China's Q2 2023: Bonds drive fund flow boom

In Q2 2023, China's financial sector underwent a robust rebound, with net flows reaching a notable RMB 1,226 billion, the highest since Q1 2021. These were the findings of a new report by IIC Analytics, titled 'IIC Analytics: China fund flows (2Q23)', which added that the prevailing trend favoured low-risk allocations. Bond funds surpassed MMFs, indicating the market's conservative sentiment. While active equity strategies faced challenges, passive equity and bond funds drew significant inflows. Balanced funds experienced their fifth consecutive quarter of outflows. However, the top 30 managers by AUM mostly registered positive net flows, demonstrating resilience in these volatile times. The slower economic recovery and the absence of strong fiscal stimulus have driven investors toward safer alternatives. Bond funds led the investment avenues, with balanced funds accounting for about 17% of the investments. High-risk avenues, such as active equity, faced declines. Passive equity and bond funds returned after prior outflows, underscoring a trend of risk-aversion among investors. Despite the Pillar III program's growth, FoFs struggled to achieve positive net flows. In fund management for Q2 2023, ChinaAMC led with RMB 72bn, followed by Maxwealth at RMB 57bn. Southern and E Fund each secured RMB 56bn, with Bosera close behind at RMB 54bn. Conversely, CCB Principle reported -RMB 17 billion, Zhongrong -RMB 5.6bn, Manulife -RMB 4.1bn, Yingda -RMB 3.7 billion and Franklin Templeton Sealand -RMB 3.2 billion. ©2023 funds global asia

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