The trend towards passive investing in equity funds.

The dilemma of star fund managersWhen it comes to public funds, many people's first reaction is the performance of actively managed equity funds led by star fund managers.In recent years, it seems that star fund managers have always been the center of attention in the fund market. They mainly manage actively managed equity funds, which means they are "stock market experts" responsible for stock selection, market timing, and trading strategies.However, following the concept of "everything follows a cycle," these star fund managers, who previously led a large number of investors to achieve huge returns in the stock market, have had a tough time in the past couple of years.Looking at the net asset value of the funds they manage, last year the net asset value of most star fund managers' funds declined significantly, directly related to the sharp decline in the stock prices of some star stocks (stocks heavily favored by fund managers).This is actually a cyclic principle. The stocks that star fund managers heavily invested in may have experienced a favorable upward cycle from 2018 to 2020. During this period, the performance of star fund managers has been steadily increasing, accompanied by a great personal star halo. This led many investors to mistakenly believe that high-performing funds would maintain their high position in the long term, resulting in a large influx of funds into these star-managed funds.Once the stock market enters a downturn, especially after 2022 when many leading consumer, new energy, and technology stocks experience a significant correction, star fund managers who hold significant market value of these stocks find it difficult to turn around in a timely manner, and can only watch the net asset value of their funds continuously decline from highs. As a result, investors who previously had high trust in these funds are now faced with a dilemma: whether to stop loss and redeem the purchased funds in a timely manner or continue to bear the increasing losses.However, public funds are essentially designed to help individual investors avoid information asymmetry and specific operational risks in individual stock trading. The risks of investing in equity funds should obviously be different from direct stock investments in the past. In other words, funds serve as intermediaries for professional managers to manage stock market investments for ordinary people, and even if they are affected by macro-market conditions in the short term, their professionalism and analytical capabilities should be maintained at a level higher than that of ordinary individual investors. Now, the real concerns have shifted from individual stock investors to equity fund managers. From my observation, the frequency of star fund managers appearing in the media was significantly lower last year than in previous years. Some fund managers even publicly apologized at the end of the year, hoping to regain the trust of investors. But is it really that easy? Passive catching up with active Right at this critical moment, many relatively experienced investors have shifted their focus to passive investment fund products (such as passive index funds or ETFs). According to data from Wind, as of February 22, the total size of 845 stock ETFs (including cross-border ETFs) in the market has reached 2.04 trillion yuan. At the same time, the transformation pace of fund companies is accelerating. Since last year, many fund companies have focused on new fund products that lean towards passive investment. This transformation has gone beyond the scope of equity funds, especially in terms of the significant growth of policy financial bond index funds and interbank certificate of deposit index funds. This is a real trend. According to a Shanghai Securities research report, in 2023, a total of 1,279 funds were successfully launched in the market, with a combined issuance scale of 1.17 trillion yuan. Of particular note is that among them, 362 index funds were issued, accounting for more than 28% of the total, with a combined issuance scale of 295.39 billion yuan, ranking second among all fund categories, accounting for more than 25% of the total fundraising scale of the year. In contrast, the situation for actively managed funds is quite different. According to research from CICC, in terms of single quarters, in the fourth quarter of last year, there were only 14 new ordinary equity and balanced funds, with the issuance volume of 1.85 billion shares and 21.67 billion shares respectively; overall, the issuance heat remained at a historically low level, and market sentiment was relatively weak. Looking at the scale of active equity funds, the overall scale of 2023 has shrunk. In the fourth quarter of last year, the overall scale of active equity fund products was about 3.8 trillion yuan, with a year-on-year decrease of 18.4 percentage points. In terms of the scale managed by star fund managers, by the end of 2023, among the top 20 active equity fund managers by scale, only one person achieved nearly flat growth in scale, while the others experienced varying degrees of shrinkage. The main reason, as mentioned earlier, is that most of the representative products managed by these star fund managers experienced significant losses last year, and even the average rate of return of these top 20 star fund managers' representative products was similar to that of equity fund indexes. This inevitably creates doubt: the active equity funds managed by star fund managers, who charge higher management fees, performed only on par with equity fund indexes last year. It can be imagined that if the performance of star fund managers is on par with fund indexes, the overall performance of actively managed funds in the market last year can only be worse. Data also support this view: in terms of investment types, the median returns of ordinary stocks, balanced funds, and flexible allocation funds were -12.5%, -14.1%, and -12.2% in 2023, all below mainstream broad-based indices such as the Shanghai and Shenzhen 300 Index, CSI 500, and CSI 1000. Index funds play a key role as "national team" players In addition to their impressive growth and performance, passive equity funds have played a central role in the recent "national team intervention" process before and after the Spring Festival. Against this backdrop, index funds tracking the SSE 50 Index, CSI 300 Index, CSI 500, and CSI 1000 have attracted significant institutional capital inflows, signaling positive market sentiment and an improvement in risk appetite from medium- to long-term investors. Huaxia Fund stated that this reflects the decision-makers' emphasis on the stable development of the capital market, which helps to restore short-term market sentiment and improve risk appetite. In the first few trading days after the Spring Festival, there was a continued upward trend that began in February, with FTSE China A50 Index futures continuing to rise. This index closely tracks the 50 largest companies in the A-share market, focusing on blue-chip stocks and highlighting large market capitalization. Many investors observed the sharp increase in trading volume of these broad-based ETFs in a short period of time as a signal of mysterious funds entering the market. This indirectly reflects the unique advantages of passive investment funds, especially ETFs, in the current market environment. Fund companies are clearly not ignoring these trends. On February 19, the simultaneous issuance of 10 CSI A50 ETFs is a typical example. On the other hand, the fees of passive investment funds are significantly lower than those of corresponding actively managed funds, and recently issued ETFs have further reduced fees. This aligns with the regulatory policy of lowering fund fees that started last year, as the downward trend in fees has spread from active equity funds to ETFs. This is undoubtedly a bonus for fund investors. Conclusion: Not only domestically, the passiveization of public funds is also a global trend In fact, it is not only the domestic market. In the strong US stock market last year, the trend of passiveization in the public fund industry also seems irreversible. According to a recent report by PwC on the US mutual fund market, the demand for fee reductions among US fund investors is forcing US fund managers to undergo a more aggressive "passiveization" transformation. PwC estimates that by 2030, the proportion of passive funds in the total assets of US mutual funds/ETFs may increase from 44% in 2022 to 58%, providing US investors with more low-cost index funds and ETF choices.Translate this text to the English language:

The text you provided is already in Chinesebut I can still translate it into English for you. Here is the translation: "Star fund managerstock marketfund net asset valueinvestor trustworthinesspassive investment fundindex fundETFpassive i