Top mutual fund companies are nearing a complete shift to exchange-traded funds (ETFs), signaling a major transformation in China's fund management industry. Zhong Ou Fund has recently submitted the application materials for its first-ever ETF product. This move likely means that all of the top 20 non-monetary asset management firms will soon be fully competing in the ETF arena.

China's ETF market began in December 2004 with the launch of the first product, the China Universal SSE 50 ETF. The total scale of ETFs first surpassed the 1 trillion yuan milestone in October 2020. It then broke through 2 trillion yuan in August 2023, 3 trillion yuan in September 2024, and has surpassed 4 trillion and 5 trillion yuan in 2025. Today, ETF categories cover a range of assets, including equities, bonds, commodities, and currencies. They have long served the crucial function of guiding medium- and long-term capital into the market and maintaining the stability of the capital market.

This near-universal entry of top-tier fund companies into the ETF market indicates several concurrent changes in the industry. First, the ETF tool is now a "must-have" rather than an optional choice. For a long time, the core narrative of the mutual fund industry was "active management," focusing on discovering star fund managers, chasing excess returns, and concentrating on blockbuster products. However, the recent characteristics of ETFs, such as their diversity and appeal, are completely reshaping this landscape. The fact that all major fund companies are entering the ETF "fast lane" signals that passive investment is no longer an option but a necessity. The full participation of fund companies, once known for their active equity management, shows a consensus has formed: layout ETFs to secure a core position in the future asset management landscape.

Second, a trend of differentiated strategies among institutions in ETF layout is becoming apparent. The rankings of fund companies by ETF product scale show a clear divergence. Leading firms manage over 600 billion yuan in ETF assets, while those at the bottom manage only a few billion yuan, with some managing less than 1 billion yuan. For some companies, ETF assets account for more than 70% of their total non-monetary fund assets, indicating that ETFs have become a core strategic direction. In contrast, some other top-tier firms have ETF assets representing only about 20% of their total, or even less. These companies are choosing a dual-drive model that combines active management with passive tools. This strategic variance reflects different predictions about the future of the industry. Even if all top-tier firms enter the market, product differentiation will not disappear; the real competition is just beginning.

Third, this move is about positioning for the upcoming phase of active ETFs. The current boom in broad-based ETFs represents an expansion of the market's "quantity," while the forthcoming active ETFs will be a leap in "quality." For example, in mid-July, the first batch of 18 active ETF products was collectively submitted for approval. These innovative products, seen by the industry as a "third path," combine the excess return capability of active management with the advantages of low fees and high transparency. The core value of top-tier fund companies actively laying out the existing ETF track is to accumulate experience in the full ETF chain, refine supporting business systems, and build a solid capability foundation for the subsequent launch of active ETF products.

In summary, the full entry of top-tier fund companies into the ETF market means the mutual fund industry is completing a profound paradigm shift, moving from an era of pure active management to a new stage of "diversified active strategies." However, the full entry of all players is not the end of the industry's development but the starting point of a new round of differentiated competition. When all institutions are on the same track, the true test of the industry is just beginning.