Strategic Pivot and Growing Pains

On July 14, 2025, Lu Weiming officially took the reins as chairman of China Universal Asset Management. Having spent nearly 28 years at Orient Securities, with a long focus on fixed income and derivatives, the veteran took over a company far from being at ease. By then, China Universal was already a trillion-level top-tier public fund, but beneath the glossy surface of scale, problems had been building for years: a severely imbalanced business structure, a fading halo around active equity, and a persistent decline in the performance of star fund managers, putting market trust under severe strain.

Lu Weiming, emerging from a securities firm background, brought with him a mindset rooted in fixed income and macro asset management. The market anticipated he could break the long-standing structural deadlock at China Universal. Now, as of August 2026, a full year of leadership has passed, and the company has indeed undergone profound changes. The underlying asset layout has been continuously improved, with index and "fixed income+" funds becoming the core engines for scale expansion, pushing total assets under management (AUM) to a new high. A sales subsidiary has also been established to reshape channel dynamics. However, the transformation has come with significant pain. A dramatic reshuffling of the investment and research team, a financial quagmire of "revenue growth without profit growth," and regulatory warnings on compliance have exposed the "bloated" risks hidden behind the trillion-level facade of this established public fund. It is undeniable that China Universal's strategic transformation is still in a deep adjustment phase, with a long road ahead before it can mature and achieve high-quality development.

Personnel Overhaul

The past year has undoubtedly been the most turbulent and intense period for personnel changes at China Universal. At the beginning of this year, the company experienced a significant wave of talent attrition. Data from the Asset Management Association of China showed that the company had 897 employees at the end of 2025, but this number had dropped to 876 by April 11, 2026. In just one quarter, over 20 employees left, covering core departments like research and sales. To counter this talent drain, China Universal opted for large-scale external recruitment to fill the gaps quickly. By August 10, the headcount had rebounded to 907, completing a round of personnel turnover within six months.

