Retail investors turning AI & professionally managed funds
In China, retail investors are calling time on the do-it-yourself investment boom.
They’re channeling their love of stock trading through professionally-managed funds instead, accelerating a trend that saw a record 1.57 trillion yuan ($243 billion) of equity funds launched last year, according to data from consultancy Z-Ben Advisors Ltd.
The shift, in stark contrast to the boom in share trading by individuals globally, comes as Chinese families move more of their money into equities. Rock-bottom interest-rates, a purge of peer-to-peer lending platforms and stagnant property prices in large cities have left investors with fewer alternatives within the nation’s capital-controlled borders.
Zheng Meng, a 33-year-old civil servant in Beijing, is one of those changing tactics.
“The bread and butter of my investments will gradually shift to mutual funds as I double down this year,” said Zheng, who has about half of his total assets invested in shares. “I don’t have the energy or resources to research each stock.”
Adding to allure of the pros are their market-trouncing returns. The weighted average return of stock funds tracked by China Securities Index Co. was 47% last year, beating the benchmark CSI 300 Index by 20 percentage points.
Against numbers like that, traditional investment destinations don’t look attractive.
Returns in property have slumped since the government’s 2016 edict that “houses are built to be inhabited, not for speculation” prompted local governments to introduce a raft of restrictions to cool price growth. The average value of new residences in the country’s three most expensive cities of Shenzhen, Beijing and Shanghai have grown less than 10% in total over the past four years, according to official data.
Expected one-year returns from banks’ wealth management products hit a record low of 3.45% in recent weeks, according to a research note from Guotai Junan Securities Co.
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