Shanghai-based consultancy Z-Ben Advisors has picked out five winners and five laggards from China’s fund management industry across 2012.

In total, 21 managers improved their market-share standing, while 32 saw it slide. But while E Fund replaced Harvest as the second largest house, and ICBC Credit Suisse, BOC and CCB Principal all gained, Z-Ben puts this down to their jumping on the fixed-income bandwagon.

“Fixed-income flows have never been considered stable, and with a new rally occurring in the equities market, the threat of aggressive redemptions from MMFs and bond funds early in 2013 is both real and credible,” the consultancy finds.

Winners
In the winners' enclosure, Z-Ben lists Invesco Great Wall, Harvest, BOC, Lombarda China and Huatai-PineBridge.

On Invesco Great Wall it points out that its fund finished first among all 500+ actively managed equity funds, having recognised the trend of chasing fixed-income flows. Its total MMF and bond fund AUM comprises 3% of the firm's size. If equity sentiment rises, Invesco Great Wall will benefit.

Z-Ben praises Harvest for showing restraint and for protecting profits and revenues by having by far the lowest allocation into fixed income (24%) among the top 10 managers -- even though it lost its second-place ranking to E Fund.

BOC saw strong AUM growth to Rmb100 billion, from Rmb40 billion a year before, grabbing 155 basis points in market share. However, the consultancy notes that this was from MMF and short-term bond fund flows.

Lombarda China was aggressive with its equity funds which, though small in AUM (Rmb8.6 billion), are in line to see increased demand and faster growth over the coming year if they perform.

And Z-Ben praises Huatai-PineBridge for near-trebling in size to Rmb38.5 billion through one of the first CSI300 ETFs. While it acknowledges that the firm is heavily dependent on one product, "the fact remains that Huatai-PineBridge has done what few other fund managers could: carved out a real competitive capability”. Its passive capabilities could drive AUM growth in 2013.

Laggards
Following significant changes to China AMC's leadership team, Z-Ben argues there was a loss of focus on equity portfolio management, meaning the firm ended 2012 without any top-performing products.

"This, in turn, required management to chase after fixed-income fund flows to ensure that it retains the top position in the market share leadership," notes Z-Ben. But the consultancy suggests that the firm is, for the first time, at risk of ceding top spot to E Fund, and possibly even Harvest.

With AUM of Rmb107 billion, ICBC Credit Suisse was able to retain a top 10 place by leveraging its relationship with ICBC and adding fixed-income flows. Z-Ben suggests it has "yet to demonstrate the necessary capabilities to run equity funds", and could see outflows and loss of market share.

HSBC Jintrust saw its AUM decline from Rmb8.7 billion to Rmb7.3 billion over the year, with Z-Ben suggesting that "strategic ambiguity" lies at the heart of a structural problem. It argues that without a value proposition, there has been no driver for investor demand.

Changsheng also ended last year with a decline in AUM from Rmb40.3 billion to Rmb33.4 billion. The chief culprit was the opening up of the firm's largest product, with the Changsheng Tonqing Fund suffering a 60% redemption rate over a three-month period. "It goes to show the damage faced by those managers having significant AUM in a single product," finds Z-Ben.

The consultancy also lists Value Partners Goldstate, noting the final resolution in which KBC sold its stake to Hong Kong-based Value Partners has not yet resulted in a turnaround.

"For the coming year, all eyes will be on the equities market," it concludes. "If investors were to shake off the yoke of risk aversion, nearly all of the bank-backed JVs would be under threat of massive redemptions in their fixed-income products."