Rejecting customers on one hand, welcoming customers on the other? Money market funds and bond funds "close doors" to prevent arbitrage. New fund launches showcase a "battle for market share."

Source: Economic Information Daily Author: Zhang Hanqing, Xu Zhangchao

The fund market generally enters “holiday mode” before the Spring Festival, with many funds announcing the suspension of related services during the holiday. However, the new fund issuance market remains enthusiastic. A review of Tonghuashun iFinD data shows that, according to published fund issuance plans, from February 1 to 13 before the holiday, a total of 74 new funds were launched across the market. On the first trading day after the holiday, 24 new funds were ready to be launched.

Contrasts in the Fund Market Before the Holiday

On February 12, Dongfanghong Money Market Fund announced adjustments to large purchase limits and suspension of direct sales agency transfer-in services. Specifically, the maximum daily purchase amount for fund A and B shares per fund account through distribution agencies, and for D, E, and F shares by non-individual investors, shall not exceed 100 yuan.

Meanwhile, several public fund management companies, including Fuan Da Fund, Southern Fund, Shenwan Lingxin Fund, Yongying Fund, and Great Wall Fund, also issued similar notices before the holiday, suspending subscription, transfer-in, and regular fixed-investment services for some of their funds. These suspended products mainly include money market funds and bond funds, with some funds scheduled to resume operations on February 24.

Industry insiders say that the “closed-door” approach for money market and bond funds by these institutions mainly aims to prevent large capital inflows from diluting holiday returns. Most fund products’ purchase restrictions align with the stock exchanges’ holiday schedules during the Spring Festival. The three major exchanges will close normally on February 14 (Saturday), and from February 15 (Sunday) to February 23 (Monday), they will be closed for the Spring Festival holiday. Trading will resume as usual from February 24 (Tuesday).

In contrast to the pre-holiday adjustments for money market and bond funds, the new fund issuance market before the holiday experienced a “wave of launches.” According to the new fund issuance calendar, on the last trading day before the holiday, seven funds—Dacheng Zhaoxiang Hui Zhi Hybrid A, Dacheng Zhaoxiang Hui Zhi Hybrid C, Caitong CSI A500 Index A, Caitong CSI A500 Index C, Yongying Yuanjia Balanced Multi-Asset 90-Day Holding Hybrid (FOF) A, and Yongying Yuanjia Balanced Multi-Asset 90-Day Holding Hybrid (FOF) C—were officially launched.

Data from Tonghuashun iFinD shows that, based on subscription start dates and different share classes (same below), in January this year, 300 funds issued a total of 1,193.98 billion units, an increase of 165 funds compared to the same period last year, a growth of 122.22%. The total issued units increased by 33.864 billion, a rise of 39.59%. Among them, 35 funds, including Wan Jia Qitai Stable Three-Month Holding Hybrid (FOF) A, adopted a “one-day fundraising” model.

In February, the launch of new funds before and after the Spring Festival remained hot. From February 1 to 13, 74 new funds issued a total of 814.59 billion units. Ten funds, including China Merchants Yutian Hybrid Initiating A, chose the “one-day fundraising” model. During the first trading week after the market reopened, according to announced plans, 48 new funds will be launched, with Wan Jia Medical Innovation Hybrid Initiating A and C opting for “one-day fundraising.”

Positive Expectations Fuel the Launch of New Funds

Regarding product types, among the 122 funds launched before and after the Spring Festival, stocks, hybrids, FOFs, and bond funds each accounted for a significant share. Specifically, stock funds performed most prominently in February, with 40 funds issued, accounting for 32.79%. The number of hybrid funds, FOFs, and bond funds issued was 37, 23, and 22, respectively.

Of the 40 stock funds launched, passive index funds dominated, with 30 funds. The remaining 6 were general stock funds, and 4 were enhanced index funds. Among the 37 hybrid funds, equity-biased hybrids remained dominant, with 33 funds issued. Bond-biased hybrids and flexible allocation funds each had 2.

As of February 13, 45 funds had completed fundraising in February. Among nine funds with over 1 billion units raised, the highest was Bo Dao Xing Hang Hybrid, which raised 2.733 billion units in seven days. Six other funds, including GF Yufeng Multi-Asset Stable Three-Month Holding Hybrid (FOF) C, Southern Wengjia Multi-Asset Allocation Three-Month Holding Hybrid (FOF) A, and Invesco Great Wall Yingjing Conservative Allocation Three-Month Holding Hybrid (FOF) A, also used the “one-day fundraising” model.

Which institutions are rushing to launch new funds? The list of fund management companies managing newly launched funds before and after the holiday shows that 19 public fund management firms have raised over 1 billion units each. Many leading public fund managers, such as GF Fund, E Fund, Southern Fund, and Wanguo Fund, are among them. Notably, GF Fund launched the most new funds, with nine.

Will the “wave of new fund launches” continue? Under the influence of a sustained stock market recovery and other factors, funds have become a key battleground for capital. Industry insiders believe that the trend of a strong start for new fund issuance this year is clear, with both the number of funds launched and the amount raised reaching new highs. The accelerated pace of fund company deployments also reflects a positive outlook for the new year’s market.

Yang Dehong, Chief Economist at Qianhai Open Source Fund, told reporters that the spring rally has begun gradually. During the Spring Festival, as people visit friends and family, the hot topic on the dinner table is undoubtedly last year’s investment returns. This will further spread the market’s profit-making effect, attracting more capital through direct account opening or fund purchases.

According to Zhu Renmu, an analyst at Guolian Minsheng, this year may focus on technology and consumer funds. The tech industry is a key development direction encouraged by national policies, with rapid growth in artificial intelligence globally, offering significant industry development potential. Tech funds are expected to perform well through 2025, and due to their profit-making potential, they are likely to continue attracting capital. The consumer sector, currently undervalued, is a major strategic focus for boosting consumption, which is expected to recover and grow in the future.