[Introduction] The 23rd anniversary of open-end funds, with a total scale of 27.65 trillion yuan and the number of products exceeding 10,000. China Fund News reporter Li Shuchao In September 2001, my country's first open-end fund "Hua'an Innovation" was officially established. In

[Introduction] The 23rd anniversary of open-end funds, with a total scale of 27.65 trillion yuan

The number of products exceeded 10,000

China Fund News reporter Li Shuchao

In September 2001, my country's first open-end fund "Hua'an Innovation" was officially established. In September this year, open-end funds will celebrate their 23rd anniversary. Currently, the number of open-end funds has exceeded 10,000, with a total scale of 27.65 trillion yuan. In more than 20 years, 20 "tenfold funds" have been born.

The total scale reaches 27.65 trillion yuan

It is the most mainstream product type in the public fund market

The so-called open-end fund refers to a fund operation in which the fund shares are not fixed and the fund shares can be subscribed and redeemed at the time and place specified in the fund contract. Way.

In the early days of the public fund industry, Fund Kaiyuan and Fund Jintai, established in March 1998, were both traditional closed-end funds. Three years later, in September 2001, Huaan Innovation, the first open-end fund, was established. Since then, the operating model of open-end funds has gradually expanded to stock funds, bond funds, currency funds and other product types, opening up the open-end A new journey for great prosperity and development of the fund.

Data from the Asset Management Association of China show that as of the end of July 2024, the number of domestic open-end funds reached 10,742, with a total scale of 27.65 trillion yuan, accounting for 88%. Open-end funds have become the mainstream product type of my country’s public funds. .

Manulife Fund stated that compared with closed-end funds, open-end funds have good liquidity, and investors can apply to redeem fund shares based on capital needs to meet liquidity needs. Open-end funds have lower investment thresholds and are more friendly to small and medium-sized investors.

From the view of Manulife Fund, open-end funds have brought product-level innovation to the public fund industry, and various subdivided investment type products have been launched one after another, which not only enriched the product line of my country's public funds, but also promoted the improvement of laws and regulations. At the same time, open-end funds, as representatives of inclusive finance, have become an important financial management tool for small and medium-sized investors. Finally, as typical portfolio investors, long-term investors and value investors, open-end funds have played an active role in guiding social funds to support the real economy.

"The establishment of open-end funds has promoted the rapid development of the industry, and open-end funds have quickly replaced closed-end funds and become the mainstream variety in the market." Wang Tieniu said.

Nie Han, an equity researcher at Yingmi Fund Research Institute, also believes that open-end funds have good liquidity and are convenient for subscription and redemption, making them suitable for spreading to more investors. They also reflect the inclusive nature of public funds and help public fund products spread to a wider range of people. crowd. It is also conducive to promoting the richness of industry product types and the expansion of industry management scale.

For the capital market, Nie Han further said that open-end funds have become the most mainstream fund type. As the scale of products continues to grow, they have become an important source of funds for the capital market, playing a role in price discovery in the capital market and supporting the real economy. Open-end funds play a very important role, and open-end funds are also an important means for ordinary investors to indirectly participate in capital market investment and share the operating results of listed companies.

Objectively examine the free subscription and redemption mechanism

Form a positive incentive mechanism for fund managers

In the field of large asset management, open-end funds directly face the largest investment group and also face the most direct challenges. Investors can quickly " Vote with your feet” in choosing open-end funds.

A large fund company in Beijing said that the more open and fully competitive an industry is, the faster it will progress. To this end, it is necessary to objectively examine the free subscription and redemption mechanism of open-end funds.

The fund company analyzed that on the one hand, the higher flexibility of capital entry and exit of open-end funds puts forward higher requirements for the investment management capabilities of fund managers, forcing fund companies to strengthen their own investment research capabilities and reduce pressure. As a driving force, we should improve fund performance based on customer needs and strive to continue to win the favor of investors; on the other hand, in the survival of the fittest in the market, it will help promote healthy competition in the industry and achieve high-quality development of the capital market.

