Core Viewpoint - The Chinese asset management industry is at a historic turning point, with passive fund sizes expected to surpass active equity funds by the end of 2024, indicating a significant shift in asset allocation logic and investment tool selection [1][3]. Group 1: Industry Trends - The scale of passive index funds in China is rapidly increasing, with the gap between passive and active products widening. As of mid-2024, the total scale of passive index funds has reached approximately 5 trillion yuan, reflecting a growth of 27.4% from the end of 2024 [6][3]. - The number of ETF products has surged to 1,260, tracking over 480 indices, with a total scale of 4.7 trillion yuan, marking a more than 5.5-fold increase since the end of 2020 [6][7]. - The rise of index investment aligns with trends seen in mature markets like the U.S., where ETF growth has been explosive after reaching significant milestones [3][6]. Group 2: Investment Opportunities - The advantages of index funds, such as stable Beta returns, high transparency, and low fees, make them increasingly attractive to both institutional and individual investors [2][8]. - The average management fee for equity ETFs has dropped to 0.28%, significantly lower than the approximately 1.18% for active equity funds, enhancing the competitive edge of index products [11][8]. - The current market environment, characterized as a "high-quality slow bull" with low volatility and gradual upward movement, favors index investment strategies [8][19]. Group 3: Market Dynamics - The influx of various funding sources, including state-backed long-term funds and margin financing, has supported market liquidity and driven the current slow bull market [13][14]. - The behavior of investors has shifted, with a notable preference for index-based tools over traditional active equity products, particularly in the context of the current market dynamics [13][19]. - Data indicates that in July, the probability of making profits through index investments was significantly higher than through individual stock investments, reinforcing the advantages of index strategies in the current market [17][19]. Group 4: Company Strategies - Penghua Fund has established a comprehensive product matrix covering various dimensions, including broad-based and thematic ETFs, to cater to diverse investor needs [20][22]. - The company has developed a robust active quantitative strategy system, achieving notable excess returns in its enhanced products, which positions it favorably in the competitive landscape [24][23]. - Penghua is also focusing on innovative "fixed income plus" products to meet the demands of different risk-averse investors, enhancing the overall investment experience [26][27]. Conclusion - The era of index investment in China is emerging, with significant implications for asset management practices and investor strategies. The current market conditions and the evolution of investment tools are expected to further solidify the role of index products in the asset management ecosystem [28][29].

Core Insights - The Chinese asset management industry is at a historic turning point, with passive public funds expected to surpass active equity funds by the end of 2024, marking a new development phase in the market [2][3][4] - The 2025 Asset Management Conference focused on the theme "Breaking the Deadlock and Restructuring - Rebuilding Competitiveness in Asset Management," gathering industry leaders to discuss future paths in the new cycle [1][2] Industry Trends - Index investment in China is rapidly advancing, with passive index funds becoming essential tools for both institutional and individual investors due to their stable Beta returns, high transparency, and low fees [2][4] - As of July 2025, the total number of ETF products in China reached 1,260, with a total scale of 4.7 trillion yuan, reflecting a 27.4% increase from the end of 2024 [3][4] - The growth of the ETF market in China is expected to continue, with significant room for expansion compared to the U.S. market, where ETF assets exceed 9 trillion USD [3][4] Market Dynamics - The rise of passive index investment is attributed to increasing market efficiency and the growing difficulty of achieving excess returns through active management [4][5] - The average management fee for equity ETFs has dropped to 0.28%, significantly lower than the approximately 1.18% for active equity funds, enhancing the competitive advantage of index products [5][6] - The current market is characterized by a "high-quality slow bull" trend, defined by low volatility and gradual upward movement, with a notable risk-return profile [5][6] Funding Sources - Key funding sources driving the current market include long-term capital from state-owned entities, margin financing, and increased participation from quantitative private equity [7][8][9] - The margin financing balance has recently surpassed 2 trillion yuan, indicating a shift in the investor base compared to previous market rallies [8][9] Company Positioning - Penghua Fund has established a comprehensive product matrix, including 46 onshore ETFs and 28 offshore LOFs, covering various dimensions such as broad-based and thematic strategies [10][11] - The firm has developed a robust active quantitative strategy system, with significant excess returns reported for its enhanced products since 2020 [12] - Penghua is also focusing on innovative "fixed income plus" products to meet diverse investor needs, enhancing the investment experience during the current market conditions [13][14] Future Outlook - The "golden era" of index investment in China is anticipated, with index and enhanced tools becoming crucial for asset allocation and capturing structural opportunities [15]