Recently, a research report from Changjiang Securities has gained widespread attention. The report's data indicates that in the second quarter, actively managed equity funds experienced a net redemption of 240.176 billion yuan by investors, ranking third in the list of quarterly net redemptions since 2005, only behind the 805.1 billion yuan in the third quarter of 2015 and the 279.7 billion yuan in the first quarter of 2024.

Among them, the scale of top celebrity fund managers shrank significantly, with the top 10 individual fund managers seeing a total reduction of 14.718 billion yuan in their managed scale during the second quarter.

Affected by the substantial redemptions by investors, the share of actively managed equity funds further declined in the second quarter of 2024, with the total scale falling back to 3.22 trillion yuan, a 46.65% decrease compared to the peak of 6.03 trillion yuan in the fourth quarter of 2021.

While actively managed equity funds faced significant redemptions, the share of passively managed equity funds increased. Data from Tianxiang Investment Consulting shows that the net subscription shares of passively managed equity funds in the second quarter were 93.288 billion shares, which is an increase compared to the previous quarter.

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In the first half of the year, actively managed equity funds experienced net redemptions of nearly 520 billion yuan.

Actively managed equity funds continued to face accelerated redemptions in the second quarter.

The Changjiang Securities report shows that in the second quarter, actively managed equity funds were subject to a net redemption of 240.176 billion yuan by investors, including 23.262 billion yuan from the issuance of new funds and a net redemption of 263.438 billion yuan from existing funds.

Looking at the historical context, the net redemption amount for the second quarter ranks third among quarterly net redemptions since 2005, only behind the 805.1 billion yuan in the third quarter of 2015 and the 279.7 billion yuan in the first quarter of 2024.

This means that for the entire first half of the year, investors redeemed a net amount of 519.8 billion yuan from actively managed equity funds, averaging 8.66 billion yuan per month.

Affected by the significant redemptions by investors, the share of actively managed equity funds further declined in the second quarter of 2024, with the total scale reducing by 310.2 billion yuan, falling back to 3.22 trillion yuan, a 46.65% decrease from the peak of 6.03 trillion yuan in the fourth quarter of 2021, and only an increase of 203.3 billion yuan compared to the peak in the second quarter of 2015.Active equity funds' weighted total shares decreased by 7.02% in the second quarter, following a 7.33% reduction in the first quarter, marking a 19.38% decline from the peak in the first quarter of 2022.

It is noteworthy that some Hong Kong stock fund products, which performed exceptionally well in the second quarter, still faced net redemptions from investors. For instance, four Hong Kong stock funds, namely Wanjia Hong Kong Stock Connect Selection A, ICBC Hong Kong-Shenzhen Selection A, Wanjia Hong Kong-Shenzhen Blue Chip A, and Yongying Hong Kong Stock Connect Quality Life Wisdom Selection, all achieved net value growth of over 13% in the second quarter and were included in the top ten list of second-quarter returns.

However, these four products experienced net redemptions of 0.03 billion yuan, 1.39 billion yuan, 0.78 billion yuan, and 0.24 billion yuan, respectively, in the second quarter.

Some products under the management of well-known fund managers were also subject to significant redemptions. Among the five funds managed by Qiu Dongrong, except for Zhonggeng Hong Kong Stock Connect Value, which was in a closed period and could not be redeemed, the other four funds all faced substantial redemptions in the second quarter.

Specifically, Zhonggeng Value Pioneer saw a net redemption of 1.036 billion shares, with the total shares at the end of the second quarter decreasing by 31.43% compared to the end of the first quarter; Zhonggeng Value Agility had a net redemption of 210 million shares, with a 18.29% reduction in total shares; Zhonggeng Small Cap Value experienced a net redemption of 906 million shares, with a 43.70% decrease in total shares; and Zhonggeng Value Quality One-Year Hold had a net redemption of 671 million shares, with a 19.02% reduction in total shares.

