(China Alert) China Mutual Funds-Don’t Stop Me Now

-China’s mutual fund industry stabilized in Q2 after volatility in Q1
-Institutional demand is building for specific products

Update: Z-Ben Advisors finds it interesting that investors are seemingly learning lessons from volatility: last quarter they made more mature investments into fixed income mutual funds rather than just pulling their money out. As a result, China’s public mutual fund industry has continued to grow, hitting to RMB7.9tr (USD1.2tr) at the end of the second quarter. In some cases, these investments were made out of choice; in others, their hand was forced considering that other channels for diversification – namely offshore – are currently facing tight restrictions. Z-Ben Advisors believes trends in this quarter are likely to continue but that structural change to investor makeup and preparations for pension reform are likely to define the industry in the second half of the year.

The hangover effect of Q1 equity market volatility continued to linger among investors in the first half causing flows to continue to surge into bond funds, stabilizing AUM. Despite…

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