However, the agency also mentioned that if the scale changes significantly due to frequent subscriptions and redemptions due to short-term market fluctuations, it may increase investors’ operating costs and is not conducive to fund management. Therefore, in recent years, fund companies have stepped up investor education, guided rational investment, value investment and long-term investment, and improved the stability of investment behavior.

Nie Han also believes that the operating mechanism of open-end funds has formed a positive incentive mechanism for fund managers: managers with excellent performance receive continuous improvement in scale, while managers with poor performance face redemption pressure. This continuous positive incentive mechanism will also promote the continuous improvement of management capabilities of public funds.

However, Nie Han also admitted that the relatively good liquidity of open-end funds has also led to some problems and challenges. For example, investors’ redemption and redemption behaviors have brought liquidity requirements to the portfolio, and instability on the liability side has had a negative impact on the investment portfolio, which in turn has affect investment performance. In addition, investors may engage in "chasing the ups and downs" or even engage in short-term investment behavior, resulting in a certain degree of dilemma where "funds make money but investors do not."

Wang Tieniu also concluded that the free subscription and redemption mechanism of open-end funds puts both pressure and motivation on fund managers. The pressure aspect is that fund managers need to have a higher level of asset allocation and risk management when facing short-term capital flows caused by market fluctuations. In terms of motivation, it is necessary to continue to strengthen the construction of the investment research system, optimize the evaluation mechanism, improve investor education, cultivate long-term investment and value investment concepts, and promote high-quality development of the industry.

The birth of 20 "ten-fold funds"

From the perspective of investment performance, wind data shows that as of September 6, the first three open-end funds established, Huaan Innovation, Southern Stable Growth, and Huaxia Growth, have annualized returns since their establishment. They are 6.4%, 8.38%, and 7% respectively.

Since the birth of open-end funds, there have been funds such as Huaxia Market Select A, which earn 24 times, and 20 "ten-fold funds" such as Harvest Growth, Xingquan Trend Investment, and Manulife Cycle. The annualized returns of these funds have exceeded 10 %, becoming an outstanding representative of public funds.

Manulife Fund stated that in the past 23 years, the overall return rate of open-end funds has significantly outperformed bank time deposits, and a number of excellent funds with higher performance returns have emerged. The investment performance of open-end funds has proved that the concept and investment method of "value investment and long-term investment" in China's capital market can bring relatively high investment returns to investors.

The agency believes that the daily subscription and redemption mechanism of open-end funds allows investors to redeem products with continued poor performance at any time. This mechanism will force managers to perform well and continuously improve investment management capabilities.

Nie Han analyzed that the long-term profit-making effect of open-end funds is based on the opportunities of the era of my country's rapid economic development and the continued growth of the capital market in the past two decades. Public funds, as professional investment managers, have achieved excess profits for investors through active management. Return, this long-term money-making effect is the most direct manifestation of the long-term investment and value investment concepts that public funds have always advocated.

Wang Tieniu also said that a group of open-end funds have achieved relatively excellent annualized returns in long-term investment, proving that public funds have a high level of equity investment research capabilities, industry allocation, and risk management. In the future, more consideration should be given to the actual returns, holding experience and sense of gain of fund investors to better solve problems such as "funds make money, but citizens do not".

The scale accounts for more than 80%

Open-end funds will remain the mainstream products

China Fund News reporter Zhang Ling

Open-end funds have achieved steady growth in both quantity and scale since their establishment 23 years ago. However, in recent years, with the continuous deployment of fund companies, closed-end funds have also achieved steady expansion, and their proportion once increased to 13%, posing certain challenges to the development of open-end funds.

Many industry insiders believe that closed-end funds and open-end funds have their own pros and cons, and they are not an either-or relationship. In recent years, with changes in investor risk preferences, the proportion of the two types of products has fluctuated.But overall, open-end funds account for more than 80% and will remain the mainstream product in the market in the future.