The second-quarter report disclosed by Zhonggeng Fund showed that among the five products managed by Qiu Dongrong, except for Zhonggeng Hong Kong Stock Connect Value (which was in a closed period and could not be applied for redemption), the other four funds all faced significant net redemptions of over 18%. In terms of share levels, Zhonggeng Small Cap Value had a net redemption rate of 43.73%; Zhonggeng Value Pioneer had a net redemption rate of 31.44%; Zhonggeng Value Quality had a net redemption rate of 19.01%; and Zhonggeng Value Agility had a net redemption rate of 14.57%. The products with high redemption rates also tend to have a higher proportion of institutional investors. For example, the institutional investor proportion for Zhonggeng Small Cap Value and Zhonggeng Value Pioneer was relatively high, at 49.30% and 45.24%, respectively. In contrast, the institutional investor holding proportion for Zhonggeng Value Quality and Zhonggeng Value Agility was less than 14%, and their redemption rates were relatively lower, all within 20%.

The substantial redemptions of active equity fund products are closely related to the poor performance of the equity market. Zhao Feng, a star fund manager at Ruiyuan Fund, indicated in the quarterly report that the A-share market showed a pattern of rising and then falling in the second quarter, with the Shanghai Composite Index falling by 2.43% for the quarter, while the Shenzhen Component Index fell by 5.87%, and the CSI 1000 fell even more, reaching a 10% decline.The market not only exhibits distinct style differences but also sees a significant divergence in industry performance. As of the close on July 5th, the best-performing banking sector in the Wind second-level industry index has risen by nearly 20% since the beginning of the year, followed by public utilities and energy, both with increases exceeding 15%. On the other hand, the software and services sector has plummeted by nearly 30%, retail by 28%, and both semiconductors and pharmaceuticals have declined by over 20%.

Zhao Feng believes that such a vastly divergent market is primarily driven by several factors. First, the macroeconomic performance remains relatively moderate, without the strong rebound that everyone hoped for, especially with fixed asset investment and total retail sales still showing weakness, indicating a generally cautious societal outlook and a strong risk-averse sentiment among investors, leading to a shift in holdings towards targets with stable income and profits, low valuations, and high dividend levels.

Second, the slowdown in growth leads to further adjustments in valuation structures. Although growth stocks have experienced significant corrections in both stock prices and valuations over the past few years, the rate of corporate profit growth has also noticeably declined. Moreover, some companies have poor free cash flow levels and low dividend-paying capabilities. In the current trend that emphasizes safety and cash returns, valuations continue to be under pressure.

Retail investors are using passive equity funds to bottom-fish, while active equity funds face substantial net redemptions, with funds entering the market through passive equity funds.

Data from Tianxiang Investment Consulting shows that, in terms of fund subscriptions and redemptions, the passive equity market was stable overall in the second quarter of 2024, with subscription shares amounting to 493.725 billion and redemption shares to 400.437 billion, resulting in a net subscription of 93.288 billion shares.

Compared to the first quarter, the net subscription of passive equity funds increased in the second quarter, indicating a decline in trading activity and an accelerated net growth rate of market funds choosing to enter in stages, with an increase in net subscriptions.

Furthermore, the trading volume of passive equity funds in the secondary market in the second quarter of 2024 significantly increased compared to the previous quarter, reaching 262 trillion shares, mainly driven by pure index stock funds, with a trading volume of 260 trillion shares; the trading volume of enhanced index stock funds in the second quarter was 22.1 billion shares.

Despite positive subscriptions, passive equity funds have seen negative returns overall due to the decline in the A-share equity market in the second quarter. Among them, the Tianxiang Pure Index Stock Fund Index fell by 2.15%, and the Tianxiang Enhanced Index Stock Fund Index fell by 3.98%, with enhanced index funds showing negative excess returns.From this perspective, many retail investors are choosing to bottom-fish the market through passive equity funds.

In the face of market volatility, many industry insiders maintain an optimistic attitude towards the medium to long-term prospects of the A-share market.

Zhu Shaoxing, a fund manager of a billion-yuan fund at Fullgoal, stated in the second-quarter report: "If we take a longer-term view, we still believe that positive factors will eventually play a role. The overall valuation of the current A-share market is at a very attractive position in a long cycle, and equity assets are currently in a good risk-return range. On a longer time scale, we believe that the difficulties we are facing now will eventually find a way out. The expected return level that investors are choosing to bear market fluctuations at present is quite appropriate."

Zhang Kun, a star fund manager at E Fund, bluntly stated that he strongly disagrees with the pessimistic market expectations.

He said that considering the current level of economic development, as long as human subjective initiative continues to be exercised, there is no reason for stagnation. The current market, due to pessimistic expectations, has traded some high-quality companies at valuation levels where even privatization can be accounted for clearly, and the long-term return expectations of high-quality enterprises are very promising.