Summary of Key Points
In the first half of this year, the tech-driven market in the A-share market led to overall profitability for the public fund industry (62 companies collectively earned nearly 24 billion yuan in net profit, with 90% of them being profitable). However, the industry's differentiation has intensified: leading companies have repositioned themselves (Guangfa Fund's net profit doubled, pushing it to the top), while some mid-sized institutions have achieved explosive growth by focusing on strategic sectors (Yongying and Caitong Fund's net profit increased by more than 180%), whereas smaller, less established firms continue to struggle with losses. In the future, the "Matthew effect" (where the strong get stronger) will be even more pronounced.
1. Nine out of ten fund companies made money, with the top performers raking in substantial profits
The tech-driven market in the first half of the year benefited fund companies. Out of the 62 companies with available data, 56 were profitable (90%), with 17 seeing a net profit increase of over 50%. The top performers were particularly strong:
- E Fund had revenue of 7.7 billion yuan (the highest in the industry) and a net profit of 2.3 billion yuan, showing stability;
- Guangfa Fund's net profit more than doubled to 2.46 billion yuan, rising by 108% and moving from fourth place to the top;
- Huaxia, Southern, and ICBC Credit Suisse all had net profits exceeding 1 billion yuan, with ICBC Credit Suisse ranking third due to its strong channel relationships with the Industrial and Commercial Bank of China.
The threshold for entering the top ten companies in terms of revenue for the first half of the year was even higher than for the entire of last year—last year, 4 billion yuan was required to be in the top ten, while this year, five companies already met this criterion.
2. Major reshuffle among the top companies
The ranking of the top companies is not static:
- Up-and-comers: Guangfa Fund jumped from fourth place to the top in net profit; Yongying and Caitong Fund saw their net profit increase by more than 180% by targeting the right sectors; Huitianfu and Jingshun Great Wall also made it into the top ten.
- Fallouts: Tianhong Fund was the only top ten company with a negative net profit growth (a decrease of 2.3%) and dropped to ninth place.
Overall, the leadership structure remains stable, but mid-range and lower-tier firms experience more frequent changes.
3. What drives growth? A favorable market, expansion in scale, and choosing the right sectors
The core logic behind fund companies' profitability is simple:
1. The market drives growth in scale: The tech boom boosted equity funds, increasing the industry's total assets by nearly 2 trillion yuan, which in turn increased management fees (the fees charged by fund companies based on their assets). For example, E Fund's management fees rose by 26% to 4.95 billion yuan.
2. Choosing the right sectors to create hit products:
- Yongying Fund's success came from two tech-themed funds (each with assets over 32 billion yuan) and a successful fixed-income product, resulting in an 1227% increase in assets and a 117% increase in management fees, as well as a 180% increase in net profit;
- Caitong Fund's growth was driven by its star fund manager Jin Zicai's products, which increased assets by 482 billion yuan and management fees by nearly 100%, leading to a 100% increase in net profit.
These institutions accurately identified market trends and used their hit products to boost their performance.
4. Increasing differentiation: Smaller firms are still losing money
Although the industry as a whole is profitable, smaller firms are struggling:
- Six companies are still in the red, with some experiencing even worse losses; for example, Suxin Fund lost 10.27 million yuan in the first half of the year, a worse outcome than last year.
- A few smaller firms have shown improvement: Ruida Fund went from a loss of 4.24 million yuan last year to a profit of 11.16 million yuan this year, while Nanhua Fund's loss decreased.
The reason is clear: leading firms have advantages in scale, channels, and research capabilities, while mid-sized and smaller firms lack these resources and are left behind.
5. Future trends: The strong will get stronger, and smaller firms need to focus on differentiation
Industry insiders suggest that the public fund industry is no longer just about scale; it's about fees, product structure, costs, shareholder background, and research capabilities. In the future:
- The top will become even more dominant: The strong will become even stronger, with a pronounced Matthew effect;
- Smaller firms need to differentiate: They cannot compete head-on with the top firms and must specialize in specific sectors (such as tech or renewable energy) or strategies (such as quantitative investing or a combination of fixed-income and other assets), adopting a "small but elite" approach.
In other words, large firms will be like "department stores" offering a wide range of products, while smaller firms will need to become "boutiques" to survive.
This news indicates that the public fund industry has moved beyond the era of easy profitability. To thrive, firms must either grow significantly or become highly specialized. For investors, choosing funds should consider a company's sector focus and the stability of its performance—following companies with strong track records is likely to be a wise decision.