Increased by 130%

In recent years, the scale of closed-end funds has expanded significantly

In recent years, as fund companies have continued to deploy regular open-end funds and holding period funds, the scale of closed-end funds has also grown significantly.

According to data disclosed by the Asset Management Association of China, at the end of January 2020, there were 874 closed-end funds on the market, with a total scale of approximately 1.67 trillion yuan; in August of the same year, the number of closed-end funds exceeded the thousand mark, and the scale More than 2.2 trillion yuan. As of the end of July this year, the number of closed-end funds on the market was 1,352, with a total scale of 3.84 trillion yuan; compared with the end of January 2020, the increases were 55% and 130% respectively.

"In recent years, the scale of closed-end funds has continued to grow, and funds have continued to flow in net, showing a trend of developing in sync with open-end funds." said Li Yiming, a senior analyst at Morningstar (China) Fund Research Center.

From the perspective of scale proportion, at the end of January 2020, the scale proportion of closed-end funds was 10.76%; since then, it has climbed year by year, increasing to 13.78% by the end of 2023. However, there has been another decline this year, and as of the end of July, the proportion dropped to 12.2%.

In this regard, a large fund company in Beijing bluntly stated that the change in the proportion of closed-end funds reflects the changes in investors' risk preferences. Fixed-open funds and holding period funds only set specific conditions for investors to apply for redemptions. The performance of the product during the holding period and closed period is also affected by macroeconomic operations, corporate profits, market trading behavior, and fund managers. The impact of factors such as one’s own investment capabilities and market cycles. When the lock-up period ends, if the product performance is not as good as expected, these funds will also encounter investors "voting with their feet."

"The original intention of public offering managers to adopt a closed-period design for their products is to avoid short-term investment behavior by investors chasing ups and downs. A relatively stable scale is also more conducive to product investment." Manulife Fund said that under the current market turbulence, it will give actual Investment has brought greater difficulties, and the overall size of some closed-end funds has fluctuated due to poor performance. However, compared with the span of more than 30 years in China's capital market, short-term fluctuations have less impact. From a longer-term perspective, closed-end funds still have relatively stable performance and good allocation value.

"In addition, from the perspective of product design, innovative attempts in redemption methods, rate settings, etc. can be considered for products in the future closed period." Manulife Fund said.

Open-end funds are still the mainstream products

Investors can choose according to their needs

Although the proportion of closed-end funds has fluctuated, due to regulatory advocacy and the layout of fund companies, there have been more and more new holding period funds in recent years. The development of open-end funds also poses certain challenges. Data from

wind shows that after 332 holding period funds were issued in the market last year; as of September 6, the number of newly issued holding period funds has exceeded 150 this year, with a combined issuance share of over 150 billion, accounting for nearly 20% of the total. .

At the same time, as of the end of July this year, the proportion of open-end funds accounted for 87.8%; although there was an increase compared with the end of 2023, it was a decrease of more than 1.4 percentage points compared with 89.24% at the end of January 2020.

talked about whether subsequent holding period funds will have a substitution effect on open-end funds. The interviewed institutions and people generally believe that both have their own advantages and disadvantages and meet the different investment needs of investors, and open-end funds will continue to be the Market mainstream.

Wang Tieniu, director of the Jian Jinxin Fund Evaluation Center, said that the main features of the holding period fund are flexible subscription and limited redemption, making it suitable for long-term investment. "This type of product is mainly to encourage investors to make long-term investments and reduce investors' short-term or frequent transactions by locking in the holding period."

"Holding period funds have received continued attention from the market and investors in the past three years. However, "Due to market fluctuations and other reasons, holding period funds do not show obvious advantages compared with ordinary open-end funds." Wang Tieniu pointed out that the income of fund products ultimately depends on the overall market conditions, as well as the investment capabilities of fund managers. Investment process execution capabilities, etc.

