The honeymoon between Chinese mutual fund investors and the surging market appears to be over. Investors are attributing large financial loses to what many are characterizing as “unprofessional” management, China Daily reports. Beginning in the third quarter last years, a surge in the Chinese market prompted 23 mutual funds to split their funds, which decreased the price, to try to expand scale quickly.

 

Now investors say these managers mislead them by promoting the short run gains of these cheaper priced funds.

 

The China Securities Regulatory Commission even released a statement last November telling funds not to mislead investors by advising them that low net value funds are a better investment. On average, funds that split offerings last year have lost 35% of earnings since their peak.

 

“When the market is hot, fund companies should not solely consider their own interests by blindly expanding fund scale, but should take the actual market conditions into account in order to ensure a consistency and sustainable growth in the future,” said the director of mutual fund research and the evaluation center at China Galaxy Securities, Du Shuming.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.