China's private funds reached record assets in July as investors shifted away from mutual funds following a semiconductor share sell-off.

Assets managed by China's private funds increased in July, even as the country's mutual funds experienced a significant decline. Data from the Asset Management Association of China shows that mutual fund assets fell by 560 billion yuan, or US$83.3 billion, during the month. This shift occurred as investors diversified their portfolios following a widespread sell-off of semiconductor shares.

Mutual fund decline

The net assets under management for domestic mutual funds dropped to 39.11 trillion yuan in July, representing a 1.4 per cent decrease from the previous month. This decline ended a four-month period of growth that had seen mutual fund assets reach a record high of 39.67 trillion yuan by the end of June.

Private fund growth

In contrast to the mutual fund sector, China's domestic private funds reached a record 25.73 trillion yuan in assets by the end of July. This figure reflects an increase of 2.07 trillion yuan, or 8.7 per cent, over the month. July marked the 10th consecutive month of expansion for these private funds.

Semiconductor market impact

The market volatility was driven by a slump in semiconductor shares, fueled by investor concerns regarding the monetization of artificial intelligence. The chip-heavy Star 50 Index in Shanghai fell by nearly 26 per cent in July, significantly underperforming the broader CSI 300 Index, which tracks leading companies in Shanghai and Shenzhen and saw an 8 per cent decline.