Huachuang Securities: Public Fund Industry will continue the trend of multiple businesses progressing simultaneously in 2026, and investment opportunities are expected to increase.

Huachuang Securities released a research report stating that against the background of low interest rates, deposit relocation, further improvement of the capital market system, and gradual implementation of public fund reforms, the Chinese public fund industry is expected to continue the trend of advancing multiple businesses in 2026. The management scale is expected to further increase, the development path may further differentiate, and investment opportunities may increase. Key points by Huachuang Securities are as follows: In 2025, the size of the public fund market exceeded 37 trillion for the first time, showing a clear feature of "overall growth and structural differentiation." The firm believes that the active development of equity public funds in China has taken three completely different paths: first, focusing on core tracks and firmly making tools, where the IP value of the product is starting to exceed the IP value of the "star fund manager"; second, continuing to adhere to pricing for people, refining the stock selection capabilities of fund managers across the market; third, industrialization and balance, constructing a complete product container system. The importance of public funds in A-share market is overall trending upward with the expansion of management scale. Passive equity fund holdings accounted for 4.3%, surpassing active equity funds for the first time in 2025, becoming a significant force in stabilizing the market. With the accelerated entry of long-term funds (such as social security, insurance, pension, etc.), and the continuous iteration of AI and computational tools driving the influence of quantitative private equity, active equity public funds must strive to further expand their pricing power. Industry pattern shows concentration at the top and a trend of business differentiation. Yifangda and Huaxia Fund firmly lead the trillion-scale first tier; the product market share differentiation is significant, with the concentration of passive equity funds (CR20 mean 38.7%) significantly higher than active equity (10.2%) and fixed income+ (20.9%), highlighting the Matthew effect. In terms of newly issued funds, equity funds accounted for nearly half of the total in 2025, with FOF funds resuming issuance, dominating the top two positions in the annual new issuance scale, reflecting an increase in demand for diversified allocation tools by investors. Forging big single-product logic has become an important leverage for driving scale growth. Various products show differentiated growth trends, with fixed income+, indices, active, commodities, alternatives, QDII, and other tracks all having large single-products emerging. 1) Fixed income+ funds broke through 2.68 trillion in size, with secondary debt funds contributing the main increment, star fund companies like Shundong Changcheng pushing fixed income+ stocks to sharpness through deeper stock selection, mobilizing multiple team resources to build a rich product matrix and drive significant scale growth; 2) Passive equity funds, new shares accounted for 71.5% of equity products, Central Huijin heavily increased holdings in ETFs in the first half of the year, Guotai Fund almost doubled its scale by focusing on industry-themed ETFs for differentiation; 3) Active equity funds, overall share growth reflects the historical law of "rising heads first," but some fund companies like Yongying have achieved significant growth in scale and share through the "Wise Selection" series, firmly following the path of toolization; Huashang Fund, relying on performance resilience to counteract the impact of star fund managers leaving, demonstrates potential for breaking through; 4) Alternative investment funds, seizing the opportunity of the gold market, Hu'an Fund achieved explosive growth in scale with gold ETFs, scarce alternative ETF categories may be a new direction for small and medium fund companies to break through; 5) QDII funds, top managers relying on strong ETFs represented by Hang Seng Technology to attract capital, meanwhile, also deploying differentiated characteristic products to supplement incremental growth; 6) FOF funds, with the advantage of cross-asset allocation to meet the demand for stable capital, the promotion through bank channels and support from pension policies jointly drive it to become a new hot spot for development. Regulatory system gradually improved The "Action Plan for High-Quality Development of Public Funds" and supporting reforms reshaped the industry ecosystem, strengthening evaluation constraints around long-term investment return, and laying a solid foundation for high-quality development. emphasis on long-term performance and reaffirmation of performance benchmarks, driving deep changes in the industry's evaluation system, further demonstrating the "trust and responsibility" to enhance shareholder experience. However, as competition in the Chinese asset management industry becomes more diverse, the general compensation return in the public fund industry faces a serious test of decline, talent attraction may weaken marginally, and some mature investment research talents may choose to leave the public fund system. The net inflow of industry talent in 2025 is at a low level in recent years, and the turnover of fund managers may become normalized; leading companies accelerate their transformation into platforms, by constructing industrialized investment research systems and improving talent development mechanisms, they weaken the reliance on individual star fund managers. However, the firm believes that the well-established investment research systems in the industry and the open flow value of public funds remain attractive to young professionals. Conditions for fund investment advisers have gradually matured, and the era of buyer investment advisers may have arrived. The core conditions that determine whether the soil for fund investment advisors is ready are: the market foundation of long or bull markets + lower fee levels in underlying asset allocations. Correspondingly, it is a more profitable capital market that has long-term earning effects, and in the process, fund investment advisors optimize the holding experience by strengthening their allocation capabilities, redirecting investors, channels, and fund companies to establish a longer-term investment value perspective. With the guidance of a series of regulatory policies, the conditions for regular business maturity have gradually matured. Risk warning: Regulatory changes, significant market fluctuations, data limitations.