Against the backdrop of a persistently low-interest-rate environment, public Fund of Funds (FOF) have become one of the most actively sold product categories through bank channels. Since the beginning of the year, the scale and pace of new FOF issuances have accelerated simultaneously. In just the first three months (up to March 23), both the number of newly established FOFs and their total fundraising amount across the market have seen significant growth. Multiple products achieved single-day fundraising totals exceeding 5 billion yuan, with products selling out on their first day becoming a frequent occurrence. Bank channels played a dominant role in this activity.

Industry insiders believe that the role of banks is rapidly shifting from being mere "distribution channels" for FOFs towards becoming central hubs for asset allocation. This transformation is closely linked to the operational pressures faced by banks themselves and is also driven by the accelerated migration of funds amidst the trend of depositors moving money out of savings accounts. Under this trend, a significant inflow of capital with low-risk tolerance is expected into mixed bond-heavy FOF products, which have demonstrated relatively better performance.

**New Issuances Show Over Threefold Year-on-Year Increase** Wind data shows that, counting from their establishment dates up to March 23, 44 new FOF products have been launched market-wide this year, with a combined fundraising scale exceeding 65.125 billion yuan. This represents an increase of nearly 3.6 times compared to the 14.147 billion yuan raised in the same period last year. On a per-product basis, the average fundraising size rose to 1.48 billion yuan from 884 million yuan a year earlier.

The issuance pace for individual products has noticeably quickened. In early March, a six-month holding period FOF launched by E Fund saw its fundraising concluded ahead of schedule on the very first day, raising close to 3.5 billion yuan and becoming the tenth product this year to sell out on its debut. Prior to this, several other FOF products had single-day fundraising totals surpassing 5 billion yuan. Among them, a six-month holding FOF from Bosera Fund raised over 5.8 billion yuan in a single day, with the number of valid subscription applications exceeding 20,000.

In terms of overall market size, FOF funds have also registered substantial growth. As of March 23, the total assets under management for public FOFs reached 288.514 billion yuan, nearly doubling from 148.255 billion yuan a year ago.

A wealth manager from a joint-stock bank commented, "This year, clients' tolerance for volatility has significantly decreased, yet they still have return expectations. Pure deposits lack appeal, while they are hesitant to make significant allocations to equity-based products. FOFs正好 fit in the middle."

**Bank Dominance in Custody and Distribution** Looking at the custody and issuance structure, banks clearly hold a dominant position. Among the FOF products established this year, the custody institutions involved include 19 entities, 15 of which are banks. These include China Merchants Bank, Bank of Communications, Ping An Bank, China Guangfa Bank, Postal Savings Bank of China, China Everbright Bank, and Bank of Suzhou, among others. China Merchants Bank leads with a custody scale exceeding 20 billion yuan, accounting for approximately 40% of the issuance scale for the year.

Specifically, banks such as China Merchants Bank, China Construction Bank, and Bank of China have successively launched initiatives like the "Changying Plan," "Longying Plan," and "Huitou Plan," using FOFs as a core tool to provide clients with one-stop asset allocation solutions.

"A public FOF fund manager stated, 'In the past, the focus was on recommending fund managers; now, it's about recommending portfolio solutions. Banks aim to front-load their allocation capabilities, while fund companies increasingly take on the role of underlying asset managers.'"

**Banks' Shift from Distributors to Allocation Hubs** This shift is closely related to the operational pressures banks themselves face. Against the backdrop of persistently narrowing net interest margins, the importance of non-interest income is continually rising. Products like FOFs, with their longer holding periods and relatively stable scale, are viewed as more sustainable sources of revenue.

A representative from the wealth management department of a large bank said, "The model relying solely on subscription fees and trailing commissions is no longer sustainable. Clients are also placing increasing emphasis on the holding experience. FOFs, to some extent, smooth out net asset value fluctuations and have also reduced complaint rates, which is crucial for distribution channels."