The aforementioned fund company also said that the launch of holding period funds is more to balance capital liquidity and short-term fluctuation risks. The original intention of its establishment is to help investors "control their hands" and reduce the behavior of chasing ups and downs; for fund managers Generally speaking, the holding period can maintain a relatively stable fund size and facilitate fund managers to make investment arrangements from a longer-term perspective.

"There is no either/or relationship between holding period funds and open-end funds, and there is a high probability that they cannot replace open-end funds." The company emphasized that to a certain extent, its existence is reasonable. The two types of products have different advantages and characteristics, and their suitability for investors is also different. Therefore, there is certain room for development in the future.

"Open-end funds and holding period funds may have differences in investment strategies, risk and return characteristics, etc. to meet the preferences and needs of different investors." Nie Han, an equity researcher at Yingmi Fund Research Institute, also believes that the two are more Most of them are complementary and synergistic. The liquidity advantage of open-end funds cannot be replaced by holding period funds.

Li Yiming said that the advantage of holding period funds is to guide investors to reduce transactions, and the lock-in mechanism can help investors develop long-term investment habits and help increase investor returns. However, the disadvantages of holding period funds are also obvious. For example, it will be very troublesome if investors have urgent capital needs. So overall, holding period funds and open-end funds have their own pros and cons, and investors can get what they need.

"Judging from the experience of overseas mature markets, the mainstream products in the market are still mainly open-end funds." Li Yiming believes that unless the holding period fund has other advantages such as fee rates or strategies, investors with mature investment concepts can generally independently invest in open-end funds. The holding period of the control fund does not require a holding period fund to forcefully lock in the investment period.

Integration of liquidity and long-term value

China Fund News reporter Cao Wenjing

With the continuous opening up and continuous reform of China's capital market, China's public fund operation methods are also continuing to innovate and change. From the earliest old base funds to open-end funds, and then from open-end funds to fixed-open funds and holding funds, public funds have carried out the innovation of product operation models to improve product liquidity, increase long-term returns, cultivate patient capital, and practice long-term investment and other historic missions.

Many industry insiders said that the historical changes in the operation model of China's public funds are inherited, and the innovation of the operation model is also constantly changing and evolving on the basis of the previous model. In the future, public offering products may still make innovative breakthroughs in various aspects such as operating models, charging mechanisms, and business models.

In addition, they mentioned that the high liquidity of open-end funds is not inconsistent with the cultivation and expansion of medium and long-term funds. Through continuous investor education, allowing investors to understand and accept correct investment concepts, open-end funds can also become the backbone of medium- and long-term funds.

Under the wave of the new era

Future public fund innovation will show diversity

Regarding the development and changes in the operation model of public funds from open-end funds to fixed-open funds and holding funds, Wang Tieniu, director of the Jian Jinxin Fund Evaluation Center, said, On the one hand, it better meets the multi-level investment needs of investors through the innovation of operating models; on the other hand, it also reflects the policy orientation of cultivating the market ecology of long-term investment and value investment and supporting "long-term investment, long-term investment" effort. In addition, the innovative development of public funds in the future will also be reflected in the diversification of products such as FOF and REITs, the investment research process empowered by financial technology, and the optimization of fund rate structures. The purpose is to better promote the sustainability of the entire fund industry. Sustained and high-quality development.

Manulife Fund pointed out that although traditional closed-end funds have certain short-term fluctuations, under the condition of stable scale, fund companies are better able to make value investments and strive to bring sustained returns to fund holders. Its relatively stable scale can prevent investors from chasing ups and downs and making short-term irrational investments. This also provides important reference for the emergence of fixed-term funds and holding funds.

Giving investors a sense of gain is an important mission of the public offering industry.Under the background of the new era, the capital market continues to mature and improve, and it also puts forward new requirements for the public offering industry. Manulife Fund suggests that good fund product innovation should first be oriented to meet the needs of investors. Secondly, fund companies must firmly grasp product quality. Only by controlling investment risks and achieving long-term performance can they gain the support of investors. Regarding the product innovation model, in terms of investment scope, we can try to cover a variety of innovative asset classes and enhance product highlights and features from the source; in terms of investment strategy, we can use more diversified strategies to enhance product competitiveness and meet the diversified investment needs of investors. ; In addition, the product structure can be innovated on the charging structure, operating model, redemption method, etc.

