GUANGZHOU (Fund China) - As the continuation of the second half of 2006’s expansion mode, individual investors continued to play an important role in the fund scale expansion in the first half of 2007. Up to the first half of 2007, the individual investors held an 85.54% fund proportion revealled in the 2007 half year fund report. It increased 17.10% when compared with the 2006, becoming the mian power investment in the fund market.

Public fund: Marekt position establish

When compared different types of fund varieties’ holder structual changes, it can bee seen that attracted by the bullish market high yield, and the fund holders proportion in the active equity fund, mixed fund, index fund as well as the LOF, ETF such equities of open-end fund varieties is increasing significantly. Which, as the ETF purchase threshold is higher than others, in some extent, it limited the individual investment. And among the other equities open-end funds, the individual holding proportion is nearly 90%.

Bond funds, money market funds such fixed income varieties that encountered institutions and individual investors focused large scale holding cut in 2006, remains stably in the whole scale at the first half of 2007. Which, the money market fund market share declined from 80 billion shares at the beginning of this year or 20% to 65 billion shares while the bond funds scale doubled, increased from the 17 billion shares at the beginning of this year to 33 billion shares. From the varieties types, it is not difficult to see that due to the new shares intensive issue and attracted by the harvest”risk-free”yield after issue. The pure bond fund invested mainly in the fixed yield vairieties and new share IPO, relying on its relative high”stability” in yield retur, gains a fund scale expansion(mianly in the institutional margin call), while the short & medium bond funds mainly encountered redemption as a low advatage in risk reture.

Despite the individual investors scale speeding expansion may bring forward some unstable impacts or the stock market’s contiual adjustment or a deeply drop in phase that may lead to a large size unrational redemption, the pubic fund’s market position has already occupied as the insurance capital collected via insurance asset managements’establishment,operation, or directly invest in the market and the future fund individual financing(under fund managements’ consideration at present) attraction for the institutinal capital.

Closed-end fund mainly holding by institutions

Institutional investors continue to dominate in the field of closed-end fund,the proportion of institutional holders of closed-end funds reduced 3.54% from 59.88% by the end of 2006 to 56.34% at the end of June 2007.

From the reaction of the top 10 holders, the insurance management and the QFII, the two main institutions’closed-end fund market share reduced 1.551 billion shares and 0.360 billion shares in the first half of 2007. oppositely, the fund management(invested in their own closed-end fund) and the general institutions(financial corporation or Bao steel corporations) closed-end fund holding proportion increase by 368 million and 289 million copies; and the social security fund, brokers financing varieties holding market shares remain stable. Gereral speaking, as the the insurance company and QFII holding reduction, the closed-end fund market shares(the 10 laregest holders holding of the total market share) declined slightly, fell from 41.85% at the end of 2006 to 40.02% at the end of the frist halft 2007.

The fund management operation style from shares turnover rate

Since 2006, as the market entered the bullish boomt, the market trading is more and more active.. 2006 A-share market turnover rate (the negotiable part, the same as below) reached 571.09% , and itreached 542.83% at the first half of 2007, is close to the 2006-year annual level, and the simple annual turnover rate is 1085.66%.

Affected by the bullish market and holders purchase / redemption impact, Fund investment turnover rate is growing gradually, but overall, is lower than the A share turnover rate at the same period. Which, the fund turnover rate in the first half 2007 is only 1/3 of the the A share turnover rate. Taking fundamentals as the main starting point, and buying and holding are still the fund managements’main investment ideas.

Analysis of the relationship between the fund’s share turnover rate and the average holding scale shows that the two exhibited a obivous negative correlation. Along with the average fund scale increased( fund scale increased),the fund’s share turnover rate shows a down trend under the liquity limited requirements.

Despite the overall fund share turnover rate is lower than the A-share market turnover rate, different funds and fund managements are obviuosly different, and in some extent, it shows a different investment operation style. Therefore, according to the half year of 2005, 2006, 2007, the there periods share turnvoer rates and the simply average lelvel of the there period’s turnover rates, different funds and fund managements investmetn operation style is differentiated and the detial of the funds and fund managements with a relative continual high share turnover rate and low share turnover rate are listed for facilitate investors to know funds and fund managements operating style, and choose the appropriate funds according to the market judgement.

In the Fund managements, statistical comparison result showed that China Nature Asset Management, Golden Eagle Asset Management, Zhonghai Fund Management, Great Wall Fund Management, First Trust Fund Management, ABN Amro TEDA Fund Management, Jutian Fund Management, China Asset Management, and Baoying Fund Management all with a relative high share trunover rate and the Guotai Asset Management, Everbright Pramerica Fund Management, Harvest Fund Management, China Merchants Fund Management, Penghua Fund Management, E-Fund Management, Bosera Asset Management, Changsheng Fund Management and INVESCO Great Wall Fund Management with a relative low share turnover rate.

Copyright Fund China 2008.

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