China Fund-of-Funds Total AUM Drops to 3.52 Trillion Yuan, H1 Investment Down 21.84%, Returns Improve

The 2026 First-Half China Fund-of-Funds Panorama Report showed that as of end-June, total assets under management of China's fund-of-funds stood at RMB 3.5181 trillion, down 12.56% from end-2025, extending the contraction trend. The total number of funds reached 473, including 346 government-guided funds with AUM of RMB 3.0549 trillion, 117 market-oriented funds with AUM of RMB 456.6 billion, and 10 S funds with AUM of RMB 6.6 billion. Total investment by fund-of-funds in the first half was RMB 260.9 billion, down 21.84% year-on-year.

In terms of new funds, 34 fund-of-funds were launched in the first half, of which 33 were government-guided funds with total size of RMB 169.8 billion, including RMB 167.8 billion from government-guided funds and RMB 2 billion from market-oriented funds. Geographically, Jiangsu led with 12 new funds, followed by Guangdong with 7, and Beijing, Zhejiang, Fujian, and Hubei with 4 each. These provinces concentrated their efforts on hard-tech sectors such as advanced manufacturing, artificial intelligence, and aerospace information, with clear provincial-municipal coordination and increasingly defined industry directions.

The report surveyed 97 representative fund-of-funds management institutions. Performance indicators improved compared with the 2025 report: government-guided funds posted an internal rate of return (IRR) of 7.33% in the first half of 2026, and their distributed to paid-in capital ratio (DPI) rose to 0.79. Market-oriented funds saw DPI increase to 0.88. The simultaneous rise in DPI for both types indicates that the improving exit environment is translating into cash recovery.

Significant institutional changes occurred in fund duration and fault tolerance mechanisms. In May, Guangdong launched its Strategic Emerging Industry Guidance Fund, the province's first corporate-style provincial government investment fund with no fixed duration and perpetual operation. Around the same time, Xi'an High-tech Emerging Industry Investment Fund extended its term from 30 years to indefinite. According to incomplete statistics, since 2025, 57% of newly established guided funds have allowed sub-funds to have terms exceeding 10 years. On fault tolerance, provisions allowing up to 100% loss on individual projects have been written into operational rules in multiple localities. These dual breakthroughs in duration and fault tolerance give fund-of-funds greater flexibility in investment cycles and risk-bearing capacity.