The investment trend has completely changed

Questioning AI · Why Are Young Investors Favoring Index Funds in the Changing Wealth Management Landscape?

Introduction: Using the institution with the largest number of holders as a sample, we can see this shift more clearly.

The divergence in the number of public fund holders reflects the transformation of mass wealth management trends.

Recently, the 2025 annual reports of public funds have been released. We observe the changes in holder data of Tianhong Fund, the public fund with the most investors in the industry. The changes in the company’s holder data mirror the evolution of mass wealth management: the number of short-term bond fund holders has decreased, while products like AI technology, gold, dividend ETFs, money market funds, and medium- to long-term bond funds have seen an increase in account numbers.

Behind this change is a shift in investor mindset from savings-based wealth management to active asset allocation.

More Honest Indicators Than Size

After investors transfer deposits into securities investment accounts and subscribe to public funds and other asset management products, non-bank financial deposits are formed. According to central bank data, in 2025, deposits in non-bank financial institutions increased by 6.41 trillion yuan, reaching a new high since 2015. The scale of public funds grew by 4.88 trillion yuan to 37.71 trillion yuan in 2025, which is a reflection of deposits shifting to non-bank financial deposits, or “deposit relocation.”

Besides scale changes, the number of fund holders is a more direct indicator. Changes in account numbers are closer to the true choices of investors and more directly show where the funds are flowing.

Using Tianhong Fund as a sample, in 2025, the total number of holders of equity index products (including index funds and index-enhanced funds) increased by 19%, reaching 15.47 million accounts. Among them, the number of holders of equity ETFs (including linked funds) increased by 2.0123 million, a 16.7% rise; pure on-exchange equity ETFs grew by 534,000 accounts. The growth in holdings of technology ETFs, gold ETFs, and dividend ETFs was the core driver of this category’s expansion.

Table: Changes in Tianhong Fund Holder Numbers

Data Source: Wind, as of December 31, 2025

The younger generation of investors is significantly more willing to participate in the stock market through index funds. In 2025, among the holders of equity ETFs (including linked funds), those aged 30 and below accounted for 27.9%, up from 21.8% at the end of 2024, an increase of 6.1%. Among first-time index fund buyers, those aged 30 and below made up 42.5%.

This trend is further confirmed by industry-wide data.

According to the “ETF Market Development White Paper (2025)” released by Shenzhen Stock Exchange in February this year, the number of ETF holders in the Shenzhen market reached 5.46 million in 2025, a year-on-year increase of 20%. The Shanghai Stock Exchange also mentioned in the “ETF Industry Development Report (2026)” that the number of Shanghai ETF accounts was about 10 million in 2025, with nearly 30% of these held by post-80s investors.

Meanwhile, short-term bond funds, once a staple for conservative investors, have seen a significant decline in holders, with the number of Tianhong Short-term Bond Fund holders decreasing by 11.7% year-over-year, a reduction of 550k accounts. Conversely, medium- and long-term bond funds, which aim for better yields by extending durations, saw a 46.2% increase, reaching 290k accounts. Despite declining yields, money market funds still saw an increase of 40.42 million accounts.

The Logic Behind Capital Migration

This capital shift is mainly driven by two forces: changes in market return expectations and increased guidance and promotion of index-based products and strategic services by channels.

Guoxin Securities’ research report earlier this year pointed out that in 2025, overall returns in the wealth management market are expected to decline, with average yields dropping to 1.98%. This may be a key background for the capital migration.

In a low-interest-rate environment, bank wealth management yields have continued to fall. Short-term bond funds cannot remain unaffected; they lose their yield advantage and their conservative nature is compromised. Part of this low-risk appetite capital flows into slightly riskier but higher-yield medium- and long-term bond funds, while another part abandons the meager returns altogether, moving into more flexible and stable money market funds.

At the same time, solid-performing dividend stocks with stable cash flows have become attractive alternatives to fixed income products due to their high dividends; gold prices surged by 63% in 2025; the AI technology sector entered a period of industry realization. These assets have caught the market’s rhythm and become new choices for capital.

