Ask AI · How should the new management team respond to a fixed-income-dominated landscape?

01. Revenue edges up, but net profit slides

With the disclosure of China Merchants Securities’ 2025 annual report, the results of China Merchants Fund are coming into view. Against the backdrop of an overall rebound in the 2025 public fund industry, this bank-affiliated asset manager—often viewed as an “outstanding student”—turned in a mixed report: revenue inched up to hold the growth line, while net profit fell by double digits; moreover, its fund size ranking dropped out of the top 10.

Judging by the financial figures, China Merchants Fund recorded operating revenue of 8B yuan in 2025, up 3.05% year over year, barely holding the growth line. However, net profit was 5.47B yuan, down sharply 12.85% from 1.44B yuan in 2024. This was the third consecutive year of declining net profit for China Merchants Fund—2022: 1.65B yuan, 2023: 1.81B yuan, 2024: 1.65 billion yuan, 2025: 1.75B yuan; over four years, it shrank by more than 20%.

This decline is especially striking among leading public fund managers. By comparison, in the same period, 华夏基金’s net profit grew by over 11%, and Industrial Bank & Schroders Fund’s (工银瑞信) surged 42.5%. Even when compared with Boshi Fund, which also belongs to the “China Merchants group,” China Merchants Fund still looks less impressive—Boshi Fund’s net profit in 2025 was 1.44B yuan, a slight increase of 0.21% year over year. While its growth rate was not high, its absolute level and stability were better than those of China Merchants Fund.

The direct cause of the net profit decline lies in cost-side pressure. The deeper issue is that, due to a fixed-income-dominant business structure, the company’s profit margin is relatively thin, and equity businesses with higher profit margins have not generated sufficient contribution.

By the end of 2025, China Merchants Fund’s public-offering asset under management (AUM) rose to 977.35 billion yuan, just one step away from the one-trillion threshold. However, the absolute growth in AUM did not translate into consolidation of its standing in the industry. At the beginning of 2024, China Merchants Fund ranked 9th; by the fourth quarter of 2025, its ranking had slid to 12th again, returning to the position it held at the beginning of 2022.

Behind the pattern of “AUM rising while rank falling” is the fact that peers are running faster. In this track record—where “not advancing is retreat”—China Merchants Fund’s relative competitiveness is being eroded.

02. Chairman and general manager both changed within a year

While performance pressure mounted, in 2025 China Merchants Fund’s executives also went through changes.

At the general manager level, on May 20 of that year, Xu Yong stepped down for personal reasons, and Zhong Wen’ue took over. Xu Yong was appointed in July 2022; during his more than two years in office, China Merchants Fund’s net profit declined consecutively.

At the chairman level, on September 24, Wang Xiaoqing stepped down due to work arrangements, with general manager Zhong Wen’ue serving as acting chairman; on November 27, Wang Ying, vice president of China Merchants Bank, officially took office as chairman.

Wang Ying has 28 years of deep experience within China Merchants Bank’s system. She previously served as assistant to the president of the Beijing branch and vice president, then president of the Tianjin branch, president of the Shenzhen branch, and has been vice president of China Merchants Bank since November 2023. Her arrival, according to industry views, was a key step toward strengthening strategic alignment between China Merchants Fund and China Merchants Bank. China Merchants Fund said it will further integrate into the shareholder’s development strategy, and do well as a “product supplier for customer investments,” a “provider of funds for investment banking and financial markets,” and a “contributor of capabilities from research & investment and asset allocation.”

03. Fixed income supports scale, but equity cannot support profits

While integrating into the shareholder’s development strategy, China Merchants Fund’s current product structure, however, shows a situation where fixed income supports scale but the company’s profits face pressure.

In terms of product structure, by the end of 2025, China Merchants Fund’s bond funds and money market funds combined totaled 1.53B yuan, accounting for as much as 76.33%. Fixed-income assets account for “more than half of the company’s main territory,” while stock funds and hybrid funds—which represent active management capabilities—combined were only 745.05B yuan, or just 20.42%. This level is in the upper-middle range among “bank-affiliated public funds,” but it is considered a “fixed-income-heavy, equity-light” structure within the industry’s leading-tier group.

Such a “head-heavy, feet-light” structure reflects both China Merchants Fund’s bank-affiliated gene and the root cause of pressure on its profitability.

Fixed-income products (money market funds + bond funds) account for as much as 76.33%. Although this portion of the business is relatively steady, the fees are low and profit margins are thin. Equity products account for only 20.42%. It’s worth noting that at the end of the third quarter of 2021, China Merchants Fund’s stock and hybrid fund AUM once surged to 279.5 billion yuan, accounting for as much as 41.67%.

What’s even more regrettable is that China Merchants Fund missed the window of opportunity for ETF development. In 2024, domestic ETF AUM grew by 1.6 trillion yuan, and net inflows of market funds were nearly 1.2 trillion yuan—hitting a historic high. However, by the end of 2024, China Merchants Fund’s ETF AUM was only 38.6 billion yuan. In 2025, the total AUM in China’s domestic ETF market had already exceeded 6 trillion yuan, while by the end of 2025, China Merchants Fund’s ETF AUM was only 84.5 billion yuan.

At present, China Merchants Fund’s newly appointed management team has proposed a strategy driven by two “wheels”: active management business and passive index business. Whether it can truly reverse the “fixed-income-dominated” landscape and make up the shortcomings in both equity and index businesses will be the core test China Merchants Fund faces in the future.