Mutual Funds Targeting Bonds, High-Dividend Shares Gain Traction Amid Stock Market Gloom

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China’s bond mutual funds continued to gain traction in the first half of the year, while their equity peers were mired in stock market gloom, except for those targeting high-dividend-paying stocks.

Mutual funds emerged as the preferred asset management avenue in China last year, outstripping banks’ wealth management products in terms of net asset value for the first time.

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China's bond mutual funds outperformed equity mutual funds in the first half, with an average return of 2.26% versus a 1.74% average loss.
Mutual funds in China topped banks' wealth management products in net asset value last year and reached 31.2 trillion yuan ($4.4 trillion) by May.
Equity funds focused on high-dividend stocks saw gains, with the CSI Dividend Index increasing nearly 8% in the first half.

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Who’s Who

China International Capital Corp. Ltd.: China International Capital Corp. Ltd. (CICC) is a leading Chinese investment bank. According to an April report by CICC, high-dividend-paying stocks in China will likely continue to be popular, especially among those increasing their dividend payments, as investors seek reliable cash returns amid market turbulence and weak economic recovery.

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What Happened When

2023：: Mutual funds outstripped banks’ wealth management products in terms of net asset value for the first time.

April 2024：: The State Council released the latest National Nine Articles, which call for improvement in the sustainability and stability of dividend distribution.

April 2024：: China International Capital Corp. Ltd. reported that high-dividend-paying stocks will likely remain popular, especially those increasing their dividend payments.

The first half of 2024：: China’s more than 5,800 bond mutual funds with available data produced an average return of 2.26%.

The first half of 2024：: The benchmark Shanghai Composite Index was down 0.25%, the Shenzhen Component Index was down about 7%, and the ChiNext Index fell roughly 11%.

The first half of 2024：: The CSI Dividend Index increased nearly 8%.

As of the end of May 2024：: The net asset value of mutual funds reached a record high of 31.2 trillion yuan ($4.4 trillion), roughly double the figure recorded as of the end of 2019.

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