China’s First Private Pensions Remain Mostly in the Red 10 Months After Launch(Yicai) Sept. 19 -- Almost four-fifths of Chinese personal pension funds are still unprofitable after the first group of such private pension products was established nearly a year ago.
Nearly 80 percent of personal pensions among all the 156 products are making a loss as of Sept. 15, and only 21 are turning a profit, according to data from Wind. In 10 months since the start, the best-performing fund grew almost 3 percent in net value and the worst one had shrunk by almost 11 percent.
China received its first batch of 113 private pensions in November to help citizens save money and plan for their post-work future in a more independent way besides the two pillars of basic pension and enterprise annuities.
However, over a dozen investors interviewed by Yicai said their experiences with individual pension funds are not positive and thereby it is natural for potential investors to hesitate.
"I always thought pension products would not be in the red," retail investor Zhao Wei told Yicai. But in fact, these products are mostly loss-making without steady performance. "Can loss-making pension funds achieve the goal of caring for us when we become senior citizens?" Zhao wondered.
Fund products' performance was impacted with a discernible pullback in the equities market this year, a fund of funds manager told Yicai. Meanwhile, frequent fluctuations in stock and bond markets made asset allocation harder. Besides, different managers had very different investment philosophies and approaches, which also affected the performance, the person added.
But investors' recognition of the new pension products relies heavily on fund performance, a person working for a bank-backed fund firm pointed out to Yicai. Poor performance causes existing investors to lack confidence in long-term investments and makes potential investors think again.
Mutual fund companies need to raise their risk control requirements and better manage returns and net value fluctuations to make their products perform more steadily, the insider added.
Editors: Tang Shihua, Emmi Laine
