Chinese Mutual Funds Capsize in Record Numbers Amidst Shadow Banking Crackdown


Beijing’s ongoing crackdown on the shadow banking sector has led to an unprecedented number of mutual fund closures in 2018.

Over 600 funds in China’s USD$1.9 trillion mutual fund market have shut down in 2018 according to a report from Bloomberg.

The figure is more than three-times the number for 2017, as well as in excess of the total number of mutual fund closures for the past 12 years.

China’s mutual fund market has seen an over five-fold increase since 2011 in terms of assets under management.

Analysts say that heightened pressure on entrusted loans as part of Beijing’s shadow banking campaign has been a key contributor to the record number of mutual fund closures, given that the flexibility of mixed allocation funds had previously made them a major draw for entrusted loans.

Over half of the mutual funds liquidated in 2018 were mixed allocation funds, while 206 were fixed income funds and 72 in equity.