Mutual fund managers across China should enhance investor
education and improve their management abilities to prepare for
another year of expansion, insiders said after the combined money
invested in such funds hit a record high.
By the end of last year, the mutual fund industry managed net
assets worth 3.27 trillion yuan (US$442.5 billion), nearly
quadrupling 2006's 856.4 billion yuan, according to a report made
public yesterday by the research division of China Galaxy
Securities Co Ltd.
China Asset Management Co, Bosera Asset Management Co and
Harvest Fund Management Co secured the top three spots by each
managing more than 200 billion yuan in funds.
"The industry expanded by leaps and bounds last year. The
outlook for this year remains good, as the domestic stock market
may continue to boom based on people's positive sentiment," said
Sang Yu, general manager of marketing development department with
the Great Wall Fund Management Co. "The securities regulator is
also expected to introduce stock index futures, a 'through train'
program and the reform of B shares to create more channels for
investors, including our money managers."
Stock index futures will allow investors to sell short for the
first time in the Chinese mainland, while the through train program
enables investors to buy into Hong Kong equities through a Bank of
China Ltd account in Tianjin.
Plans to merge hard-currency B shares with yuan-denominated A
shares will consolidate the domestic stock market.
Meanwhile, the Qualified Domestic Institutional Investor scheme
will continue to offer a channel for fund managers to source
returns in overseas markets.
Yet some work needs to be done to prepare the industry for
further expansion, said Sang.
First, fund management firms should enhance investor education.
By the end of 2007, the industry had more than 100 million accounts
under 363 mutual fund products. It meant that one out of four
households opened an account.
However, many investors don't truly understand the differences
between the products. They need to be informed about various risks
instead of simply being encouraged to invest, said Sang.
(Shanghai Daily January 4, 2008)