Simultaneously, bank performance evaluation systems are evolving. The same source mentioned that in recent years, the weight given to client complaint rates in the assessment of wealth managers has increased. The client experience related to product volatility has become a key focus for distribution channels. In contrast, due to their diversified underlying assets, FOFs exhibit relatively smoother NAV volatility, better meeting the channels' requirement for 'stability.'

"These funds are not actively seeking high-risk assets but are rather passively moving away from deposits," pointed out a securities analyst. "While the equity market has not fully recovered, these funds need a destination with lower volatility and slightly higher returns. FOFs正好 meet this demand."

**Accelerating Passive Migration of Funds** From the demand side, the trend of "passive migration" of funds is accelerating. Estimates from several institutions suggest that the scale of maturing household time deposits around 2026 is approximately 75 trillion yuan, with about 67 trillion yuan being one-year or longer deposits. Against the continuing downward trend in interest rates, the one-year time deposit rate at major banks has already fallen below 1.5%, with some products offering even lower rates.

Analyst Hu Jicong from China International Capital Corporation Ltd. (CICC) believes that FOF products, with their two-layer nested structure and function of 'solving the difficulty of fund selection,' naturally align well with the needs of individual investors. In the current environment of low interest rates and accelerating 'deposit migration,' mixed bond-heavy FOFs, as a 'fixed-income plus' category that has shown relatively outstanding performance, are poised to attract more low-risk tolerance capital.

Hu Jicong anticipates a significant inflow of low-risk tolerance funds into 'fixed-income plus' funds that offer "acceptable returns with controlled risks." Among these, mixed bond-heavy FOF products with relatively better performance are expected to continuously absorb this portion of funds, sustaining the expansion trend of the fixed-income plus FOF segment.

**Constraints of Capability, Sales, and Understanding** Industry insiders believe that, unlike previous periods dominated by actively managed equity funds, the core characteristic of the current FOF sales boom lies in their appeal based on medium-to-low risk, short holding periods, and asset diversification, primarily attracting stable capital from bank channels.

In terms of product design, the hot-selling FOFs in this round are mostly mixed bond-heavy types. Their equity allocation is typically controlled between 5% and 30%, using bond assets as the foundation while also allocating to dividend-focused low-volatility stocks, gold ETFs, and some overseas assets. Holding periods are mostly three or six months, striking a balance between liquidity and returns.

"A bank client manager said, 'Clients are most concerned about two questions: will they lose a lot of money, and how long until they can access their funds. Products with a three-month holding period are easier to explain and more readily accepted.'"

**Multiple Underlying Concerns** However, alongside the rapid expansion in scale, the FOF market also faces multiple underlying concerns.

Firstly, there is a mismatch between investment research capabilities and the growth in assets under management. "A representative from a public fund company in East China stated, 'Over the past two years, FOF assets have nearly doubled, but the investment research teams possessing cross-asset allocation capabilities have not expanded at the same pace. Apart from leading institutions, the product strategies of small and medium-sized institutions tend to be homogenized, often concentrated in the 'bond foundation + dividend low-volatility' combination model.' This person added that while strategy differences might be negligible in a stable market environment, should market structures change, performance dispersion among products could widen rapidly, leading to uncertainty in investor experience."

Secondly, sales-driven factors remain quite significant. Some industry insiders point out that the current popularity of FOFs relies, to some extent, on the sales pace and product promotion mechanisms of bank channels, rather than being entirely driven by spontaneous investor demand. With ongoing deficiencies in information disclosure and investor education, some capital may enter the market without fully understanding the product characteristics. "If the market experiences a阶段性回撤, redemption pressures could集中释放, thereby amplifying volatility," the same source noted.

Additionally, industry participants mentioned that in actual sales practices, some institutions emphasize the "short lock-up period" as a liquidity advantage, leading some investors to perceive these products as quasi-cash management tools. This may result in investors having insufficient capacity to withstand product volatility, potentially amplifying market fluctuations and redemption pressures.