(Yicai) Aug. 11 -- China’s mom-and-pop investors rushed into mutual funds in the first half after the value of wealth management products sold them by banks slumped at the end of last year.

As of Dec. 31, there was CNY1.62 trillion (USD224 billion) more invested in bank wealth management products than in mutual funds, data from the China Banking Wealth Management Registration and Depository Center showed. By June 30 this year, mutual funds had over CNY27.6 trillion (USD3.8 trillion), exceeding WMPs by CNY2.26 trillion.

“Hit by fluctuations in the bond market at the end of last year, many bank wealth management products fell below net value,” a financial analyst told Yicai. The change in asset allocation by individual investors reflects a growing desire for low-volatility products, the person said.

In the first six months of this year, mutual funds attracted CNY1.55 trillion, with money market funds gaining the most, up CNY942 billion (USD130 billion), followed by bond funds at CNY717 billion, figures from market data platform Choice showed. The scale of hybrid funds shrank more than CNY340 billion in the period.

“A decline in the scale of equity funds was to be expected, as these funds logged higher losses in recent years, but that doesn’t mean there is no money in the market,” an industry insider said. “The size of money funds and bond funds has grown rapidly.”

The key to this resizing phenomenon is whether investors can make money, he said.

Besides money market and bond funds, stock funds also scaled up over the six months, growing by almost CNY220 billion from end of 2022. That flowed into index funds, while the size of actively managed equity products shrank by more than CNY200 billion, the data showed.

For example, the Huatai-Pinebridge CSI 300 ETF grew to CNY107.2 billion as of yesterday, a record high that makes it the biggest non-money market fund.

Editors: Liao Shumin, Peter Thomas