Most fund companies can look back on good decade

Fund companies in China made 303.4 billion yuan ($48 billion) in profits for investors from 2001 to 2011, or about 27.6 billion yuan on average every year, according to statistics from Wind Information Co Ltd, a provider of economic data and financial information.

In return, the companies received about 164.6 billion yuan in management fees, meaning the funds provided investors with 138.8 billion yuan in net profits, or 12.6 billion yuan a year on average.

By the end of last year, 41 out of the 64 fund companies that took part in a recent survey said they had managed to make profits for investors since 2001. The rest said they had lost money.

Among the 41 companies that reported good results, 16 each had more than 10 billion yuan in returns during that period and four each had more than 20 billion yuan in returns.

The fund family China Asset Management Co Ltd made more than 49.4 billion yuan in profits for investors during the past 11 years, an amount equal to about 12 percent of the industry's total profits from 2001 to 2011.

Among the 23 companies that reported losses, China Post Fund was the worst. Since it began operating in 2006, it has lost 22.4 billion yuan.

Wind's statistics also suggested that 35 of the 41 companies that reported making profits in the past 11 years have seen their profits exceed their management fees.

Twenty-nine companies, meanwhile, either charged more in management fees than they produced in profits or caused investors to incur losses.

Lu Mingsheng, a 63-year-old retired factory worker in Wuxi, a city in Jiangsu province, started to invest in funds in 2007 using 600,000 yuan he had received in compensation after an apartment he had owned was demolished.

"I lost about 200,000 yuan when the market slumped in 2008," Lu said. "Although things are getting better now, I have got a little bit more than 400,000 yuan. Ordinary and inexperienced investors like me should be aware of the potential risks of these investments."

Gu Rong, a 30-year-old owner of a Shanghai-based import and export company, has had better luck with the three funds that she has been investing in since 2009. Only one of them has lost money. "Since I used to work in a commercial bank, I have some basic knowledge of funds," Gu said.

"Since China is undergoing a period of economic restructuring, in the middle of a stagnant world economy, the Chinese market is not performing well now, hence the lack of confidence in the market and the wait-and-see attitude adopted by most investors," said Johnson Chng, partner at A.T. Kearney Management Consulting Co Ltd.

He also said the losses have to do with fund managers. He said it is very hard to gauge the performance of fund managers in China, where the capital markets operate differently than in other countries.

"Meanwhile, funds are charging high management fees in China," Chng said. "Normally, investors should get profits from dividends."