Under the Multi-Diversified Investment Wave, Public Fund Allocation Enters a New Stage

Recently, A-shares have experienced some adjustments. Coupled with the low-interest-rate environment and rising demand for conservative investments among residents, the wave of diversified public fund allocation has emerged. As core vehicles, FOFs and fund advisory teams are evolving from traditional stock and bond pairings to multi-asset, multi-region, and multi-category global allocations, becoming an important tool for capital seeking stable returns.

From channel efforts to attract wealth management funds, to deep empowerment of investment decisions through quantitative tools, and to personalized customization in advisory services, diversified allocation is breaking traditional investment boundaries and accelerating the public fund industry’s shift toward high-quality development characterized by “strong allocation and enhanced experience.”

The Rise of Diversified Allocation

Public funds’ multi-asset diversification is becoming an important choice for capital. More and more ordinary investors are shifting from single-asset investments to diversified allocations, injecting substantial incremental funds into the public fund sector.

Data from Tianxiang Investment Advisory shows that by the end of 2025, the scale of FOFs will surpass 200 billion yuan, a 66% increase from the end of 2024. As of March 16, about 20 FOF products with initial fundraising scales over 1 billion yuan have been launched this year, indicating that multi-asset allocation has become a new market trend. Several managers of multi-asset fund advisory teams also revealed that their managed products have steadily grown since inception, and during significant market fluctuations, the number of investors willing to redeem has not increased.

The complex and volatile market environment is precisely the “battlefield” where multi-asset allocation strategies demonstrate their advantages. Zou Zhuoyu, Director of Quantitative Investment Research at Yingmi Fund Research Institute, stated that increased global market volatility does not necessarily drag down the performance of related portfolios and may even highlight the risk diversification benefits of multi-asset allocation.

For example, the China Europe Wealth Multi-Asset Advisory Portfolio: in January this year, as global risk appetite improved, it allocated to technology growth assets; simultaneously, when the volatility of non-ferrous metals expanded during a phase, it increased allocations to chemicals and other resource commodities. In February, as short-term liquidity tightened, metal resources entered a correction phase, and the portfolio used medium-term bonds for hedging, reduced overseas stock positions, increased holdings of A-shares, H-shares, and dividend assets, and optimized commodity allocations.

Ms. Chen, with nearly ten years of investment experience, said, “Last year, buying ETFs could still make good money, but it’s clearly harder this year.” After experiencing market gains previously, she now prefers to “preserve her gains.” This year, she has moved some funds out of ETFs and is considering investing in multi-asset FOFs or fund advisory portfolios.

Public Funds Embrace Industry Trends

Embracing multi-asset allocation is becoming a new trend in the public fund industry. This is not only driven by market volatility but also a natural result of industry evolution and upgrading.

“Recently, ‘phenomenal’ FOF products have appeared frequently, thanks to collaboration with leading bank channels,” said Yan Lu, Head of FOF Investment at Huafu Fund. Currently, it’s difficult for funds to find high-yield, guaranteed products, so investors tend to prefer relatively higher-risk, stable-yield assets. In recent years, the multi-asset allocation concept of FOFs has gained increasing recognition from institutions and individual investors, making their sales naturally popular.

From an investment iteration perspective, multi-asset allocation aligns with the industry’s evolution. Yan Lu explained that, for example, FOFs have entered phase 3.0: “Phase 1.0 FOFs focused on selecting funds, mainly marketed as ‘fund selection experts’; in phase 2.0, the industry shifted toward broad asset allocation, balancing fund selection with stock and bond asset allocation; now, in phase 3.0, the focus has further upgraded to comprehensive, multi-asset, multi-region, and multi-category global asset allocation, increasingly utilizing systematic and quantitative models to implement large-asset allocation strategies.”

“Multi-asset allocation may become the mainstream approach for future FOF investments,” Yan Lu said. Currently, many FOFs focus on the ‘fixed income +’ track. If an FOF does not include assets like QDII products or commodities, its advantages over ‘fixed income +’ funds will be significantly weakened. To leverage its unique strengths, an FOF must maximize its advantages and actively pursue multi-asset allocation.

Supporting High-Quality Industry Development

The “Action Plan for Promoting High-Quality Development of Public Funds” issued by the China Securities Regulatory Commission in 2025 emphasizes shifting from a focus on scale to a focus on investor returns. The rise of multi-asset allocation aligns with this “enhanced experience” industry trend.

In this context, the deep empowerment of quantitative tools has become a catalyst for accelerating the development of multi-asset public funds. Yan Lu stated that for public FOFs to become sustainable and long-term investment products, they must establish a scientific and standardized investment system, overcoming human weaknesses as much as possible. Strengthening discipline and scientific rigor in investment can reduce randomness in outcomes and prevent over-reliance on single assets or fund managers.

“Looking at mature overseas markets, there are many examples, such as Bridgewater’s All Weather strategy. It mainly invests in U.S. assets, including stocks, bonds, and commodities, relying on a replicable investment framework. Even with personnel changes, this framework is likely to continue,” he said. Today, more domestic FOF research teams are equipped with backgrounds in mathematics, quantitative analysis, and asset allocation.

Customized services further expand the space for multi-asset development. Zou Zhuoyu introduced that Yingmi Fund’s “Remainder” platform launched customized solutions in June 2024, providing tailored advisory strategies through broad asset allocation to meet investor needs, achieving “personalized” services.

“Customized multi-asset allocation for high-net-worth clients, previously limited to high-net-worth scenarios, is now expected to benefit a broader user base through online services,” Zou Zhuoyu said. Compared to single products, customized allocations can better match client needs. However, to truly excel in customized multi-asset allocation, risk control and improving client experience are key, relying on quantitative risk management and dynamic adjustment strategies to precisely match different client groups’ return goals and risk tolerances.

Some industry insiders believe that domestic multi-asset investment is still in its early stages: “Many funds and advisory portfolios labeled as ‘multi-asset allocation’ are actually just using gold, overseas funds, and other assets as ‘decorations,’ not true diversification. The key to multi-asset allocation is not simply including various assets but understanding and dynamically optimizing their correlations and hedging relationships. Only by deeply understanding the underlying logic and managing correlations can the allocation of gold, QDII, and other assets be effectively increased, truly achieving diversified returns and risk mitigation.”

Facing the development opportunities of multi-asset allocation in public funds, industry experts believe that only by leveraging professional capabilities to seize the era’s opportunities and maintaining long-term performance to earn investor trust can multi-asset classes truly support residents’ wealth growth and become an important driver for public funds to practice inclusive finance and pursue high-quality development.