Author: Yang Guang, Coopers
Public funds have been losing money every year since 2022, and bank wealth management has earned hundreds of billions every year, but why has the scale of bank wealth management only increased by 1 trillion since 2022, while public funds have skyrocketed by 5 trillion. Judging from the data, the people's money seems to have moved from bank wealth management to public funds, what happened to cause this strange phenomenon of performance and scale going in the opposite direction?
For a long time, people have a natural sense of trust in banks, so they basically treat bank wealth management products and managers without discrimination - only looking at product performance, not product investment, nor paying attention to the investment ability of managers, and not sensitive to bank wealth management information disclosure. With the implementation of the new regulations on asset management in 2022, the era of new net-worth bank wealth management products is coming, and the traditional bank wealth management products with guaranteed capital and interest have withdrawn from the historical stage, and trillions of bank wealth management products have truly bid farewell to the era of blind selection.
According to the statistics of the Jinxin Fund Evaluation Center, in the first half of 2024, a total of 178 banking institutions and 31 wealth management companies across the country issued a total of 15,400 new wealth management products, raising a total of 133.68 trillion yuan. A total of 239 banking institutions and 31 wealth management companies in the country have 40,000 existing products, an increase of 0.49% from the beginning of the year; The scale of existence was 28.52 trillion yuan, an increase of 6.43% from the beginning of the year. Among them, a total of 32 wealth management companies have been established, and there are only 21,600 existing products of wealth management companies, with an existing scale of 24.33 trillion yuan, accounting for 85.29% of the total market.
As of the end of June 2024, there were 163 public fund management institutions in mainland China (including 148 fund management companies and 15 asset management institutions with public offering qualifications). A total of 630 new products have been issued, raising a total of 0.68 trillion yuan; 12,000 existing products, an increase of 4.41% over the beginning of the year; The scale of existence was 31.08 trillion yuan, an increase of 12.62% over the beginning of the year.
As of June 30, 2024, the scale of bank wealth management was 28.52 trillion yuan, an increase of 6.43% from the end of last year; The total net asset value of mainland public funds was 31.08 trillion yuan, an increase of 12.61% from the end of last year. In the first half of 2024, the growth and growth rate of public funds will exceed that of bank wealth management.
From the comparison of the scale of wealth management companies and public funds, from the data since the implementation of the new regulations on asset management in 2022, It will be found that the scale and growth rate of bank wealth management and wealth management companies have been surpassed by public funds: the scale of bank wealth management will be 27.65 trillion yuan in 2022, drop to 26.8 trillion yuan in 2023, and increase to 28.52 trillion yuan in the first half of 2024, and the scale of wealth management companies has continued to grow since 2022, with 22.24 trillion yuan in 2022, 22.47 trillion yuan in 2023, and 24.33 trillion yuan in the first half of 2024. It can be seen that the growth of bank wealth management from 2022 to the first half of 2024 will only be 870 billion yuan, while the growth of wealth management companies will be 2.09 trillion yuan. In the same period, public funds increased from 26.03 trillion yuan in 2022 to 27.6 trillion yuan in 2023, and soared to 31.08 trillion yuan in the first half of 2024, an increase of 5.05 trillion yuan. Public offerings and funds have surpassed bank wealth management in terms of absolute scale and growth rate.
In 2022, bank wealth management raised 89.62 trillion yuan, while public funds raised only 1.5 trillion yuan, in 2023, bank wealth management raised 57.08 trillion yuan, public funds raised 11,500 yuan, and in the first half of 2023, bank wealth management raised 336,800 yuan, and public funds raised 680 billion yuan.
From the above data, the following points can be seen: the ability of bank wealth management to raise funds far exceeds that of public funds dozens of times; The ability of both public funds and bank wealth management to raise funds has been declining since 2022, which reflects the declining enthusiasm of investors for new products issued by bank wealth management and public funds; If combined with the scale of existence, bank wealth management continues to raise new products, and old products expire one after another. In essence, the growth of the scale of bank wealth management is mainly driven by new issuance, and the existing products will end after expiration. However, the contribution of new products in the growth of the scale of public funds since 2022 is very small. So what is the reason for the increase in the scale of public funds by 5.05 trillion since 2022?
According to the data of Ji'an Jinxin Fund Evaluation Center, the scale of pure debt funds in public funds since 2022, 2023 and the first half of 2024 will be 5.84 trillion yuan in 2022, 7.17 trillion yuan in 2023, and 7.93 trillion yuan in the first half of 2024, respectively, and 10.42 trillion yuan in 2022, 11.44 trillion yuan in 2023, and 13.19 trillion yuan in the previous year of 2024. It can be seen that the pure debt type of public funds will increase by 1.33 trillion yuan in 2023 compared with 2022, and the currency fund will increase by 1.02 trillion yuan, and the scale of these two types of fund products will increase by 2.35 trillion yuan in 2023, an increase of 22.77% and 9.79% respectively; In the first half of 2024, the growth rate of pure bond funds and money market funds of public funds continued to grow rapidly, with the scale of pure debt funds in the first half of 2024 reaching 7.93 trillion yuan, an increase of 760 billion yuan over the whole year of 2023, and the growth rate of monetary funds in the first half of 2024 increasing by 1.75 trillion yuan, or 15.3%, compared with the annual scale of 2023, significantly exceeding the growth rate of 2023 compared with 2022. In the first half of 2024, the scale of these two types of funds has increased by 2.51 trillion yuan. It is not difficult to see that the total scale of these two types of funds has increased by 4.86 trillion yuan from 2022 to the first half of 2024, accounting for 96.24% of the total growth of 5.05 trillion yuan in public funds.
