China's 346 mutual funds lost a combined 647.5 billion yuan in the first quarter of this year, with equities funds posting a 22.31 percent, or 466.58 billion yuan, slide in total net asset value, show figures from TX Investment Consulting Co Ltd, which tracks the performance of funds.
"The landslide in the mainland stock market has pulled down the earnings of mutual funds," said Yu Shanhui, an analyst at TX Investment.
Although these funds on average outperformed the market that dropped 33.9 percent in the same period, investors find little to cheer about.
Take Qian Chunni. The 25-year-old administrator at Shanghai TV University, has been watching the value of her 22,000 yuan investment in a fund managed by China AMC shrinking by the day. At last count, her investment had depreciated by at least 15 percent.
"If I sell now, the loss will be real," she sighed. But "if I keep holding onto it, I have no idea when the loss will stop".
Her dilemma is shared by millions of other fund investors, including those who consider themselves savvy enough to have put at least a part of their money in more mature overseas markets through the QDII scheme.
Sun Yiye, a website editor, said she felt betrayed by professional fund managers who are supposed to know better.
Sun invested 15,000 yuan on the subscription of a QDII fund managed by China International Fund Management Co. "I once thought the HK stock investment may be much safer because of their relatively low stock price compared with mainland stocks," said Sun.
But the price of the QDII fund fell to 0.7 yuan, which set her back by 4,500 yuan. "It's hard to decide whether to hold or sell, maybe waiting is a good option," said Sun.
According to statistics from Lipper, QDII funds lost 9.58 percent in profits in March, and QFII funds received continued redemption.
Many fund investors have called it quits. Net redemption of equity funds and mixed-asset funds amounted to 1.097 billion units and 9.713 billion units respectively in the first quarter. Capital guarantee funds had shrunk by 428 million units through redemption.
"Investors can diversify their portfolio by increasing the less risky bond fund and money market fund holdings," said Zhang Yu, an analyst at China Jianyin Investment Securities.
Only bond funds and money market funds have showed net asset increase. Net assets of bond funds rose 10.56 percent while that of money market funds rose 2.34 percent.
Yu of TX Investment Consulting said: "As the market gets clearer in the second half of this year, the mutual fund performance will become more stable."
Source: China Daily
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