New Fund Issuances Face Cold Reception: Where Has All the Money Gone? – A Layman’s Explanation of the Current Public Fund Market’s “Divided Reality”
Summary of Key Points
In simple terms, the current fund market is experiencing a very clear “divided reality” phenomenon.
The “Cold” Side: Fewer investors are willing to try and make quick money by buying equity funds. People are hesitant or unwilling to invest. As a result, many newly issued equity funds are struggling to sell, forcing fund companies to repeatedly extend the sales deadline (commonly referred to as “overtime sessions”), with some products barely managing to raise enough funds after three weeks.
The “Hot” Side: Although investors are reluctant to take big risks, they don’t want their money to lie idle either. Consequently, “fixed-income+” products, which combine a majority investment in bonds for stability with a small portion in stocks for potential returns, have become highly sought after. Many of these products sell out before their deadline, and fund companies even end sales early because no one is interested in purchasing further. This reflects a general shift towards caution and a desire for stability.
Detailed Analysis: Understanding Market Changes from Five Dimensions
1. Direct Observation: New Funds Struggling to Sell, Frequent Extensions
If you’ve been following fund news recently, you might have noticed a strange phenomenon: many new funds, originally scheduled to close on September 15, suddenly announce extensions to September 24, or even further delays a few days later.
- Data Proof: In just four trading days from September 10 to 15, 14 funds announced sales extensions.
- Who’s Extending? Previously, only smaller companies had difficulty selling products, but now even popular offerings from major institutions like Huaan, China Merchants, and Industrial Bank (such as satellite industry and AI ETFs) are being extended.
- Extreme Case: One “robot ETF” was extended twice within three weeks: from September 4 to September 14, and then directly to October 14. This indicates that even the hottest tech themes are no longer attracting easy investment.
Layman’s Interpretation: It’s like a shopping mall promotion. In the past, it was “buy now while stocks last”; now, the products are on the shelves, but no one is buying. Fund companies are extending the sales period in hopes of attracting more investors.
2. Capital Flow: From “Chasing Gains to Seeking Stability”
Why are equity funds struggling to sell while “fixed-income+” products are booming? The core reason lies in the change in investors’ attitudes:
- Equity Funds: High risk and large volatility. With the market fluctuating, the potential for profits is not clear, so people are cautious and opting to wait and see.
- Fixed-Income+ Products: These are hybrid investments, with 90% in bonds for stability and 10% in stocks for potential returns. They offer a balance of safety and flexibility.
- Institutional Buying: Not only individual investors but also large institutional funds are buying these products. For example, the China Merchants Antuo fund, originally planned to sell until December 3, closed early on September 24 due to high demand.
Layman’s Interpretation: People used to aim for big profits, but now they’re more focused on avoiding losses and earning a modest interest.
3. Market Situation: Stock Market in a Stagnant Phase
Why are people reluctant to buy equity funds? The stock market is in an awkward position:
- Index Performance: The Shanghai Composite Index has fallen 2.63% since its July peak, despite some rebounds. It has been fluctuating between 3,800 and 4,000 points.
- Expert Opinion: Researcher Wang Li from Great Wall Fund suggests that the market is unlikely to see significant drops or rises and is likely to remain stagnant.
- Lack of Leading Trends: Tech stocks (AI, robotics, etc.) have risen sharply and are now adjusting, while non-tech stocks (consumer, pharmaceuticals) are performing poorly due to economic factors. There’s no clear leader that can drive the market upward.
Layman’s Interpretation: The market is like a car with the accelerator pressed but not moving (lack of investor interest), or the brake released but not causing a slide (support from the bottom).
4. Underlying Reasons: External Disturbances + Internal Caution
Besides market volatility, two additional factors are affecting investor behavior:
- External Disturbances (Global Factors):
- Uncertainty about U.S. interest rate hikes and global liquidity tensions.
- Volatility in overseas tech stocks affecting domestic sentiment.
- If the Fed signals further tightening (higher interest rates), global funds may withdraw, which is detrimental to the A-share market.
- Internal Constraints (Performance Pressures):
- Short-term funds (such as some wealth management products) are reducing risk by selling stocks and switching to bonds or cash at the end of the year to meet performance targets.
- This creates a situation where fewer people want to buy and more want to sell, leading to a tight capital market.
Layman’s Interpretation: It’s like trying to eat at a restaurant in the rain (external risks) with limited money (lack of new funds) and needing to save some for the New Year (year-end performance goals). So, people decide to wait until the rain stops and they have more money.
5. Future Strategies: Avoid One-Sided bets, Use a “Barbell Strategy”
Experts advise against blindly buying low or chasing high in a volatile market. Instead, adopt a more balanced approach:
- Diversified Allocation: Don’t put all your money in one sector (e.g., only tech or banks).
- Barbell Strategy (suggested by Wang Zonghao of UBS):
- Offensive End: Invest in AI technology hardware and export leaders with solid growth prospects.
- Defensive End: Invest in bank stocks and high-dividend stocks for stability.
- Focus on Areas: Autonomous control (domestic substitution in tech and materials), strategic resources (affected by global inflation and supply), and high-dividend stocks (banks and utilities).
Layman’s Interpretation: Investing is like playing golf. Don’t focus all your efforts on one hole; use a “barbell” approach with both an “offensive” (tech stocks for high returns) and a “defensive” (bank stocks for stability) strategy. This way, you can benefit from both gains in tech stocks and the stability of dividend-paying stocks if the market declines.
Advice for Ordinary Investors
1. Don’t Rush to Buy Low: The market is still volatile, and there’s no clear upward trend. Don’t invest all your money in equity funds.
2. Consider Fixed-Income+ Products: If you’re risk-averse and seek stability, look for “fixed-income+” products that have already raised funds. While their returns may be lower than equity funds, they offer more security.
3. Diversify Your Portfolio: If you want to invest in the stock market, use a “barbell strategy” with a portion in high-dividend stocks (banks/Utilities) and a portion in performance-driven tech/exports.
4. Be Patient: Market stabilization takes time, and external risks (like Fed policies) need to be addressed. Now is not the time for aggressive bets but for observation and strategic planning.
In Summary: The market is difficult to both buy into and sell from. People are seeking safety. Ordinary investors should remain calm, avoid excessive risk, and adopt a balanced investment strategy, waiting for the market to stabilize before increasing their investment.