Table 1: Comparison of product scale data of bank wealth management and public funds in the first half of 2022, 2023 and 2024
Source:
Bank Wealth Management Registration and Custody Center, Ji'an Jinxin Fund Evaluation Center
Table 2 Comparison of bank wealth management and public funds in 2022, 2023 and 2024 to create income for investors
Data source: Bank Wealth Management Registration and Custody Center Ji'an Jinxin Fund Evaluation Center
If we compare the performance of bank wealth management and public funds since the implementation of the new regulations on asset management in 2022, this is a strange phenomenon with the scale growth rate of the two major asset management industries.
According to the statistics of Jinxin Fund Evaluation Center, since the implementation of the new regulations on asset management, bank wealth management has been much better than public funds in terms of creating profits for investors. Bank wealth management as a whole has achieved positive returns every year, while public funds have lost money for two consecutive years in 2022 and 2023: in 2022, bank wealth management earned 880 billion yuan for investors, and public funds lost 1,478.365 billion yuan for investors; In 2023, bank wealth management will earn 698.1 billion yuan for investors, and public funds will lose 427.292 billion yuan for investors; In the first half of 2024, bank wealth management earned 341.3 billion yuan for investors, and public funds earned 57.213 billion yuan for investors.
Why is the scale of profitable bank wealth management surpassed by loss-making public funds? This is a structural reason. The above data shows that the total scale of public funds, pure debt funds and currency funds increased by 4.86 trillion yuan from 2022 to the first half of 2024, accounting for 96.24% of the total growth of 5.05 trillion yuan in public funds. These two types of products are precisely the main force for public funds to make money for investors in the context of the continued downturn in the equity market in 2022. According to the data of Jinxin Fund Evaluation Center, the pure debt fund will make an overall profit of 132.243 billion yuan in 2022, 221.763 billion yuan in 2023, and 166.589 billion yuan in the first half of 2024, and the money market fund will make a profit of 202.017 billion yuan in 2022, 232.687 billion yuan in 2023, and 123.348 billion yuan in the first half of 2024.
In 2022, public funds earned 334.26 billion yuan for investors by relying on 5.84 trillion pure debt funds and 10.42 trillion money market funds, 454.45 billion yuan for investors in 2023 by relying on 7.17 trillion pure debt funds and 11.44 trillion yuan, and 289.937 billion yuan for investors in the first half of 2024 by relying on 7.93 trillion pure debt funds and 13.19 trillion currency funds. The pure debt funds and currency funds in the public funds have assumed the important responsibility of the earning capacity of the public funds, and realized the positive interaction between performance and scale.
If we compare the returns of various products of bank wealth management and public funds, the return rate from 2022 also confirms this result. The average return of fixed income products, which account for the largest proportion of bank wealth management scale, will be 1.41% in 2022, 3.28% in 2023, and 1.78% in the first half of 2024; In contrast, the performance of pure debt funds of public funds is even better: the average return in 2022 is 2.05%, the average return in 2023 is 3.62%, and the average return in the first half of 2024 is 2.3%. Benefiting from the bull market in the bond market, the performance of pure debt funds is better than that of bank wealth management fixed income products, which has naturally won the favor of investors, and the scale has risen.
It is worth noting that in the comparison of the performance of bank wealth management cash management products and the money market funds of public funds, the average performance of bank wealth management cash management products in the first half of 2024 was counterattacked by the money market funds of public funds. According to the data of Ji'an Jinxin Fund Evaluation Center, the average performance of bank wealth management cash management products will exceed the average return of money market funds in 2022 and 2023, but in the first half of 2024, bank wealth management cash management products have achieved an average return of 0.87%, underperforming the average return of 0.95% of public fund money market funds. This also explains why the scale of money market funds will soar by 1.75 trillion yuan in the first half of 2024, with a growth rate of 15.3%.
So is the fixed income management level of bank wealth management inferior to that of public funds? This is a very complex issue, and it is clear that it cannot be concluded simply on the basis of data, so I will not discuss it in depth here.
Table 3 The average rate of return of various products of bank wealth management and mutual funds since 2022
Data source: Bank Wealth Management Registration and Custody Center, Ji'an Jinxin Fund Evaluation Center
In addition, the average rate of return of mixed and equity wealth management products of wealth management companies is better than that of public funds, and these two types of products account for a small proportion of bank wealth management and can be ignored. These two types of products account for a relatively high proportion of public funds, but both 2022 and 2023 have led to large losses for investors, which is the main reason for investors to criticize public funds.