Summary of Key Points
As a public fund company affiliated with Industrial Bank, Xingye Fund has a clear advantage in its fixed-income business (bond products), but its equity business (stock products) has long been weak. To overcome this challenge, the firm has hired renowned fund managers such as Qian Ruinan and market-oriented general managers like Li Hui in an attempt to strengthen its equity capabilities. However, these efforts have not met expectations. With Li Hui's departure, Xingye Fund is now at a crossroads: should it continue to seek market-oriented managers or appoint executives from its parent bank? The root of the problem lies not with the individual managers but with systemic constraints imposed by the shareholders, such as short-term performance evaluations, salary caps, and lack of strategic continuity. Unless these underlying issues are addressed, no matter which path is chosen, the firm will struggle to break the pattern of dominating fixed-income while underperforming in equity.
Current Situation: Fixed Income as the Mainstay, Equity as a Secondary Focus
Xingye Fund's performance can be described as a mix of success and challenges:
- Fixed Income Business: Leveraging Industrial Bank's channels and institutional resources, Xingye Fund's fixed-income products (especially medium to long-term pure bonds) have seen significant growth. As of Q2 2026, the scale of these products exceeded 260 billion yuan, ranking it around 15th in the industry. These products are primarily targeted at institutions and offer stable returns with low risk, making them a crucial source of profit for the firm. The team is also stable, with core fund managers having over 10 years of experience.
- Equity Business: However, the equity business accounts for only 4.87% of the total portfolio (Q2 2026), and both active equity and index funds have not performed well. The active equity team is small and has mediocre results; there are no star fund managers. Although nearly 10 index funds have been launched, the largest one, a Hong Kong Stock Connect internet ETF, only generates around 400 million yuan in sales, largely relying on Industrial Bank's distribution channels. Even the "fixed-income+" products (which combine bonds with a small portion of stocks) are not very successful.
In short, Xingye Fund is like a student who excels in one subject (fixed income) but struggles in another (equity), resulting in overall performance that places it in the top 30, albeit with significant structural weaknesses.
Two Attempts at Transformation: Why Did They Fail?
Xingye Fund is not unwilling to change, but the challenges are substantial:
- First Attempt with Qian Ruinan: In 2021, the firm hired Qian Ruinan from Galaxy Fund, hoping he could boost the active equity business. However, the market turned bearish during his tenure (2021–2023), leading to significant losses for the products he managed, and he left the company in 2024.
- Second Attempt with Li Hui: In 2023, Li Hui (formerly from Guotai Fund) was appointed as general manager. Although he knew about marketing channels, he lacked experience in investment research. His strategy focused on strengthening fixed-income operations before attempting to expand into equity through index funds. While fixed-income assets did grow (from 290 billion yuan to 550 billion yuan), equity performance remained poor. The firm failed to develop unique strategies for its index funds and failed to attract top talent for the active equity team.
Why Did Yongying Fund Succeed?
Yongying Fund, also established in 2013 as a bank-affiliated public fund, has successfully transformed from a fixed-income-focused entity into a comprehensive financial platform with equity assets ranking among the top ten in the industry. The differences lie in:
- Market-Oriented Incentives: Yongying Fund offers an employee stock ownership plan that aligns employees' interests with the company's long-term goals. For example, the chief equity officer receives both salary and dividends from the company's profits, motivating them to invest in the equity business.
- Strategic Consistency: The firm's leadership has remained stable since 2016, with a clear vision for becoming a comprehensive asset management platform that is willing to tolerate short-term losses in the equity business.
- Shareholder Support: Ningbo Bank, as a major shareholder, does not view the fund merely as a tool for selling fixed-income products. It supports the development of an independent equity brand.
The Dilemma: Market-Oriented Managers or Executive Appointments from the Parent Bank?
Xingye Fund faces two options, each with its pros and cons:
- Market-Oriented Managers: They understand the public fund industry better and can attract talent for the equity business. However, they are constrained by the parent bank's systems (salary caps, budget limitations, etc.), making it difficult to improve performance.
- Executive Appointments from the Parent Bank: These appointments facilitate smoother communication with the bank and leverage its distribution channels, but they may reinforce the firm's reliance on fixed-income.
Conclusion: Simply changing managers will not solve the problem. The root issue lies with the shareholders. If Industrial Bank does not reform its policies—such as extending the evaluation period for equity business, increasing salaries, and allowing employee stock ownership—no matter who is appointed, Xingye Fund will continue to struggle in equity.
The Way Forward: Changes Required at the Shareholder Level
For genuine transformation, Industrial Bank needs to:
1. Lengthen Evaluation Periods: Extend the evaluation period for equity business from one year to three to five years and allow for short-term losses to avoid focusing solely on immediate profits.
2. Provide Incentives for Research Teams: Offer higher bonuses based on performance within the parent bank's salary structure to attract top talent.
3. Stabilize Management: Ensure that general managers serve for a minimum of three to five years to maintain strategic continuity.
4. Clarify Roles: Assign specific responsibilities, with the general manager focusing on operations and marketing, and a dedicated person in charge of investment research.
Without these changes, Xingye Fund will likely remain trapped in its current position, with fixed-income dominating while equity remains underdeveloped.
In summary, the problems at Xingye Fund cannot be resolved by merely changing managers. The company and its shareholders must make fundamental changes to support the growth of its equity business.