Data does not support the notion of the "Matthew Effect," and the idea that "small and medium-sized public funds are in trouble" is also not a universal phenomenon. However, it is true that individual disparities are widening due to varying abilities to seize market opportunities.

On June 13th, the China Foreign Trade Trust Company (hereinafter referred to as "Foreign Trade Trust") once again drew media attention to the survival status of small and medium-sized public funds when it listed its 25% stake in Baoying Fund for investment solicitation on the Beijing Property Exchange.

Prior to this, the announcement of the resignation of five senior executives at Jiangxin Fund on the same day, along with rumors of unpaid wages at a small-scale public fund, had already made some practitioners feel uneasy.

Regarding the aforementioned phenomena, there is a popular viewpoint that directly points to the "Matthew Effect," suggesting that "small and medium-sized public funds are in trouble" as an inevitable and universal phenomenon.

In fact, setting aside the subjective and objective individual differences in the term "difficulty," data-wise, the "Matthew Effect" does not seem to be significant.

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According to the data from East Money CHOICE, as of the end of the first quarter, the total public fund scale of the top 10 fund companies was 11.39 trillion yuan, accounting for 39.63% of the total public fund scale (28.74 trillion yuan), which is a decrease of 3.28 percentage points from the end of 2019 and a decrease of 9.37 percentage points from the end of 2015.

However, it is also true that individual disparities are widening. Taking Baoying Fund and Wanjia Fund as examples, at the end of 2015, their public fund scales were ranked 28th and 55th, respectively. By the end of the first quarter of 2024, the former had dropped to 66th place, while the latter had risen to 25th place.

One of the reasons for this rise and fall is the different degrees to which they seized market opportunities during a specific period. For instance, from 2016 to 2018, when the overall A-share market was in an adjustment period, the total market public fund scale increased from 8.40 trillion yuan to 13.03 trillion yuan, a growth of 55.12%. During the same period, Wanjia Fund seized market opportunities and increased its public fund scale by more than 2 times, while Baoying Fund's scale decreased by more than 60%.

Regarding Foreign Trade Trust's listing of its stake in Baoying Fund, some public opinion considers it a strategic implementation in the trust industry to "optimize asset structure" and "focus on main responsibilities and main businesses." However, there are 21 "trust-based" public funds (where the largest shareholder is a trust company), and trust companies giving up their equity stakes are still a minority and have not become a universal phenomenon.

Listing for Investment SolicitationThe official website of Beijing Property Exchange shows that on June 13th, as the investment attraction entity, China Foreign Trade Trust (CFT) listed its 25% stake in Baoying Fund in the "Comprehensive Investment Attraction" section.

According to the "Basic Information of Investment Attraction Project," by the end of 2023, Baoying's comprehensive asset management scale was 137.821 billion yuan, of which the public fund asset management scale was 67.332 billion yuan, and the dedicated asset management scale was 69.594 billion yuan. The asset management scale of its subsidiary, China Railway Baoying Asset Management Company, was 895 million yuan. As for Baoying's main financial indicators, they were not disclosed.

Based on the public information released by Baoying, the company was established in 2001 with a registered capital of 100 million yuan, with China Railway Trust Company and China Foreign Trade Trust holding 75% and 25% of the shares, respectively.

Among them, China Railway Trust is a controlling subsidiary of the listed company China Railway, holding 78.91% of the shares, but China Railway has not disclosed Baoying Fund's financial statements.

China Foreign Trade Trust is a controlling subsidiary of Sinochem Capital, holding 97.26% of the shares. Sinochem Capital is a controlling subsidiary of the listed company Sinochem Corporation, holding 92.78% of the shares. According to the annual report released by China Foreign Trade Trust, Baoying's net profit for the year 2023 was 81.07 million yuan, and the asset-liability situation at the end of the period was unclear.

From the perspective of the annual report data, it seems that China Foreign Trade Trust's listing of its Baoying equity for investment attraction was not due to financial reasons.

The annual report data shows that China Foreign Trade Trust's net profit attributable to the parent company for the year 2023 was 1.021 billion yuan, a year-on-year increase of 21.40%, with net assets at the end of the period at 19.112 billion yuan, a year-on-year increase of 1.23%, and current liabilities of 392 million yuan for the same period, a year-on-year decrease of 37.48%, of which non-current liabilities due within one year were only 28.18 million yuan, a year-on-year decrease of 49.51%.

Although the data also shows that the income from fees and commissions, which accounts for more than 60% of China Foreign Trade Trust's revenue structure, has been declining for two consecutive years, from 1.973 billion yuan in 2021 to 1.919 billion yuan in 2022, and 1.728 billion yuan in 2023, this income mainly comes from trust assets and has no direct connection with Baoying.

However, it is also true that Baoying Fund's development has been lagging behind the average level of the public fund industry in recent years.Data from Eastmoney CHOICE indicates that as of the end of the first quarter, Baoying's public fund scale reached 71.659 billion yuan, a 6.43% increase from the beginning of the year, but a 9.67% decrease compared to the end of 2015 (79.333 billion yuan).

From a historical perspective, missing the development opportunities from 2016 to 2018 is an important reason for its lagging growth. Since 2016, as the A-share market entered a three-year adjustment period, many individual investors chose to embrace public funds, leading to rapid development in the public fund industry. According to data from the China Securities Investment Fund Association, the scale of public funds across the market was 8.4 trillion yuan at the end of 2015, increasing to 13.03 trillion yuan by the end of 2018, a 55.12% increase over three years.

