Source: FactSet, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse, Wind, East Money. The network is based on top-5 holdings of the top 5% best/worst performing funds (with equity holdings) for the last year.  

2021 weakness highlights rising impact of mutual funds. Onshore Chinese mutual funds are increasingly driving the A-share market. This is a structural trend that will continue as onshore markets further institutionalise. We estimate that domestic mutual funds hold around Rmb9 tn worth of A-shares, or ~35% of market free float. In 2021, the impact of mutual funds has been pronounced, with rapid inflows and outflows driving increased volatility. YTD moves underscore the increased risk of mutual fund crowding. Recently, crowding has eased and may portend improved short-term market performance 

A deep dive into domestic mutual funds. In this first report of a series addressing A-share market positioning, we take a deep dive into the swiftly changing world of onshore mutual funds.  We look at trends in AUM across fund types, the rise of “star managers”, and assess crowding risks. We find that domestic funds are typically high turnover, active investors. Stocks with high and increasing mutual fund stakes tend to show idiosyncratic outperformance, while crowded names suffer more severe drawdowns. Style biases include long large caps, growth, volatility and momentum, short high leverage and value stocks.