Changes at the fund manager level were equally intensive. In the past year, the company appointed 19 new fund managers, far exceeding the industry average of four, while five managers left during the same period. Beyond personnel changes, the internal product division and management structure were also being reshaped. The company issued over a hundred announcements regarding fund manager changes within the year, most citing "internal company work adjustments." This round of personnel changes was particularly concentrated and intense in the passive index investment area. For example, Guo Beibei, Deputy Director of the Index and Quantitative Investment Department, stepped down from four products on August 4th due to "internal work adjustments," including the New Energy Vehicle Industry Index LOF, Gold and Precious Metals Fund, Consumer ETF, and CSI Major Consumer ETF Feeder Fund. Prior to this, in July, she had already resigned from eight ETFs and feeder funds, including the Traditional Chinese Medicine ETF, Medical ETF Feeder, and Biotech LOF. According to Wind data, after this round of intensive "load reduction," Guo Beibei's AUM under management shrank from 553.76 billion yuan at the end of the first quarter to 103.08 billion yuan currently. Her remaining products are now largely concentrated on overseas index funds like the Nasdaq 100 ETF. The main successor to Guo Beibei's resigned products was Sun Hao, who took over five funds covering themes like new energy vehicles, biotech, and consumption. Combined with taking over the Hong Kong Stock Connect Consumer ETF from Le Wuqiong on August 5th and newly established funds in July, Sun Hao has taken on nine new products this year. Simultaneously, Sun Hao was also reducing his load, resigning from 10 funds such as the Non-Ferrous Metals ETF and CSI Shanghai State-owned Enterprise ETF from May to July. Looking at the products he took over, Sun Hao's management focus clearly shifted towards broad-based indices and mainstream sectors, while the products he resigned from were mostly cyclical or regional themes. Other multi-billion-yuan fund managers like Yan Yang and Wu Zhenxiang also participated in this round of product rotation, showing a clear trend towards contraction and focus within the sector layout. Yan Yang resigned from five broad or small-scale products this year, including Home Appliances, HSG 500, and 800 Value, while one carbon-neutrality themed ETF triggered liquidation due to its low scale. Simultaneously, he took over two products from Sun Hao in June—the CSI Dividend ETF Feeder and CSI Bank ETF Feeder—and became the manager of two new CSI 300 Free Cash Flow themed funds, consolidating his portfolio towards high-defense, high-cash-return stable index themes like dividends, banks, and cash flow. However, after this product reshuffling, Yan Yang's AUM fell out of the "billion-yuan club," shrinking to 85.81 billion yuan. Wu Zhenxiang's management scope narrowed from broad-market indices to specific regional and strategy-enhanced directions. In May this year, he resigned from five products, with three related to CSI 300 ETFs and feeder funds being taken over by Li Yanan; the CSI A500 ETF Feeder and CSI 500 ETF Feeder were taken over by Sun Hao. During the same period, he took over the MSCI China A50 Connectivity ETF Feeder and CSI Shanghai State-owned Enterprise ETF Feeder from Sun Hao, and also took charge of the newly established CSI Hong Kong Stock Connect Composite Index Enhanced fund. Currently, he also manages some bond products, with his total AUM approaching 200 billion yuan. Dong Jin might be the busiest person in this major personnel reshuffle. Since the start of the year, she has resigned from seven cyclical and traditional broad-based products, including Non-Ferrous Metals, Energy, Solar, and CSI 300, with these products being taken over by newcomers Li Yanan and Di Zexu. At the same time, she has taken on a large number of new products, adding 12 funds to her management this year. These include four medical-themed products handed over by Guo Beibei, the Hang Seng Biotech ETF and Hang Seng Index (QDII-LOF) Fund transferred by Le Wuqiong, as well as several new and existing products like the Chemical ETF, Home Appliance Leader ETF, Hong Kong Stock Connect Medical ETF, and Power ETF. Structurally, Dong Jin is exiting from traditional sectors like "Non-Ferrous Metals + Energy + CSI 300" and moving heavily into new directions such as medical, Hong Kong stocks, chemicals, and power. Through this "one step back, two steps forward" approach, the number of products under Dong Jin's management has actually increased, establishing her as a key player in China Universal's index investment line. Compared to the drastic restructuring in passive indices, the adjustments in the active equity line have been more moderate, largely characterized by a combination of "co-appointments" and "load reductions." For instance, on March 17, 2026, veteran equity manager Zhao Pengfei resigned from the China Universal Multi-Strategy Open-ended Fund, handing it over to Yuan Feng. On April 2, Zhou Han was appointed as a co-manager for the China Universal Yuexiang Two-Year Holding Hybrid Fund managed by Zhao Pengfei. The China Universal Min'an Zengyi Open-ended Fund managed by Hu Xinwei appointed He Biao as a co-manager on April 28, and on May 14, the China Universal Stable Growth Hybrid Fund A appointed Zhu Linghao as a co-manager. Overall, the active equity line focused on strengthening management capacity and sharing the load of fund managers, without the large-scale product ownership restructuring seen in the index team.

