Sunlight Foundation is back! FOF "explodes in popularity," and banks' strategic shift toward co-creating "star-making"

FOF (Fund of Funds) is becoming a “hot commodity” for fund companies and banks to expand their wealth management channels. “Sunlight Funds” are frequently appearing, and early fundraising has become the norm. On March 10, Beijing Business Daily reporters noted that several recent FOF products were sold out immediately after issuance, with market enthusiasm continuing to rise.

Meanwhile, China Merchants Bank, China Construction Bank, and Bank of China have launched their own exclusive FOF plans, partnering with fund companies to build one-stop asset allocation solutions. Analysts believe that in the current low-interest-rate environment and with residents’ wealth shifting, banks’ vigorous development of FOFs and other comprehensive wealth management services help optimize income structures and strengthen intermediary businesses.

FOF Funds Are Booming

Once with a weak presence in the public fund landscape, FOF businesses are now gaining momentum. On March 10, E Fund’s E Ruyi Yingze 6-Month Holding Period FOF announced it had completed its fundraising early after just one day of sale, becoming the tenth “Sunlight Fund” of the year.

Additionally, Bank of Shanghai’s subsidiary, Pudong Development Bank Asset Management, announced that its Pudong Development Bank Ying Tai Multi-Asset Allocation 3-Month Holding Period FOF, launched on March 5, had reached the total fund share and subscription account thresholds required for fund contract effectiveness, leading to an early closure of fundraising. The deadline was moved up from March 20, 2026, to March 5, 2026, making it a true “Sunlight Fund.” In the same month, Invesco Great Wall Fund Management also announced that its Invesco Great Wall and Xi’an An Yu 3-Month Holding Period FOF had closed early on the day of issuance.

Such blockbuster “Sunlight Funds” are not isolated cases. Wind data shows that, aside from the three above, several other funds also sold out within a day, including Southern Stable Jia Multi-Asset 3-Month FOF, GF Yuefeng Multi-Asset Stable 3-Month FOF, Invesco Great Wall Yingjing Conservative Allocation 3-Month FOF, Bosera Ying Tai Zhenxuan 6-Month FOF, Nuoya Zhiying Preferred 3-Month FOF, Guotai Ruili 6-Month FOF, and Wanjia Qitai Stable 3-Month FOF.

The issuance side vividly reflects market enthusiasm. According to Wind data, as of March 10, there were 34 FOFs established in the market with a total issuance scale of about 48 billion yuan; last year’s first quarter saw only 16 FOFs with an issuance of 14.147 billion yuan. According to the China Securities Investment Fund Association, by the end of January 2026, the net asset value of FOFs reached 281.178 billion yuan, a growth of 36.785 billion yuan from the end of 2025, indicating a clear growth trend.

Banks Also Favor FOFs

Amid the FOF issuance boom, major banks are accelerating their deployment, launching their own exclusive FOF plans, shifting from single-product distribution to systematic, branded, and customized operations.

In 2024, China Merchants Bank launched the “TREE Changying Plan,” collaborating with public fund managers to create a one-stop asset allocation solution. Based on the bank’s TREE asset allocation service system, it adopts a multi-asset strategy covering domestic and international stocks, bonds, commodities, and more. Compared to single-asset investments, multi-asset allocation offers better returns and lower volatility. Leveraging the bank’s five-star product system, it selects high-quality targets from over 10,000 funds, manages them strictly, and regularly reviews performance to achieve investment goals. The plan also provides dedicated advisory services and full-process support to enhance investors’ experience.

Market performance shows that several “hot” FOFs established in 2025, such as Dongfanghong Yingfeng Stable Allocation 6-Month FOF (65.73 billion yuan), Full Wealth Yinghe Zhenxuan 3-Month FOF (60.01 billion yuan), E Ruyi Ying’an 6-Month FOF (58.48 billion yuan), Huatai Bairui Ying Tai Stable 3-Month FOF (55.77 billion yuan), all had fund custodianship by China Merchants Bank. As of March 10, 2026, multiple newly issued FOFs with subscription scales exceeding 2 billion yuan also saw China Merchants Bank acting as custodian multiple times.

In 2026, banks further accelerated their FOF strategies. At the start of the year, China Construction Bank officially launched the “Longying FOF” plan, partnering with top fund companies to develop professional asset allocation solutions, providing investors with comprehensive, one-stop asset management services.