During the same period, Baoying's public fund management scale decreased from 79.333 billion yuan to 26.827 billion yuan, a 66.18% drop, and its ranking fell from 28th to 65th.

From 2019 to 2023, Baoying's public fund business showed significant improvement, but due to missing the previous three years and the considerable growth rates of many peers, its ranking did not rise. By the end of 2023, Baoying's public fund scale was 67.333 billion yuan, a 1.51-fold increase compared to the end of 2018, exceeding the industry growth rate by 39.17 percentage points, yet its ranking fell to 70th.

Over the same period, the total market public fund scale increased to 27.6 trillion yuan, a 1.12-fold increase. Wanjia Fund's public fund scale increased to 393.811 billion yuan, a 3.66-fold increase, significantly leading the industry growth rate, and its ranking rose to 23rd.

In terms of product structure, the relatively slow development of Baoying's public fund business is mainly reflected in equity products (stock and hybrid types). At the end of 2015, Baoying's equity product scale was 49.023 billion yuan, which decreased to 12.433 billion yuan by the end of 2018, a 74.64% reduction. Although it rebounded to 19.404 billion yuan by the end of 2023, it still shrank by 60.42% compared to 2015. During the same period, the proportion of equity products in its public fund scale decreased from 61.79% at the end of 2015 to 46.35% in 2018, and further decreased to 28.82% by the end of 2023.

According to the annual report published by Foreign Trade Trust, in 2015, Foreign Trade Trust's investment income from Baoying was 124.5268 million yuan, which significantly decreased to 13.52 million yuan in 2018. Although it rebounded to 20.2685 million yuan in 2023, it still decreased by more than 80% compared to 2015.

Frequent TransfersIt is worth mentioning that the change in equity of Baoying Fund is not an isolated case.

On May 13th, also on the official website of Beijing Property Exchange in the "Comprehensive Investment Attraction" column, AVIC Trust listed the 81.818 million shares of Jiahe Fund it held, with the price to be negotiated. The difference is that its "basic information of the project" is even simpler, and it does not even explain the asset management scale of Jiahe.

According to the data of East Money CHOICE, as of the end of the first quarter, the public offering management scale of Jiahe Fund was 41.819 billion yuan, an increase of 9.48% compared to the beginning of the year. However, its equity business accounted for a low proportion, only accounting for 5.80% of its public offering management scale at the end of the first quarter.

Recently, there are rumors that Shanxi Trust's transfer of 31% equity in HSBC Jinxin may have a follow-up. In June 2023, this part of the equity was listed on the national public resource trading platform with a base price of 1 billion yuan, but no one took over. As of the end of the first quarter, its public offering scale was 46.273 billion yuan, a decrease of 9.66% compared to the beginning of the year, and the equity scale accounted for 47.41%. HSBC Global Investment Management (UK) Company holds 69% of its equity.

The official website of the China Securities Regulatory Commission shows that as of June 14th, 13 public offering institutions have declared the "change of more than 5% equity and actual controller" matters, most of which are small and medium-sized companies, such as Tai Xin, Hui Sheng, Hive, Bo Dao, Jin Xin, Heng Yue, etc., with public offering scales of 55.871 billion yuan, 51.807 billion yuan, 48.210 billion yuan, 15.807 billion yuan, 10.594 billion yuan, and 3.881 billion yuan at the end of the first quarter, respectively.

In addition, Jiangxin Fund announced on May 11th that five senior executives resigned at the same time, and some small and medium-sized fund companies have rumors of arrears of wages. Therefore, there is a view that the "Matthew effect" of public offering funds is highlighted, and "small and medium-sized public offerings face survival difficulties".

However, from the perspective of data, the "Matthew effect" does not seem to be established. The data of East Money CHOICE shows that as of the end of the first quarter, the total public offering scale of the top 10 fund companies was 11.39 trillion yuan, accounting for 39.63% of the total scale of public offering funds (28.74 trillion yuan), a decrease of 3.28 percentage points compared to the end of 2019, and a decrease of 9.37 percentage points compared to the end of 2015.

There are also views that the listing of the equity of Baoying Fund held by Foreign Trade Trust, and the transfer of the equity of Jiahe Fund held by AVIC Trust, and other cases, are the implementation of the trust industry's "optimization of asset structure" and "focusing on the main responsibility and main business" and other strategies.

However, it should be pointed out that among the 21 "trust system" public offering institutions, those that are undergoing or have undergone equity changes are still a minority and have not become a common phenomenon.

Looking at the data of the past three years, the "trust system" as a whole has not lagged behind the development speed of the public offering industry.From the end of 2021 to the end of 2023, the total public fundraising scale of the aforementioned 21 "trust-based" companies was 3.05 trillion yuan, 2.98 trillion yuan, and 3.25 trillion yuan, respectively, accounting for 11.98%, 11.60%, and 11.97% of the total public fundraising scale, with little change. In terms of the scale of equity product categories, the proportion of "trust-based" companies during the same period was 12.17%, 11.99%, and 12.37%, respectively.

The above data regarding "trust-based" companies does not include Manulife Fund and Guolian Fund. In 2022 and 2023, these two companies (formerly known as Teda Manulife and Zhongrong Fund) successively underwent equity changes. The former changed from a "trust-based" company to a member of the "foreign-funded" series, while the latter changed from a "trust-based" company to a member of the "securities firm" series.