Chinese mutual funds close at highest rate in 8 years, expected to top 300 funds by year-end
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Chinese mutual funds are shutting down at the fastest pace in eight years, after a weak Chinese stock market, a lack of new capital inflows, and continuous investor redemptions. Data compiled by Bloomberg shows that 256 publicly offered funds have been liquidated this year, and another 46 have warned investors that they may soon close, making it possible that more than 300 funds will shut down by the end of this year. If that happens, it would be the highest number since 2018, when fund closures hit a record high after a major industry reform forced many funds to cease operations. China's securities regulations require fund managers to report remedial plans, such as fund liquidation, to regulators if a fund's net assets stay below 50 million yuan, or 7.5 million dollars, for 60 consecutive trading days. Most of the funds that closed this year fell into that category. Meanwhile, the China Securities Index Active Equity Fund Index has posted an average annual return of negative 0.8% over the past five years, even though it has risen 3.6% this year. The CSI 300 has already fallen 6% in 2026, while the Star 50 index, which is dominated by chip stocks, has trimmed its gain to 14%. Chen Junde, a fund manager at Guangdong Fund Investment, said funds that are too small, have too few investors, or consistently underperform their benchmarks face high operating costs and struggle to justify continuing operations.