What happened
Since the first batch of public FOF products was approved on September 8, 2017, the sector has evolved through stages of emergence, growth, and adjustment, now entering a period of flourishing. This year, FOF issuance has reached nearly 140 billion yuan, setting a new annual record.
According to data from Choice, as of September 7, 133 FOFs have been established this year, with total issuance of 138.541 billion yuan, surpassing the combined issuance from 2023 to 2025. The China Asset Management Association reported that FOF assets under management stood at 330.58 billion yuan as of the end of July.
Industry insiders attribute the boom to declining deposit rates and wealth management product yields, making FOFs attractive for their multi-asset allocation and controlled volatility. Recent FOFs often feature shorter lock-up periods of three or six months, balancing discipline with liquidity.
Why it matters
FOFs have transformed from a simple fund-picking tool into comprehensive asset allocation solutions, broadening their appeal to investors with different risk appetites. This shift aligns with the growing demand for stable yet enhanced returns in a low-yield environment.
The expansion of FOF investment scope to include commodities, QDII, and REITs, coupled with bank channel support, signals a strategic move toward client-centric allocation services. This could reshape how wealth is managed in China's mutual fund industry.
Despite the growth, FOFs still represent a small fraction of the nearly 40 trillion yuan mutual fund market, indicating significant room for development. However, challenges remain in refining multi-asset strategies and ensuring consistent performance.
Key facts
First batch of public FOF products approved on September 8, 2017.
This year, 133 FOFs have been established with total issuance of 138.541 billion yuan, a record high.
FOF scale reached 330.58 billion yuan as of the end of July.
New FOFs in 2025-2026 typically have three- or six-month holding periods.
What to watch next
How fund companies enhance their multi-asset investment systems and product matrices to sustain growth and improve investor experience.
Whether banks and other channels continue to promote FOFs as strategic products for wealth management transformation.
The evolution of FOF strategies in response to market changes, including the rise of quantitative investing and ETFs, and the integration of diverse asset classes.