China's regulated open-end funds surpass that of Japan, Australia to top Asia-Pacific
Published: May 09, 2021 07:02 PM
Finance File photo:VCG

Finance File photo:VCG

The scale of China's regulated open-end funds topped the Asia-Pacific region with $2.66 trillion in 2020, surpassing that of Japan and Australia, according to data released by the Investment Company Institute (ICI). 

On a global scale, China ranked fifth, surpassing the UK, France and other developed economies, the data showed, pointing to the global rise of China's public fund market. 

Two major factors contributed to the trend: guidance and encouragement by regulators, and a better performance that attracted more investors, Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times on Sunday. 

Regulators have been strongly encouraging the market to develop equity funds, and hybrid funds and stock funds became very popular in 2020, Dong added, noting that the overall performance of public funds improved significantly last year, especially as equity funds had high rates of return. 

Just a year ago in 2019, the scale of China's open-end funds ranked third in the Asia-Pacific region after that of Australia and Japan, the China Security Journal reported on Sunday. 

The boom in issuance of publicly offered funds also contributed to China's ranking, according to media reports.

As of the end of 2020, total net sales of China's regulated open-end funds reached $1.86 trillion, representing roughly five times Japan's net sales of $338.56 billion during the same period, according to ICI's data.

Equity funds, however, still represent the weak spot for China's public fund companies. Equity funds account for a very high proportion of public funds in countries where public funds are developed, whereas China's equity funds only make up a very small portion of public funds, Dong said. 

The proportion of equity funds increased slightly from 7.75 percent in 2019 to 8.97 percent in 2020, according to media reports.

China's publicly offered funds need further innovation and growth to boost their investment performance and retain investors' confidence, Dong added.