The "battlefield" with blurred boundaries: When high-performing public funds begin to "invade" the private placement arena

Recently, a product that has been described as a "noble broker" has appeared on a high-end wealth management shelf, attracting collective attention from the industry.

It is sold alongside well-known private equity quantitative and overseas hedge products, with similar names, strategies, and channel displays, but the manager is not a traditional private equity institution, but a public fund company.

In the past, public fund products dominated bank retail channels, while top overseas and domestic private equity products led private banking and high-end wealth management at brokerages, with a clear distinction between the two.

However, this gap has now been opened.

When a team under a public fund institution "strongly intrudes" into the traditional market of top private equity, a new change is brewing.

Will this be a loosening of boundaries or a rewriting of the rules of the game?

"New Product" on High-End Wealth Management Shelf

Recently, on a high-end wealth management distribution platform of a leading brokerage, a product named China Resources Trust - Baodao Jin Xuan No. 1 Collective Fund Trust Plan (hereinafter referred to as "Jin Xuan No. 1") quietly made its debut and was prominently displayed.

This product takes the form of a trust plan, similar to those displayed by Ningquan, Jinglin, Gao Yi, and others, but the underlying "manager (investment advisor)" is Baodao Fund Management Co., Ltd. — a rising public fund company with strong performance in recent years.

Interestingly, this product does not appear in the public fund wealth management area but is placed in the core private equity shelf of this distribution platform, alongside mainstream subjective long, quantitative hedge, and macro-strategy private equity products.

According to the product prospectus, the minimum investment amount for this trust plan is 400,000 yuan, which is "similar" to most private equity wealth management products on the market, targeting traditional high-net-worth clients.

Public Fund "Steps In"

It is rare for high-end private equity distribution channels to focus on recommending private equity products from public fund institutions.

However, upon closer examination, it seems there is not much issue with this arrangement, as some public fund institutions already have private equity product series — separate account products — and thus possess dedicated private equity product management teams. If such institutions act as managers, the challenge in terms of management capability is not significant.

But from another perspective, the aforementioned product is almost a "standard," common private equity product: trust channel, core channel of high-end private equity, with strategies and selling points highly "privatized." The only difference is that the manager has changed to a public fund institution.

This means that public fund institutions have indeed put their core capabilities into private equity separate account products and seriously placed them on the private equity distribution platform of leading brokerages, fundraising alongside traditional stock-picking private equity firms like Gao Yi, Jinglin, and Ningquan.

The thoughts behind this are worth exploring.

Opening New Blue Ocean?

From the perspective of the overall market environment, the A-share market has just successfully found a bottom at the end of 2024, initiating a relatively stable market trend, which creates a window period for some public fund institutions skilled in equity investment to launch new product issuances From the perspective of the policy environment, on one hand, equity investment has received affirmation and strong promotion from regulatory authorities; on the other hand, the fee rates of public funds have undergone two rounds of reductions and have stabilized at relatively low levels. It is also worth understanding the search for new issuance platforms and channels for equity products from the perspective of business development.

Looking at the product design of Jin Xuan No. 1, which has recently entered the core circle of private equity, it is also an active equity product that focuses on broad consumption—this not only considers traditional consumer stocks with currently low valuations but also certainly includes popular emerging consumption in the market, leaving operational space for investment managers.

At this juncture, the asset management industry still has a relatively "blue ocean" market of high-end private equity that has not been extensively involved by public funds, making the entry of public institutions understandable.

Opportunities and Challenges Coexist

Of course, as public fund private account products appear on the private wealth management shelves of leading brokerages, a new competition has inevitably begun.

From the perspective of private equity institutions, more competition is unavoidable, especially as teams that have long been competing in the public fund arena enter the private market, which may lead to new characteristics in the product styles of this market.

Additionally, whether in terms of team composition or the financial strength of the institutions behind them, mid-tier public institutions should not fall behind top private equity institutions (of course, the differing styles of fund managers are irreplaceable). This will also prompt some top private equity institutions to step up and respond seriously.

From the perspective of public institutions, entering the traditional "enclosure" of private products clearly requires speaking the language of the private market and "producing" products that meet the risk-return needs of private clients. This integration with the established and strong investment styles of public funds will require significant effort.

Historically, many institutions have not overly "revealed their strengths" in this field for a reason, but since it has been initiated, this matter must have a considerable degree of completion.

From the sales platform perspective, this is clearly a good thing; more institutions and more products are always beneficial to the sales platform, provided that overall performance is satisfactory.

Risk Warning and Disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at their own risk