Taking Tianhong Fund’s holder data as an example, the number of holders of Tianhong Shanghai Gold ETF Link Fund increased from 715.4k at the end of 2024 to 1.64M at the end of 2025, more than doubling. The Tianhong CSI Dividend Low Volatility ETF Link Fund’s holders grew from 707.7k to 989.9k.

Among more aggressive on-exchange ETF investors, preferences for the technology growth sector are even more evident. The number of holders of Tianhong’s Robotics ETF jumped from 30k in 2024 to 160k in 2025, making it the company’s most held ETF. The third to fifth most held products are photovoltaic ETF, biomedicine ETF, and computer ETF, all showing varying degrees of growth.

This migration is not blind following but a rational choice made by investors weighing risks and returns. Besides market factors, sales channel guidance is also crucial.

Broker channels excel in the index fund space. Leading brokerages like CITIC Securities and Huatai Securities hold over 90% of their equity fund assets in stock index funds. With their inherent securities trading DNA, they are moving away from simply “selling funds” toward “strategy output,” guiding clients to allocate via ETFs into dividend low-volatility and AI ETFs in a “dumbbell” configuration.

Banks are also actively transforming. China Merchants Bank’s sales resources are increasingly focused on index funds, such as the “Index Pass” module now available in their app. Although bank clients still favor actively managed products, the overall scale of bank-held index funds grew by 86.06% year-over-year in 2025.

Ant Financial’s “Algorithm + Community” model has helped the equity fund holdings surpass 1 trillion yuan, with its intelligent wealth management assistant covering long-tail users and promoting inclusive finance combined with index investing.

Public Fund Institutions’ Embrace and Progress

Ultimately, this capital flow is an inevitable result of declining wealth management yields. As liquidity, returns, and volatility fluctuate, funds vote with their feet.

The increase or decrease in holder numbers across different product types also signifies a maturation of retail investors’ wealth management awareness—from passive savings to active asset allocation.

This shift is also pushing the public fund industry from “product-oriented” to “demand-oriented.” Tianhong Fund, as a practitioner of inclusive finance, exemplifies this transformation.

The company is gradually shedding its “big money market” label and moving toward becoming a top-tier comprehensive asset management firm. While consolidating its fixed income strengths, Tianhong Fund is also achieving balanced development in index ETFs, active equities, overseas assets, and pensions, building a multi-asset, multi-strategy, multi-scenario business matrix.

Its product ecosystem covers broad-based, sector-themed, strategic, commodity, and bond categories, including hard tech sectors like AI and cloud computing, catering to different risk preferences and forming a comprehensive, distinctive product portfolio. According to the annual report, by the end of 2025, Tianhong’s equity index funds (excluding index-enhanced funds) had 14.57 million holders, ranking first among similar products. The number of holders of the CSI 300 ETF and linked funds, Shanghai Gold ETF and linked funds, photovoltaic ETF, offshore index funds, and CSI Dividend Low Volatility ETF and linked funds were 2.2 million, 1.64 million, 1.04 million, 990k, and 410k respectively.

While expanding its product lineup, Tianhong Fund also enhances investor experience through fee reductions. All its passive index funds have management fees below 0.5%, with 20 equity index funds charging as low as 0.15%, among the industry’s lowest.

Additionally, leveraging its internet and fintech capabilities, Tianhong continuously develops service tools aligned with investor needs, such as jointly launching the “Strategy Target Investment” intelligent investment tool with JD Finance, which automatically generates buy/sell signals based on algorithms to help investors achieve preset returns; and collaborating with Ping An Securities to develop the “Institutional Express” investment tool, which constructs rotation strategies based on institutional fund flows and behaviors, providing professional decision support.

These inclusive innovations reflect the true transformation of the public fund industry toward “demand orientation.”

From “savings” to “allocation,” the evolution of ordinary investors’ wealth management journey continues. This change driven by cognitive upgrading is pushing the wealth management market toward a more mature and rational stage. In an era where diversified allocation is mainstream, Tianhong Fund is responding to this trend through a comprehensive product ecosystem and innovative tools, offering investors more diversified choices.

Risk reminder: Investment involves risks; please proceed cautiously. Past performance does not guarantee future results. The trends shown by the sample data and the viewpoints in this article are solely the personal opinions of the author and do not constitute any investment advice.