According to the annual reports disclosed by listed companies in mainland China, public mutual funds are facing an unprecedented industry downturn.
As reported by mainland media “Finance” on March 30, as of March 29, 40 fund management companies have disclosed revenue data for 2024. From these reports, it is evident that public mutual funds are experiencing an industry-wide cold spell, with the majority of companies showing a downward trend in revenue.
Companies relying heavily on actively managed equity funds are seeing consecutive declines in revenue and net profit. Only companies with a more comprehensive product line can counteract the slide in actively managed equity. Some companies have managed to achieve counter-cyclical growth or profit optimization in the industry downturn through differentiation strategies and cost-cutting measures.
However, after cost-cutting measures, the once lavish compensation systems have collapsed. In 2024, shareholder executives, who were the first to initiate salary cuts in the fund industry, had none with an annual pre-tax salary exceeding 3 million yuan. After multiple rounds of audits, top fund companies began heavily discounting year-end bonuses. For example, the annual report of China Post Fund, listed on the New Third Board, shows that the average compensation per person has dropped from a peak of 1.5 million yuan to 560,000 yuan, with both salary reductions and layoffs occurring simultaneously with increased competition in educational qualifications.
Among the 40 fund management companies, over half saw a year-on-year decline in net profit, with companies heavily focused on actively managed equity products being particularly hard hit. For instance, Xinda Aoyan Fund saw a 31% decrease in revenue and a 42% drop in net profit; Oriental Red Asset Management saw a 30.4% revenue decline and a net profit reduction of over 40%; Everbright Prudential Fund’s revenue dropped by 25.5% and net profit decreased by nearly 50%; China Merchants Schroders Fund and AgBank Hui Li Fund saw a net profit decline of over 20% year-on-year.
Among the aforementioned companies, Xinda Aoyan, Oriental Red Asset Management, and China Merchants Schroders Fund were all primarily focused on actively managed equity funds. Under multiple pressures such as performance, scale, and reduced fees, these companies’ revenue and net profit have been significantly impacted, leading to a consecutive decline in revenue and profit for two years or even longer.
China Merchants Fund, part of the China Merchants Group, saw a 5.9% decrease in net profit in 2024, attributed significantly to actively managed equity funds, with hybrid fund scale declining by 21%.
China Post Fund is the only public mutual fund listed on the New Third Board in the industry, and its annual report details various expenditure items. Data shows that the average compensation per person at China Post Fund was 678,000 yuan in 2023, dropping to 564,000 yuan in 2024, a salary reduction of approximately 17%. Employee compensation expenses went from 190 million yuan to 140 million yuan, a decrease of 21.6%.
In addition to significant reductions in employee compensation, various business expenses have also been slashed, showing the most notable declines in meeting expenses, business entertainment expenses, and business promotion expenses.
Specifically, handling fees and commissions decreased by 33.8592 million yuan, a reduction of 31.23%; business promotion expenses decreased by 3.9544 million yuan, a reduction of 35.41%; business entertainment expenses decreased by 3.5463 million yuan, a reduction of 51.97%; travel expenses decreased by 1.4039 million yuan, a reduction of 28.29%; meeting expenses decreased by 4.934 million yuan, a reduction of 72.44%; consultation fees decreased by 2.2898 million yuan, a reduction of 39.23%; intermediary services fees decreased by 0.9318 million yuan, a reduction of 20.92%; communication expenses decreased by 0.5984 million yuan, a reduction of 21.49%; vehicle usage expenses decreased by 0.1197 million yuan, a reduction of 23.87%.