“Few asset management firms are pinning their hopes on equity-based funds to bolster their growth,” said Ivan Shi, research head of fund consultancy Z-Ben Advisors. “Instead, they are focusing on launching products that meet clients’ needs for wealth management.

“There’s little left for asset managers [dealing with equity-based funds] to doarket.”

The 67 stock-focused funds accounted for less than 6 per cent of the total 1,151 mutual funds launched in China last year. in the nuclear winter situation. This situation will last for a while until a bull run returns to the m

The remaining 94 per cent mainly targeted debt and money markets that generated stable returns.

Money-market funds normally invest in commercial paper and short-term debt securities products that are regarded as safe, while providing a higher yield than bank deposits.

In 2015, equity-based funds represented 85 per cent of the total number of newly launched mutual funds.

Between mid-June and late August that year, US$5 trillion was wiped off the value of shares when the market slumped by 43.3 per cent.

The benchmark Shanghai Composite Index still advanced 9.4 per cent during 2015 due to a strong bull run in the first half of the year. The main gauge lost 12.3 per cent in 2016 as the market was mired in bearish sentiment.

As of Thursday, it had gained 2.6 per cent so far this year.

On the mainland, a subscription spree on newly launched equity-based funds tends to occur when a strong rally hugely inflates stock prices. In that event, investors go on the rampage, chasing the rally and hoping to turn a quick profit.

With the A-share market currently mired in flat trading, the apparent lack of buying interest is taking its toll on the mutual fund houses.

Liquidity is always a key factor affecting market movement on the mainland, since millions of investors use turnover as a barometer when making their investment decisions.

“Fund managers will have to be patient,” said Wu Kan, the head of equity trading at Shanghai investment firm Shanshan Finance. “After all, this is a speculators’ market where people still ignore fundamentals.”

The A-share market is a retail-driven market because individual investors contribute the majority of trading value.

UBS research showed that mainland-listed firms would report an average 6 per cent year-on-year growth in earnings in 2017, which in turn could support a 10 per cent rise in the key A-share indicator.

The mainland’s mutual fund companies are also facing challenges from the fast-growing hedge fund sector as wealthy investors believe the latter can generate better returns.

Mutual funds are subject to stricter regulatory oversight. Restrictions such as the requirement that they hold a minimum percentage of equities make it difficult for them to dodge a bear run even if they see it coming.

The best-performing hedge funds can deliver investment returns of more than 100 per cent a year.

Mutual fund houses have seen hundreds of asset managers jump ship to join hedge funds in the past decade, attracted by the better pay packages on offer.

Analysts said high net-worth individuals with greater appetite for high-risk investment were increasingly attracted by hedge funds, believing they can outperform mutual funds in a flat market.

Mutual fund companies cannot launch new funds unless they receive approval from the China Securities Regulatory Commission (CSRC).

A new mutual fund can’t start operating until it raises a minimum of 200 million yuan from at least 200 investors.

According to Wind, about 500 of the mutual funds launched last year - including stock-focused, bond and money-market funds - barely raised 200 million yuan.

Mutual fund companies have increased the number of so-called “tailor-made” products aimed at helping institutional investors such as insurers and brokerages to manage their cash.

The products normally target bond and money markets, which offer yields higher than banking deposits.