"The changes in the operation model of public funds reflect the efforts of the public fund industry to continuously adapt to and meet the needs of investors. At the same time, it is also the public fund industry's responsibility to assume and fulfill corresponding social development responsibilities and contribute to the construction of a modern financial system." Li Yiming, a senior analyst at Morningstar (China) Fund Research Center, pointed out that the future development of the public fund industry will still present both opportunities and difficulties. In the face of various internal and external uncertainties, we must adhere to our original intention of investing well and serving investors well. It is the greatest certainty that the public fund industry can grasp.

Establish a correct investment concept

Open-end funds can also become the "backbone" of medium- and long-term funds

In recent years, as market volatility intensified, many high-quality fund products have experienced a retracement of about 70%. How to make long-term investment and value investment in open-end funds; how to help investors obtain a better investment experience; whether open-end funds with "high liquidity" and redemption at any time will conflict with the cultivation and growth of medium and long-term funds and other issues are placed in front of institutional investors one by one.

Many industry insiders said that the development of open-end funds is not inconsistent with the cultivation and expansion of medium- and long-term funds, but is conducive to building an ecological mechanism of "long-term money and long-term investment". Nie Han, an equity researcher at Yingmi Fund Research Institute, pointed out that open-end funds meet investors’ needs for liquidity in asset allocation and provide investors with a relatively flexible allocation choice. Open-end funds are also actively helpful for long-term and value investments. A typical example is that investors can buy open-end funds through a long-term fixed investment strategy to achieve the effect of reducing investment risks and accumulating long-term returns.

"In recent years, the decline of equity funds has mainly followed the overall decline of the A-share market. In addition, the performance fluctuations of some high-quality funds are higher than the market due to the characteristics of their investment strategies, such as investment styles that are more growth-oriented or portfolio concentration is relatively high. , all may be the reasons for poor fund performance. "Li Yiming believes that in order to invest well in open-end funds, fund managers must first find effective and suitable investment strategies and continuously polish and improve them in actual investments. Investment strategies and consistent execution can bring long-term good returns to investors. Fund companies must also establish an assessment mechanism and research team that match the investment philosophy of fund managers, which is also an indispensable part of making good fund investments.

Wang Tieniu believes that in the future, open-end funds need to better implement the concept of "countercyclical layout" in terms of promotion, issuance, and investment. For example, when the market is down, more attention should be paid to the layout and promotion of equity funds. At the same time, when the market is very enthusiastic about theme funds in certain industries, it is not advisable to promote and sell related funds too much. Practice has proved that fund products purchased at relatively hot spots and high prices in the market often bring greater losses to investors subsequently.

"Public fund managers, sales channels and other industry entities should not pay too much attention to indicators such as scale and sales volume, but should put investors' sense of gain and the functionality of the industry in a more important position; while paying attention to fund issuance, We must pay more attention to the sustainable operation of funds; we must better practice the concepts of value investment and long-term investment. These are the aspects that need to be focused on for the sustainable and healthy development of the industry," Wang Tieniu said.

“Currently, public funds are taking active actions to help investors improve their investment experience."A large fund company in Beijing said, first of all, the industry is comprehensively optimizing the fee rate reform to benefit investors and continue to promote high-quality development. Secondly, it is further increasing investment in the construction of the investment research system, and at the same time paying more attention to longer-term performance evaluation, changing the Short-term assessments may cause distortions in investment behavior. At the same time, internal management and risk control construction must be strengthened to avoid overly centralized "betting on the track" investment. In addition, the depth and breadth of investor education should be increased, and more diversified investment education should be explored. The form advocates rational investment.

Editor: Xiaomo