Core Insights - The total scale of public funds is expected to exceed 34 trillion CNY by mid-2025, with index funds being the primary source of growth, netting an increase of 2.17 trillion CNY [1] - The most popular index product in 2024 was the CSI A500, which saw over 30 products launched and reached a record scale of over 1 trillion CNY within a month [1] - Despite initial success, Guotai Fund's A500 ETF saw a significant decline in scale, dropping from 281 billion CNY to 184 billion CNY within a year, losing its leading position to Huatai-PB and GF Fund [1][9] Fund Competition Dynamics - The index fund market operates under a "winner-takes-all" principle, where the largest fund benefits from liquidity, lower trading costs, and reduced tracking errors [2][3] - The competition for the largest A500 ETF is viewed as a strategic resource battle, testing the capabilities of fund companies in marketing, capital strength, and brand influence [4] Guotai Fund's Strategy and Performance - Guotai Fund aimed to establish dominance in the A500 ETF market, especially after new leadership took over in early 2024 [5] - Despite leading in scale for a time, Guotai's A500 ETF struggled with low trading volume, ranking third or fourth among peers [6] - The fund's leading position was characterized as "hollow," with high scale not reflecting active trading but rather strategic allocations from large institutions [7][8] Market Shifts and Challenges - By mid-2025, Huatai-PB's A500 ETF surged in scale, overtaking Guotai Fund, which faced significant redemptions amounting to 105 billion CNY in the first half of 2025 [9] - Guotai Fund's overall index fund scale increased from 1.32 trillion CNY to 2.04 trillion CNY, but its market share declined from 3.84% to 3.63% [10] - The fund's ranking in the index fund market has dropped from fourth to ninth, with significant competition from Huatai-PB, Southern, and others [12][13] Long-term Strategic Implications - Guotai Fund's heavy investment in the A500 ETF was seen as a gamble to overcome strategic weaknesses in broad-based indices, but it ultimately failed to deliver [16] - The fund's historical strength in thematic ETFs has diminished, with a lack of new successful products in recent years [19][21] - The decline in customer maintenance fees since 2020 has raised concerns about the fund's strategic direction and market competitiveness [24][25] Future Considerations - Guotai Fund faces a critical decision point: continue competing in the broad-based index space or refocus on its strengths in thematic ETFs, which may offer better profit margins and competitive advantages [26]