China’s active equity fund market is experiencing its strongest fundraising momentum in months, with four new funds each raising over 1 billion yuan ($138 million) in June alone. The surge includes Shanghai Oriental Securities Asset Management’s Oriental Red Core Value Mixed Fund, which became so oversubscribed it implemented proportional allocation – a rare occurrence in recent years.
High-profile launches signal market shift
The Oriental Red fund ultimately raised 1.99 billion yuan from 14,585 investors, marking 2024’s largest active equity fund launch to date with a 94.03% allocation ratio for June 4 subscriptions. It wasn’t alone in its success:
- Fullgoal Balanced Investment Mixed Fund raised 1.96 billion yuan from 8,924 investors
- Essence Preferred Value Mixed Fund attracted 1.31 billion yuan from 4,909 subscribers
- SWS MU Industry Select Mixed Fund gathered 1.22 billion yuan from 10,477 participants
These join just three other active equity funds that have crossed the 1 billion yuan threshold this year. Separately, industry sources reveal the first batch of new variable-fee structure funds have already drawn over 5 billion yuan in commitments.
Performance-driven allocation emerges
Analysts attribute the resurgence to two key factors:
- Return visibility: Recent sector rotations have demonstrated active managers’ alpha-generation capabilities
- Manager credibility: The successful funds feature seasoned professionals with balanced, benchmark-agnostic approaches
“Investors are rewarding managers who delivered consistent returns without extreme sector bets,” noted a Shanghai-based fund analyst. “The painful lessons of style-drift volatility appear to be changing allocation behaviors.”
Alignment mechanisms build trust
“Skin-in-the-game commitments help align interests and rebuild confidence,” observed a distribution executive at a major private bank. This sentiment appears validated by subsequent investor flows into existing top performers, prompting capacity controls:
- Noah Multi-Strategy Mixed Fund (YTD return >30%) imposed 1M yuan daily limits
- GF Value Core and GF Technology Innovation funds capped daily subscriptions at 10K yuan
- CTAM Digital Economy Mixed Fund restricted 10M+ yuan investments
Strategic optimism prevails
Despite recent market volatility, fund managers express constructive outlooks. “China’s industrial advantages and corporate competitiveness remain on an upward trajectory,” said Zhou Yun, portfolio manager of the oversubscribed Oriental Red fund. “We maintain long-term confidence in both the economy and equity markets.”
This renewed optimism, combined with demonstrable performance and improved product structures, suggests active equity funds may be regaining their place in China’s asset allocation landscape after years of passive dominance.
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