese mutual funds have revealed a significant gap between fund performance and actual investor profitability. Following new CSRC regulations, active equity and hybrid funds must now report the “proportion of profitable investors” over the past year.

Data from 4,416 active equity funds shows that while the average fund return reached 54.59% during the 2025-2026 period, many investors failed to see gains. In some cases, funds with high returns saw extremely low profitability ratios; for instance, one fund reported a 98.54% return but only a 26.02% profitable investor ratio. Eight specific fixed-term funds reported a 0% profitability rate, meaning no investors made a profit during the period.

Experts attribute this discrepancy to “pro-cyclical marketing,” where investors enter funds at peak prices during market highs, and the tendency of retail investors to chase trends.

Parallel research from Renmin University suggests a correlation between social media influence and poor investment performance. An empirical study of over 2,500 financial influencers found that larger follower counts often correlate with lower future investment returns. The study suggests that influencers may prioritize engagement and “impression management” over sound financial logic, often shifting their focus from investment returns to monetization through traffic and commissions.