Multiple Funds Adjusting Scale "Flow Valve"

As the annual market trends draw to a close, mutual funds are entering the final stage of their yearly performance sprint. Currently, as of November 28, two-thirds of actively managed equity funds have regained positive returns this year. Products heavily invested in the technology sector and those focused on the Beijing Stock Exchange theme are leading the pack, but due to the minor performance discrepancies among these products, the final rankings await market confirmation.

Among them, Guorong Rongsheng Leading Selection A has achieved an impressive cumulative return of 51.71%, placing it first among actively managed equity funds; whereas at the bottom, Jinyuan Shun'an Quality Selection A has returned -37.46% year-to-date. This signifies that with merely over a month left until the year ends, the performance gap between the top and bottom performing actively managed equity funds is approaching 90 percentage points.

Meanwhile, multiple fund managers have been observed adjusting their "flow valves." Some fund products are "declining large clients," announcing adjustments or suspensions of large-scale purchases and regular investment activities, proactively controlling product sizes; others are choosing to bolster their "ammunition," attracting more capital inflows.

"Each product has its own situation. Generally speaking, well-performing products opt for purchase restrictions to safeguard their performance, while some products relax these restrictions to strive for larger scale in the year-end push," a mid-to-large fund industry insider told Yicai. The decision to limit purchases or not is essentially a choice made by fund managers, which may be adjusted or revoked in response to market changes and does not necessarily reflect the quality or performance of the funds.

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Performance Enters the Sprint Stage

Since November, the A-share market has once again entered a phase of turbulence and consolidation, with the Shanghai Composite Index fluctuating around the 3300-point mark. Data show that as of the market close on the 28th, the Shanghai Composite Index climbed and then retreated, falling back below 3300 points, landing at 3295.7 points, with the year-to-date increase narrowing to 10.78%.

The market's fluctuations have dampened the profit-making effect. According to Wind, as of November 27, the equity-mixed fund index has slightly declined by 0.4% since the beginning of this month. Excluding newly established products from the second half of the year, among the 4,402 actively managed equity funds with comparable data (including ordinary stock funds, flexible allocation funds, equity-mixed funds, and balanced mixed funds; only counting initial funds, the same below), two-thirds have achieved positive returns this year.

Currently, the top three funds exhibit minor performance differences. Leading the pack is Guorong Rongsheng Leading Selection A, with a cumulative net return of 51.71% year-to-date; followed closely by Morgan Stanley Digital Economy A and Yinhua Digital Economy A with returns of 51.41% and 49.77%, respectively.

Following closely are products like Huaxia Beijing Stock Exchange Innovative SMEs Selected Two-Year Open, Huaxia Jianlong Selected, and Wanji Emerging Blue Chip A, with the top ten staying anchored at a threshold of 41.67%. Furthermore, there are six products that have also seen cumulative returns exceeding 40% this year, including Changsheng Internet A and Western Benefit New Power A.

Overall, products invested heavily in the technology sector and those focused on the Beijing Stock Exchange theme remain at the forefront; however, the performance differences among the leaders are minimal, with the narrowest performance gap between any two products being just 0.02 percentage points. This indicates that in the context of a recently volatile market, even slight shifts in trends can lead to changes in the rankings of fund products.

In late October, only four products among the top ten maintained their positions in the leading performance tier, with Morgan Stanley Digital Economy A occupying the top spot with a cumulative return of 57.97% for the first ten months; meanwhile, Yinhua Digital Economy A, ranked 170th at that time, climbed to third place within less than a month, closing the gap with the first position by less than 2 percentage points.

Additionally, benefiting from the strong performance of the Beijing Stock Exchange, eleven themed funds have rebounded to varying degrees this month, with the top performer, Huaxia Beijing Stock Exchange Innovative SMEs Selected Two-Year Open, surging 14.79% this month to break into the top five, a substantial leap from its previous rank, which was outside the top 110.

However, over 1,400 actively managed equity products continue to struggle with negative returns, with six products experiencing year-to-date declines exceeding 30%. For instance, Jinyuan Shun'an Quality Selection A sits at the bottom with a return of -37.46% this year, while Furong Value Selection A and Dacheng Dynamic Quant A have also dropped more than 32%. Consequently, the performance gap between the top and bottom actively managed equity funds is nearly 90 percentage points.

Year-End Capital Flow Adjustment

As the annual market draws to a close, the time available for fund products to "strive for yearly performance" is dwindling. Observations reveal that several funds have chosen to actively "limit flow," issuing announcements to suspend large-scale purchases and regular investment activities.

On November 28, the Jin Ying Xin Rui Hybrid Fund, co-managed by Long Yuefang and Ni Chao, announced a halt to large purchases from institutional clients (including conversions and regular investments), with a single-day purchase limit set at 100 yuan. Additionally, funds like Minsheng+Yin Xin Fu Hybrid and Wanji New Opportunities Leading Enterprises Hybrid also released purchase restriction announcements on the same day.

According to statistics from Yicai, as of November 28, nearly a hundred equity fund products (calculated separately by share class) have implemented suspensions on large purchases since the beginning of November. This includes products managed by well-known fund managers.

For instance, Huashang Superior Industries managed by Zhou Haidong has a daily purchase limit of 100,000 yuan for institutional clients. The Fuguo Tianhui Growth Hybrid (LOF) managed by Zhu Shaoxing has extended its 20,000 yuan daily limit to include A, C, and D shares. Both are products from star fund managers with management scales exceeding 20 billion yuan.

As for the latest purchase status, currently, 369 actively managed equity funds are under a suspension for large purchases. Among these restricted products, a quarter have achieved returns exceeding 10% this year. Notably, both Huaxia Jianlong Selected and Huaxia Superior Selected have recorded annual returns above 40%.

Simultaneously, some fund products have recently lifted purchase restrictions, opting to actively "bolster their firepower." According to incomplete statistics from Yicai reporters, in the past month alone, there have been 79 announcements regarding the resumption of large purchases, including Tianhong New Value Hybrid and Changsheng Shengfeng Hybrid.

Whether "welcoming clients" or actively "limiting flow," the majority of official reasons provided in the announcements aim to protect the interests of fund shareholders and ensure stable fund operations. So, what signal does the lifting or maintaining of "purchase restrictions" convey at this juncture?

Industry insiders suggest that by year's end, fund companies have dual demands for performance and scale; hence, different products may adopt varying strategies. For instance, loosening purchase restrictions aims to attract more capital inflows, while limiting large purchases seeks to control scale, ensure fund stability, and manage the impact of short-term subscriptions and redemptions.

"Affected by investment styles and market capacity, fund products aim for a relatively ideal scale," the aforementioned mid-to-large fund insider told Yicai. For certain small-to-mid market cap style products, flexibility with capital can enable them to seize opportunities during market fluctuations. However, such products are sensitive to scale; excessively large inflows in a short period may disrupt the investment strategies and management quality of fund managers and dilute the returns for original shareholders.