McKinsey: making money from funds in the next five to 10 years

“The situation of” funds making money and basic people losing money “will be gradually broken.” On January 21, McKinsey, a global management consulting company, published the “how far is China’s first-class public funds from the world’s first-class?”? 》In this report, the agency made the above forecast for the development of China’s public fund industry in the next 5-10 years.


China’s public fund industry has a history of more than 20 years, but many funders will have the same feeling that “the fund makes money and the funders lose money”.


According to the statistics of China Fund Industry Association, as of the end of 2018, the average annualized yield of stock funds is 14.1%, and that of bond funds is 6.9%, which is significantly higher than the market risk-free yield level. But at the same time, the survey shows that nearly 60% of individual fund investors have not made profits or losses, of which about 6% of Jimin’s losses are more than 30%. As for the dilemma of “the fund makes money and the people lose money”, McKinsey believes that this phenomenon will change greatly in the next five to 10 years. The preference of investors is changing. Investors pay more and more attention to the investment allocation with certain fluctuation to achieve the investment goal, and they increasingly agree with the concept of “long-term investment” and “value investment”.

McKinsey: making money from funds in the next five to 10 years

Ma Ben, global managing partner of McKinsey, pointed out that in the second half of 2020, closed investments issued by China’s top public funds are very popular, which confirms the substantial improvement of investors’ maturity. Secondly, now the head public offering is doing the exploration of buyer investors, so as to better help investors to allocate assets. At the same time, the head public offering is also thinking about how to replace financial management, and help bank customers achieve the investment goal of “low volatility, medium income” by replacing bank financial management with asset products of scheme type.


At present, there is a contradiction between performance and scale in the public offering industry. Fund managers have their own ability circle, in the case of limited management ability, once the scale is too large, it will bring certain difficulties to the fund investment operation, leading to a decline in performance. Ma Ben believes that the average asset management scale of China’s single product is significantly lower than that of the global market, partly due to the new development oriented ecology.


Ma Ben believes that with the improvement of head wealth management business in the past few years, the profitability of products is becoming more and more important. In this context, the head of the public fund is thinking about how to solve the problem of asset management boundary, how to make the investment research mode to carry large-scale investment. Vertical, integrated model, fund manager team model, are good solutions.


McKinsey expects that after the structural reform in 2017-2020, China’s large asset management market will return to the growth track in the next five years. The average annual growth rate of assets under management will reach 9% from 2019 to 2025, and the asset management scale is expected to reach 196 trillion yuan in 2025.


“The public fund business will reach an average annual growth rate of 18% in 2019-2025, and become the leader in attracting new funds in various types of large asset management licenses.” McKinsey believes that there will be six major trends in the development of China’s public fund industry in the next five to 10 years


Trend 1: Retail capital will be the most important new capital source for public offering business in the future. It is estimated that retail business will create about 16 trillion yuan of incremental capital for public offering fund by 2025. At the same time, the situation that “the fund makes money and the people lose money” will be gradually broken.

McKinsey: making money from funds in the next five to 10 years

Second, competition and cooperation coexist, and financial customers mainly in banking and insurance will still be important institutional customers of public funds.


Third, the structural reform of the pension system will bring opportunities for the outsourcing of the first and second pillars and the three pillars of the pension system.


Trend 4: equity products and fixed income + products will lead the market growth, and asset management institutions will continue to promote the diversification of product strategies.


Trend 5: the global investment of China’s public funds will be further accelerated.


Trend 6: the Matthew effect of local industries will intensify.

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