The “Longying FOF” plan aims to solve the “difficulties in selecting funds” for retail investors by employing multi-asset strategies across stocks, bonds, commodities, and overseas assets, capturing market opportunities. It offers four main series: low-volatility multi-asset FOF, medium-volatility multi-asset FOF, ETF-FOF, and global investment products. Based on market conditions and product operations, it provides professional services and full-process support to improve the holding experience.

Under this plan, several FOFs, such as Southern Stable Jia Multi-Asset 3-Month FOF, GF Yuefeng Multi-Asset Stable 3-Month FOF, Wanjia Qitai Stable 3-Month FOF, Pudong Development Bank Ying Tai Multi-Asset 3-Month FOF, and Invesco Great Wall and Xi’an An Yu 3-Month FOF, sold out within a day.

In February, Bank of China launched the “Plan,” collaborating with public fund managers to create a one-stop asset allocation scheme, offering four asset portfolios tailored to different risk preferences: ultra-low, low, medium, and high volatility. The “Hui Tou Plan” also employs multi-asset strategies, including stocks, bonds, and commodities, using growth and dividend strategies, carefully selecting top fund managers across the market, and implementing strict evaluation to ensure alignment of investment goals, aiming to deliver better investment experiences while controlling risks.

Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, stated that the shift from distribution of individual funds to active customization and mass creation of star FOF products marks a transition in wealth management from “traffic operation” to “asset allocation services.”

“Banking’s strong focus on FOF aligns closely with the profound changes in residents’ wealth structures, representing a resonance of supply and demand,” Bai further analyzed. He noted that deposit migration is entering a 2.0 phase. After the comprehensive implementation of new asset management regulations in 2022, bank wealth management products broke the fixed return guarantee, exposing residents to net value fluctuations in “deposit substitute” investments. Since 2024, with continued declines in deposit interest rates and increasing segmentation in stock markets, residents’ demand for “steady appreciation + professional management” has surged. FOFs fill this market gap by maintaining transparency and liquidity of fund products while reducing volatility through multi-asset allocation, becoming an ideal channel for wealth transfer from deposits and savings.

Wang Hongying, Director of the Hong Kong Financial Derivatives Investment Research Institute, pointed out that a key reason for banks accelerating FOF deployment is that nearly 50 trillion yuan of fixed-term deposits will mature in 2026, requiring rapid reallocation of vast funds. In an environment of declining yields on fixed income assets and rising interest in equities and gold, banks are speeding up their transformation into wealth management and fund advisory services, seizing market opportunities and enhancing professional asset allocation capabilities.

How Banks and Fund Companies Collaborate to “Create Stars”

How does the cooperation mechanism work when banks and fund companies jointly develop FOF plans? Wang Peilin, Deputy Director of the Bank Channel Department at Chuangjin Hexin Fund, explained to Beijing Business Daily that banks, as professional wealth managers, have very strict standards for the access and screening of partner funds and key recommended funds. Requirements include the fund company’s and fund manager’s years of experience, past performance, drawdowns, and more. Only top-tier products within their category can hope to enter the bank’s key or branded strategic products.

“For innovative branded projects like the ‘Changying Plan’ of China Merchants Bank or the ‘Hui Tou Plan’ of Bank of China, they are usually co-created with fund companies. Investment scope, maximum drawdown targets, and other parameters are strictly controlled to ensure product stability. Leading banks, especially top-tier ones, act as distributors and select the best products,” Wang said.

This also raises higher demands on fund companies. Wang noted that because joint-stock commercial banks are often concentrated in economically developed regions, their service delivery is more focused. Large state-owned banks have extensive branch networks, especially in third- and fourth-tier cities and counties, facing larger customer bases and higher service requirements for fund companies.

Regarding the impact of banks’ FOF strategies, Wang Hongying said that on one hand, the attractiveness of fixed income products declines in a low-interest environment, prompting more investors to accept moderate risks for excess returns, increasing demand for multi-asset allocations like stocks, gold, and commodities. On the other hand, with narrowing interest margins and rising risk premiums in traditional lending, developing FOFs and comprehensive wealth management helps banks optimize income structures and strengthen intermediary businesses.

Looking ahead, Bai Wenxi predicted that the relationship between banks and fund companies will shift from simple distribution to deeper integration. In the future, banks may customize FOFs and establish strategic or semi-exclusive partnerships with select high-quality fund companies: fund companies providing exclusive strategies, opening underlying holdings, and accepting stricter assessments; banks offering scale support and channel resources.

Beijing Business Daily Reporter Meng Fanxia Zhou Yili

(Edited by Qian Xiaorui)