(China Alert) FMC strategy: Keeping up with the Alibabas

AMAC’s July numbers show that China’s public mutual fund industry AUM dropped to RMB6.9tr, down 2.4% from end-2Q15. It should come as no surprise that equity and balanced funds suffered outflows due to market volatility. On the other hand, flows into MMFs reveal how investor behavior is changing in comparison to previous market downturns. Current flows also suggest how FMCs are altering their strategies to retain AUM when times are tough. These significant strategic shifts represent the development of a more comprehensive FMC service ecosystem. Z-Ben Advisors believes these competing ecosystems will be critical to FMCs’ effectiveness as domestic agents in the MRF scheme. More importantly, foreign managers should look to emulate this model when building their onshore presence.

The market downturn was keenly felt by domestic FMCs, reversing the flow trends enjoyed in May and June. Market volatility has continued to tempt investors to flee from……

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