Structural Imbalances

When Lu Weiming took office, the situation at China Universal was that its once-proud active equity business was showing signs of decline. The company's long-standing historical inertia of "walking on one leg" meant passive index and fixed-income businesses had long been relegated to supporting roles, creating a severely top-heavy business structure. Over the past year, the chairman, with his securities background, attempted to counter the persistent weakness in active equity by heavily allocating resources towards index and fixed-income sectors. Looking at the aggregate data, this strategy has indeed led to significant scale expansion. Wind data shows that by the end of the second quarter of 2026, the company's total AUM surpassed 1.26 trillion yuan, an increase of approximately 260 billion yuan year-on-year; non-money market fund AUM reached 773.8 billion yuan, an increase of about 234.5 billion yuan year-on-year, pushing its industry ranking from ninth back to sixth. On the surface, this seems like a passable report card. However, peeling back this glossy layer of scale reveals a different story when examining structural growth rates, profitability quality, and performance. This "passive rescue" strategy has not fundamentally turned the tide; instead, it has exacerbated the structural imbalance and growing pains across the entire product line in the short term. Index funds are one of the core drivers of this round of scale expansion and a key strategic focus for China Universal. Wind data shows that by the end of June this year, the scale of China Universal's index funds (concept category) surged from 1.658 trillion yuan to 2.371 trillion yuan over the past year, with non-money market ETFs expanding from 56 to 77 and their scale growing from 74.5 billion yuan to 128.6 billion yuan. However, beneath this impressive growth, the shortcomings are equally glaring. Firstly, the company lagged in the layout of mainstream broad-based indices, missing the first-mover advantage and struggling to challenge the market position of leading institutions. For example, the scale of China Universal's CSI 300 ETF is only 461 million yuan, a seemingly insurmountable gap compared to the 52.843 billion yuan scale of a similar product from E Fund. Secondly, affected by market style rotation and poor performance, some sector-themed index funds have experienced continuous capital outflows, leading to product instability. A typical example is the China Universal Hong Kong Stock Connect Auto ETF, which has seen its performance decline since its listing in May 2025, with a net asset value drop of over 15% in the past year. By June 30, 2026, its net assets were only 30 million yuan, a significant shrinkage of 244 million yuan from its initial listing in May 2025, reflecting the vulnerability of passive investing in specific sectors. Beyond the index arena, the "fixed income+" business became another core pillar for China Universal to stabilize its base and drive scale growth. Leveraging its stable product characteristics, the "fixed income+" business experienced rapid expansion during the volatile equity market environment, becoming a crucial tool for hedging against equity market risks. By the end of the second quarter of 2026, the scale of China Universal's "fixed income+" products had skyrocketed from 78.764 billion yuan a year earlier to 203.975 billion yuan, nearly tripling in one year. While this "substituting stocks with bonds" scale growth boosted the trillion-level AUM on paper, it also brought unavoidable concerns about profitability. In the current industry environment of fee reductions, active equity funds typically charge a 1.2% management fee, while ETF management fees are as low as 0.15%, and "fixed income+" management fees mostly hover around 0.6%. As the proportion of these low-fee products rapidly increases, China Universal's overall fee rate is continuously diluted, directly leading to a decline in the company's overall management fee yield and a clear mismatch between scale growth and profit growth. The active equity business, traditionally a moat for the company, has seen its scale recover somewhat, but the quality of growth and structural differentiation are prominent issues, with insufficient recovery momentum. Data shows that the scale of the company's active equity funds grew from 175.76 billion yuan at the end of Q2 2025 to 210.8 billion yuan at the end of Q2 2026, an increase of 41.3 billion yuan in Q2 2026 alone. However, this was more driven by a rebound in net asset values, while the fund flow side remained under pressure, with active equity funds experiencing net redemptions of 9.9 billion units in Q2. The performance divergence among the company's funds is becoming increasingly apparent. For example, the China Universal Science and Technology Innovation Fund A has seen its net asset value grow by over 80% in the past year, reaching 11.179 billion yuan by June 30, 2026, an increase of 7.4 billion yuan compared to last year. In contrast, the China Universal Consumption Sector Hybrid Fund, managed by former star manager Hu Xinwei, shrank by 4 billion yuan in the same period. This "fire and ice" performance not only affects investor experience but also tests the underlying investment research strength and long-term commitment needed to restore the company's "stock selection expert" reputation.

