CMSC review 24H1 public fund sales agencies retain data: equity dragged down, fixed income supported, passive investment and investment advisory transformation as trends

Overview: Significant drag on equity, fixed income and passive investments support the expansion of fund holdings. (1) The bond bull market is driving the expansion of fixed income funds, supporting the growth of non-equity fund holdings. The total non-equity holdings of the top 100 sales agencies reached 8.9 trillion yuan, up 3.7% from 23Q4. The fixed income (excluding equities) holdings amounted to 4.1 trillion yuan, up 17.2% from 23Q4. (2) The total equity fund holdings of the top 100 funds decreased by 5.8%, mainly due to the decline in net asset value and significant redemptions in active equity funds. During the first half of 24, the three major stock indexes fell by an average of 3.5%, with the WIND stock fund index dropping by 5.3%. The total equity holdings of the top 100 sales agencies amounted to 4.7 trillion yuan, down 5.8% from 23Q4, with index stock funds accounting for 1.4 trillion yuan and active equity funds accounting for 3.4 trillion yuan. It is expected that with the declining net asset values and continued redemption pressure on active equity funds, the equity fund holdings will shrink. (3) Concentration in the top equity funds increased. Ant Fund's equity holdings in the first half of 24 surpassed the industry's top position. The CR4 of the entire equity market in the first half of 24 was 27%, up 2 percentage points from 23Q4, and CR10 was 42%, up 1 percentage point from 23Q4; the CR4 of the entire non-equity market in the first half of 24 was 18%, down 0.6 percentage point from 23Q4, and CR10 was 29%, down 0.7 percentage point from 23Q4. (4) The progress of passive investment transformation varies by channel, with securities firms leading and banks lagging behind. In terms of the proportion of stock index funds in equity funds: securities firms (66.0%) > Internet companies (32.3%) > other companies (insurance funds, 17.8%) > banks (6.3%). (5) Ant Fund leads the market share of Internet companies, while securities firms see a decline in market share and insurance funds continue to see high growth. Among the top 100 funds, there are 53 securities firms, with Tianfeng dropping out of the top 100; 25 banks, with an increase in BQD compared to the previous period; 20 Internet companies and 2 other companies (insurance funds), which remained unchanged from the previous period. In terms of scale comparison, for non-equity funds, the scale of Internet companies increased by 7.5% from 23Q4, with a market share increase of 1.3 percentage points to 18.9%; the scale of banks increased by 5.6%, with a market share increase of 1.3 percentage points to 24.8%; the scale of securities firms reversed its growth trend, decreasing by 7.5% from 23Q4, with a market share decrease of 0.8 percentage points to 9.9%; insurance funds saw a 19% increase in scale from 23Q4, with a market share increase of 0.1 percentage points to 0.75%. In terms of equity funds, the scale of Internet companies increased by 10.3% from 23Q4, with a market share increase of 2.3 percentage points to 20.3%; the scale of banks decreased by 7.6% from 23Q4, with a market share decrease of 1.9 percentage points to 31.9%; securities firms saw a 17.5% decrease in scale from 23Q4, with a market share decrease of 3.3 percentage points to 17.7%; insurance funds saw a 10.3% increase in scale from 23Q4, with a market share increase of 0.1 percentage points to 1.3%. Internet companies support the scale of fixed income funds, with strategic differentiation: Ant focuses on passive investment, while investment advisory services may play a role. (1) Ant's passive funds development is leading, with equity fund growth against the market trend, and non-equity holdings taking the top spot. In the first half of 24, Ant's non-equity holdings amounted to 1.35 trillion yuan, up 6.2% from 23Q4, with a market share of 7.6%, down 0.2 percentage points from 23Q4; equity holdings reached 692 billion yuan, up 50.7% from 23Q4, with a market share of 10.4%, up 3.6 percentage points from 23Q4; fixed income holdings reached 659.2 billion yuan, down 18.9% from 23Q4, with a market share of 5.9%, down 2.7 percentage points from 23Q4. In the first half of 24, Ant's index stock fund holdings amounted to 264.7 billion yuan, accounting for 38% of the equity funds, leading most of the internet companies. (2) Most internet companies saw significant growth in fixed