According to the latest data from the Asset Management Association of China, money market fund assets under management exceeded 14.6 trillion yuan by the end of July 2025. This stands in stark contrast to the declining returns of these funds, despite being the largest category in China's public fund market by scale.
Wind data shows that as of September 17 this year, among 366 money market funds (calculated by merging different share classes) under the securities regulator's classification standards, 359 funds with available return data recorded an average 7-day annualized yield of merely 1.1%. Of these, 251 funds fell below 1.2%, 182 dropped below 1.1%, and 78 declined below 1%.
Money market fund returns are highly correlated with monetary policy and market interest rate levels. China has formally implemented a "moderately loose" monetary policy since the beginning of this year, and this policy stance continues to persist with expectations of maintaining the accommodative approach throughout the year. The People's Bank of China's mid-year work conference held on August 1, 2025, explicitly stated the continuation of moderately loose monetary policy implementation.
Under this policy backdrop, the primary investment targets of money market funds - including bank deposits, negotiable certificates of deposit, and short-term government bonds - have all exhibited downward yield trends, directly impacting money fund returns.
However, declining money market fund yields are not unique to China's market. Multiple developed markets globally have experienced similar phases, representing the natural outcome of economic cycles and policy adjustments.
The U.S. money market fund industry has entered "sub-1% eras" three times: 2003-2004, 2009-2017, and 2020-2021. All three periods coincided with rate-cutting cycles initiated by the United States to address economic recessions or unexpected events.
The Eurozone, due to prolonged low policy rates, experienced relatively longer periods of money fund yields in "1%" territory. Between the third quarter of 2009 and the fourth quarter of 2022, money fund returns not only remained below 1% for extended periods but even turned negative.
In summary, money market funds' average 7-day annualized yields breaking below 1% represents a normal manifestation of current macroeconomic conditions combined with market interest rate trends. Investors should rationally view money fund yield fluctuations, adjust return expectations, and conduct cash management more scientifically.
Notably, despite declining returns, domestic money market funds have not experienced large-scale capital outflows, with total assets under management continuing to grow. This can be attributed to two factors: First, household demand for low-risk asset allocation remains relatively strong, and compared to current demand deposit rates of generally 0.05%, money funds still offer significant risk-return advantages. Second, money fund products like Yu'e Bao have become deeply integrated into consumption and payment scenarios, functioning as comprehensive "payment + wealth management" tools, making them more attractive than other financial products.
Risk Warning: Purchasing money market funds does not equate to depositing funds in banks or deposit-taking financial institutions. Fund managers do not guarantee profits or minimum returns.
Disclaimer: The information contained in this communication is sourced from channels the company considers reliable and individual analyst judgments, but the company provides no direct or implied representations or warranties regarding accuracy or completeness. This communication does not constitute a complete description or summary of relevant securities or markets, and any expressed opinions may change without further notice. This communication should not be used by recipients as a substitute for independent judgment or as the basis for investment decisions. Markets carry risks; investment requires caution.