Last week, we wrote on the release of the European Fund and Asset Management Association's "2022 Fact Book, which "provides an in-depth analysis of trends in the European fund industry." Today, we quote from a sidebar on "The rise of China in the worldwide investment fund market." (See our Aug. 24 News "EFAMA Fact Book Reviews European Funds in '​21; Money Fund Highlights," and Aug. 25 News, "More EFAMA Fact Book: Govt Debt Thin in Europe; OFR on Repo Market," and learn more at our upcoming European Money Fund Symposium, Sept. 27-28 in Paris, France.) EFAMA writes, "The fund industry has only existed for 20 years in China, yet it has made remarkable advances. China's regulated open-end fund assets amounted to EUR 3.1 trillion at the end of 2021. At the global level, the United States is the largest fund domicile, followed by Luxembourg, Ireland and China.... In general, equity funds are typically the dominant investment in large markets, such as the US, Europe and Japan. This was also true in China, where equity funds accounted for 54% of total fund assets in 2011. However, from 2013-2018, the share of equity funds decreased from 39% to 7%, whereas money market funds (MMFs) increased from 27% to 63% in 2013-2018." They tell us, "The success of MMFs was driven by the fast-growing Fintech payment platform, Alipay. In 2013, Tianhong FMC -- in collaboration with Alipay backed by Ant Group, which is affiliated with Alibaba -- launched China's first online MMF, Yu'ebao. This allows investors to buy funds products online and compare products more effectively. Yu'ebao was a great success and became the biggest MMF in the world." EFAMA adds, "Between 2018-2021, the share of MMFs fell to 42%, essentially for the benefit of multi-asset funds. The change of product structure happened for four main reasons. First, more than 300 equity funds were transformed into multi-asset funds in 2015. Second, the Chinese stock market turbulence of June 2015 led retail investors to seek less-risky assets. Third, the Chinese government recognised that the MMF sector was 'systemically important' to the country's economy. This led regulators to launch a set of new rules in 2017, aimed at strengthening the supervision of China's MMFs. In response to these regulations, Yu'ebao tried to actively limit its size by imposing a subscription limit in 2018. In April 2021, China's central bank urged Yu'ebao to reduce its size to avoid liquidity risk. This explains why the share of Chinese MMFs fell to 46% in 2020 and continued to decline during 2021. Last, the share of equity funds has increased from 7% to 12% in 2018-2021, due to the regulatory guideline of 'continuously increasing the share of equity funds' and the rising A-share market in 2019."

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