income holdings, in line with the structural market trend of strong bonds and weak stocks. Lu Jin Fund/Hithink RoyalFlush Information Network Fund/East Money (Everbright Fund + East Money Information) fixed income holdings ranked in the top three among internet companies, with growth rates of 111.6%/51.0%/39.9% respectively from 23Q4, reaching holdings of 201/151/228.1 billion yuan, while equity holdings all experienced varying degrees of shrinkage, likely due to shifting investment demand. (3) Investment advisory services may play a role. Yingmi Fund, Xueqiu Fund, and others rely on influencers and focus on fund advisory services transformation to guide passive index investments, leading to overall stable non-equity holdings and market share, unchanged from 23Q4. The index stock funds of Yingmi and Xueqiu accounted for 41% and 40% of the equity funds, respectively. Seizing the momentum to strengthen fixed income funds, the non-equity holdings of banks are growing. (1) Leveraging network and team advantages, banks target customers' stable investment needs and actively promote bond products sales, resulting in a 25.3% growth in fixed income holdings. Bank of Jiangsu/Industrial Bank/HSBC/China Merchants Bank were among the top four in terms of fixed income growth, with growth rates of 102.3%/49.2%/47.0%/45.7% from the beginning of the year. Industrial Bank's non-equity holdings ranked fourth, with a market share increase of 0.47 percentage points to 2.6% from 23Q4. (2) The process of passive investment in bank products is relatively slow. Bank stock index funds accounted for only 6.3% of the equity funds. China Merchants Bank/BANKCOMM/Postal Savings Bank Of China had relatively higher proportions, at 9%/8%/8%. Guangfa Bank was the only bank to achieve growth in equity holdings, with a 9.4% increase from 23Q4, indicating a significant contribution from passive index funds. Securities firms' equity sales are a significant drag, but their passive investment advantages are notable, while there is fierce competition in fixed income sales. (1) Equity sales are a significant drag. Among the top 100 securities firms in 24, only Huabao Securities and Shanxi saw growth in equity holdings and market share compared to 23Q4.Against the backdrop of the expected improvement in the prosperity of the equity market in the first half of the year, clients of securities companies are adopting a wait-and-see attitude towards equity products; at the same time, the implementation of the second phase of public offering fee reform is affecting the incentives for the distribution of securities companies.Passive investment has significant advantages. With early index fund distribution, the construction of a buyer advisory team, and a rich spectrum of index products in the mutual funds under its banner, securities firms have outstanding advantages in the field of index fund distribution. Among the top ten stock funds in terms of size, securities firms hold 7 seats, with Huatai and CITIC SEC stock index fund sizes reaching 91.3 billion and 89.2 billion respectively, ranking 2nd and 3rd in the industry. Huabao Securities and East Money Information's stock index funds have a market share of 92% and 91%, respectively. (3) There is fierce competition in fixed-income fund distribution. Among the 53 securities firms that made it to the top 100 in 24H1, 33 saw an increase in market share for fixed-income funds compared to 23Q4, while 20 saw a decline. Overall, securities firms saw a 37.7% increase in fixed-income fund size, with a market share expansion of 0.6% to 3.8%. ChinaLin, Ping An Securities, Founder, and China Great Wall led the growth rate. Investment recommendation: Maintain a "recommended" rating for the industry. With equity market fluctuations and a hot bond market, customer risk appetite is generally conservative, and fixed-income and passive index products are still favored by customers. The implementation of the second phase of public offering fee reforms, the traditional operation mode of large financial management urgently needs to change, and the transformation of buyer advisory services is imminent. Looking ahead, regulatory support is expected to continue in the short term, liquidity is expected to remain loose, and markets are expected to await a turnaround, with equity profitability returning. Bullish on the competitive strengths of core targets in the industry chain. Risk warning: Low enthusiasm for newly issued funds; large market fluctuations leading to mass redemptions of funds.