The mutual fund industry recently faced a pivotal regulatory document—the "Guidelines for Performance Assessment of Fund Management Companies (Draft for Comments)."
As year-end approaches, compensation discussions naturally stir debate, but this draft’s specific provisions—particularly one mandating a 30% pay cut for fund managers whose products underperform benchmarks by over 10% with negative returns over three years—ignited industry-wide scrutiny.
How widespread is the impact? Data shows nearly 1,000 active equity fund managers in China, including star names like Zhang Kun and Ge Lan, trailed their benchmarks by over 10% since 2023. The rule has reignited fears of talent flight to private funds, where "2% management fees + 20% performance fees" remain alluring.
Yet, by 2025, this traditional path faces a brutal reality check.
The disruptor? Quantitative private funds. Once niche, they now dominate high-net-worth portfolios, even in 2025’s bullish market where active funds hoped to shine. Clients now demand not just benchmark-matching (as tolerated in mutual funds) but outperforming quant-enhanced indices—or risk losing capital.
For active managers eyeing private funds after pay cuts, the grass isn’t greener. The industry’s appetite has shifted irreversibly toward stability, a niche quant strategies excel in.
**Performance Gap** 2025 offered active funds a breather: the CSI 300 rose 16%, the Hang Seng Index 26%. Yet, despite improved sentiment, inflows favored quant products. Active funds’ 33.88% return (per Huofuniu data) paled against quant’s 54.74% (CSI 1000-enhanced) and 46.86% (CSI 500-enhanced).
The core issue isn’t skill but narrative. Active funds preach "mean reversion"—patience for value discovery. Quants sell "adaptation," evolving from linear models (2015) to AI-driven strategies post-2024’s micro-cap crash, proving faster recovery and risk control.
**Product Flexibility** Quant funds offer modular strategies (alpha/beta/lego-like combinations), while active funds rely on monolithic stock-picking. Faced with this, investors increasingly ask: Why bet on a "20-stock lifetime" manager when quants promise daily innovation?
**Liability Mismatch** The real hurdle for active strategies is duration mismatch. Most private funds have 3-12 month lock-ups, incompatible with multi-year "value realization" cycles. Even legends like Duan Yongping (holding Apple, Tencent, Moutai) would struggle with client money’s short patience.
Distribution channels, once kingmakers via bank partnerships, now prefer quant’s "black box" simplicity: "Negative alpha? Blame markets; positive alpha? Model works." Active funds’ storytelling ("temporary setbacks") wears thin during prolonged slumps.
**The Road Ahead** Active funds aren’t obsolete but must evolve. Ningquan Asset’s 2025 pivot—multi-asset, hedged strategies with selective fundraising—shows one path. Traditional stock-pickers may survive by focusing on "self-funded" scalability, aligning investor faith with personal conviction.
In wealth management’s Darwinian arena, active funds must choose: shrink for stability or risk irrelevance. The "Chinese Buffett" dream lives only for those who first prove it with their own capital—clients’ patience won’t stretch for PowerPoint visions.
**Epilogue** This isn’t an obituary for active investing. Its future lies in deeper research *and* curated clientele. Against quant’s efficiency, stock-picking’s high volatility demands investor faith—a scarce commodity beyond inner circles.
China’s active funds spent a decade chasing unstable growth with unstable money. Tomorrow’s winners will prioritize independence over assets—narrowing the gate to lasting success.
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