Chip sell-off helps boost China’s private funds as US$83.3b is pulled out of mutual funds

China's private funds experienced a surge in July as the value of assets under management (AUM) managed by mutual funds declined, according to data from the Asset Management Association of China. Investors diversified their portfolios due to a sell-off of semiconductor shares, leading to a net AUM decrease of 560 billion yuan (US$83.3 billion) for mutual funds, representing a 1.4% month-on-month reduction.

The mutual fund AUM fell to 39.11 trillion yuan in July, ending a four-month growth streak and hovering around a record high of 39.67 trillion yuan by the end of June. In contrast, China's domestic private funds managed a record 25.73 trillion yuan of assets by the end of July, marking an 8.7% month-on-month increase. This represented the 10th consecutive month of expansion for private funds in China.

The slump in semiconductor shares, particularly in Shanghai's Star 50 Index, which plummeted nearly 26% in July, impacted the mutual fund sector. However, the Star 50 Index is still up 24.36% for the year, while the broader CSI 300 Index fell 2.68%. Among private funds, those investing in unlisted equities expanded by 570 billion yuan (0.5% month-on-month) to 11.93 trillion yuan by the end of July.

Meanwhile, the total net worth of domestic equity mutual funds declined 0.9% month-on-month to 4.99 trillion yuan, and the AUM of mixed-asset funds fell 18% to 3.8 trillion yuan.