Profitability and Compliance Challenges

The vigorous scale expansion did not translate into a recovery in profits. The first "report card" under Lu Weiming's leadership was somewhat awkward: for the full year 2025, the company achieved total revenue of 5.658 billion yuan, a 17.2% increase year-on-year, but net profit was 1.421 billion yuan, down 8.14% from the previous year. The main reason for this "revenue growth without profit growth" is the aforementioned business structure imbalance, along with persistently high distribution costs. These distribution costs primarily refer to the well-known "trailing commissions" or customer maintenance fees in the fund industry, which are deducted from management fees and paid to external distributors like banks and online sales platforms. In 2025, China Universal's management fee income was 4.482 billion yuan, up 10.1% year-on-year, while its customer maintenance fees reached 1.565 billion yuan, accounting for 34.92% of management fee income. Simply put, for every 100 yuan of management fees the company earns, over 34 yuan flows directly into the pockets of sales channels. Looking at the longer term, China Universal's channel fee share has remained high for years, standing at 32.86%, 32.84%, 33.24%, and 34.29% from 2021 to 2024, showing a year-on-year upward trend and significantly higher than peers like E Fund, China Asset Management, and GF Fund. For a company heavily reliant on external distribution like China Universal, even if scale continues to grow, a large portion of revenue is siphoned off by channels, directly weakening its profit resilience. In the context of industry-wide fee reform, the downward pressure on management fees, coupled with high trailing commissions, further amplifies operational pressure. To break free from the shackles of channels, building an in-house sales system became a strategic choice for China Universal. In fact, as early as May 2022, the company submitted materials to establish a domestic subsidiary, receiving approval from the China Securities Regulatory Commission two years later. In June 2025, China Universal Fund Sales (Shanghai) Co., Ltd. completed its business registration and was formally established, receiving approval to operate in December of the same year. In 2026, under Lu Weiming's leadership, this long-prepared layout finally came to fruition. On August 3, the company announced it would gradually transfer its retail direct sales business to this sales subsidiary. Industry insiders believe that establishing a sales subsidiary holds multiple practical significances for China Universal at this stage. On one hand, internalizing the direct sales and distribution business allows a portion of the commissions previously paid to external channels to be retained within the system, offsetting the revenue loss from declining fee rates. On the other hand, the subsidiary can also serve as a key vehicle for buy-side advisory business, helping to break free from the traffic constraints of distribution channels, build its own customer service system, and rebuild the ability to reach investors directly. However, this reform also faces real-world challenges. Starting a sales subsidiary from scratch requires building a complete team for sales, advisory, and operations, incurring new costs in human resources, technology, and marketing, which will pressure the expense side in the short term. Direct sales businesses in the public fund industry in China generally face difficulties in customer acquisition, and diverting customers from existing distribution channels is not an overnight task. Even if the subsidiary successfully takes over the retail direct sales business, banks and third-party platforms will remain the most important traffic gateways for public funds, making it difficult to completely shake off dependence on external channels in the short term. This is destined to be a slow-moving transformation. Amidst this internal restructuring, regulatory warnings also sounded a compliance alarm for Lu Weiming and China Universal. According to the company's 2025 annual report, on November 11, 2025, the company received a corrective measure from the Shanghai Securities Regulatory Bureau due to issues in compliance, internal control, investment operations, and fund sales. Three senior managers were also issued warning letters simultaneously. This regulatory penalty directly pointed to the problems of internal control management failing to keep pace with business expansion and loopholes in compliance risk control during the company's rapid transformation, exposing management shortcomings in the fast-adjustment period. The intense personnel turnover, rapid business restructuring, and high-speed scale growth, juxtaposed with a lagging internal control and compliance system, represent the core risks that Lu Weiming's China Universal must face head-on. After one year of transformation, China Universal has achieved a comprehensive reshaping of its business tracks, team structure, and channel system, successfully stabilizing its trillion-level AUM base. However, this has come at the cost of declining profits, team instability, and compliance pressures. For a company that has completely moved away from the "equity-only era," the growing pains of scale expansion are just a temporary phenomenon. The core challenge for its long-term journey in the public fund arena will be balancing the speed of growth with the quality of development, and the intensity of change with the bottom line of risk control.