China’s Bond Funds Outshine Equity Peers Amid Stocks Slump

Rising popularity of bond funds gives the mutual fund industry a much-needed boost as it grapples with stock market rout

China’s mutual funds produced a mixed bag of performance last year. Publicly offered equity funds endured a second straight year of losses, grappling with a prolonged stock market rout. Bond funds, on the other hand, had a comparatively stellar year.

The uptick in bond fund flows fueled a shift in China’s asset management landscape, with mutual funds emerging as the most preferred asset management avenue, outstripping banking wealth management for the first time.

This shift reflects investors’ concerted efforts to navigate prevailing financial market volatility and mitigate risk in the country’s stock market, which has seen a protracted rout continue into this year.

Mixed performance

The median rate of return for equity mutual funds was roughly negative 16.5% last year, according to data compiled by financial information provider East Money Information Co. Ltd. Around 95% of the funds reported negative returns, with the majority posting a loss of more than 10%.