Summary of Key Points
For the first time, semi-annual reports of public funds are required to disclose the “proportion of profitable investors” (i.e., the percentage of people who purchased the fund and held it for more than 7 days over the past year and made a profit). The data shows that over half of all funds in the industry have helped more than 90% of investors make a profit. However, among the top-tier active equity funds with assets in the tens of billions (the most popular products among retail investors), less than 40% have outperformed the industry average. Counterintuitively, some funds with significantly increased net values still have a quarter of their investors in the red, while most investors have made a profit with funds that have had relatively modest returns. This metric is forcing the industry to shift from a focus on “scale” to a focus on the “investor experience in making money.”
I. The New Metric: “Proportion of Profitable Investors”
This metric simply measures the percentage of people who purchased a fund in the past year and have made a profit. There are two important points to note regarding the specific rules:
1. Who counts as a “profitable investor”? Anyone who has a net gain of ≥0 during the holding period is considered a profitable investor (even if it’s just 1 yuan).
2. Who is included in the statistics? The calculation includes all users who held the fund for more than 7 days at any point in the past year, not just those who still hold it currently.
For example, if a fund has increased in value by 20% over the past year, but many investors bought it after it had already risen by 15% and then declined by 5%, those investors would have lost money, resulting in a lower proportion of profitable investors.
II. Most Funds in the Industry Help Investors Make Money, but Top-tier Funds Lag
Overall, the atmosphere for making money with public funds is positive:
- Among the 5,620 funds for which data has been disclosed, the median proportion of profitable investors is 92.52% (meaning that half of the funds have helped more than 92% of investors make a profit).
- More than 56% of funds (3,122 in total) have helped over 90% of investors make a profit.
However, the top-tier active equity funds with large assets perform poorly:
- Of the 68 such funds, only 27 have outperformed the industry average.
- A contrast between two examples: Ruiyuan Growth Value (99.68% profitable investors, up 115% last year) vs. Jingshun Great Wall Emerging Growth (19% profitable investors, down 13% last year); in the latter case, over 80% of the 1.67 million retail investors lost money.
III. Counterintuitive! High Fund Returns Do Not Necessarily Mean Many Profitable Investors; Stable Funds Are More Likely to Be Profitable
Many people assume that high fund returns mean more profitable investors, but the data shows the opposite:
- Many funds with high returns had many losing investors: Caitong Value Momentum A increased by 387% last year (almost quadrupling in value), but 25% of investors still lost money.
- Some funds with lower returns had more profitable investors: Dacheng Gaoxin A only increased by 3% last year, yet 67% of investors made a profit.
The reason is simple: Funds with high returns often experience large fluctuations, and many investors buy and sell at the wrong times (for example, buying at the peak and then losing money when the value drops slightly).
In contrast, funds with stable performance have smaller fluctuations, making it easier for investors to hold onto them and thus more likely to make a profit.
This is similar to buying stocks; you might lose money on a stock that rises every day but then plummets, or you’re more likely to make a profit on a stock that rises gradually over time.
IV. The Metric Forces an Industry Transformation: From Focusing on Scale to Focusing on Investor Experience
The mandatory disclosure of this metric represents a significant change for the fund industry:
1. It shifts the evaluation criteria: Fund companies no longer just compete based on their size or rankings; they now need to show whether their funds actually help investors make money.
2. It drives changes in product design: Fund companies may opt for more stable products (with lower fluctuations and smaller drawdowns) because these are more appealing to investors and result in higher proportions of profitable investors.
3. It promotes investment education: Fund companies will be more proactive in helping investors avoid risky buying and selling decisions, such as advising them not to buy at peak prices and encouraging long-term holding.
Of course, this metric has its limitations; it is affected by market conditions and the time since the fund was launched, and it does not directly reflect the performance of the fund manager. Nevertheless, it has at least prompted the industry to start paying real attention to the issue of investors’ profitability.
V. Implications for Ordinary Investors
1. Don’t Just Look at How Much a Fund Has Increased in Value: Focus more on the proportion of investors who have made a profit with that fund. If a fund has risen sharply but has a low proportion of profitable investors, it may indicate that many investors bought it at the peak and lost money.
2. Choose Stable Funds: Funds with lower fluctuations and smaller drawdowns are more likely to help you make a profit in the long term, even if they don’t rise quickly.
3. Avoid Chasing Short-term Gains: Don’t rush to buy a fund just because it’s performing well recently, as you might buy it at a high price.
In short, buying a fund is not about which one rises the fastest; it’s about which one can actually help you make money. The newly disclosed metrics provide a clear reflection of whether a fund is capable of helping ordinary investors make a profit.