Funds News
- Mutual funds assets reach US$148b
Date: 27-Apr-2007 Sources: (Shenzhen Daily)
ASSETS under management in China's mutual fund industry jumped 33 percent during the first quarter to 1.14 trillion yuan (US$148 billion) as retail investors diverted bank savings into the sector, an industry report said.
'The growth is being driven by retail investors continuing to redeploy cash savings,'consultancy Z-Ben Advisors said in a report released Wednesday.
'Retail investors pumped billions of yuan into both new products and those returning to the market with a secondary offering,'the report said, adding that a total of 287.5 billion yuan was raised by such means.
Z-Ben Advisors estimated that 165 billion yuan was removed from bank deposits in the first quarter to buy into funds.
Many retail investors were trading mutual funds as frequently as stocks, it said.
'There is an identified risk today that investors, and predominantly at the retail level, may begin to view funds as nothing more than a cheap proxy for gaining exposure to the equities market,'the report said.
'There does appear to be a growing tendency among investors to hold funds for a shorter period of time before making the decision to sell and use the proceeds to buy into another product,'it said.
By the end of March, equity-oriented funds accounted for 71 percent of the industry's total, due to investors' penchant for high risk-high return products amid a surge in the country's A-share market, it said.
'It would even be quite reasonable to state that all or nearly all of the estimated US$21 billion in redeployed bank savings went specifically into these products,'the report said.
More equities funds are being launched, with at least 20 billion yuan in equity-oriented funds being raised this week alone.
By contrast, money market funds encountered stiff selling pressure although it appears that the product category has finally stabilized, the report said, adding that such funds stood at 74 billion yuan at the end of March.
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