What does the significant increase in ETF holders indicate? Retail investors are entering the market through indirect channels, and the trend of youthfulness is accelerating.

Ask AI · Why are young investors accelerating into index investment markets?

Cailian Press, April 1st (Reporter Li Di): The annual reports of public funds for 2025 have been disclosed, reflecting changes in Chinese investor behavior. Against the backdrop of declining deposit interest rates, continued structural opportunities in the equity market, and upgraded household wealth management needs, the allocation logic of public fund investors is undergoing significant changes.

Taking Tianhong Fund, the public fund with the most service holders in the industry, as an example, the structure of its clients’ holdings has changed markedly. Specifically, in 2025, structural opportunities in A-shares became prominent, further boosting the popularity of index investing, and the trend of retail investors entering the market via equity indices became more evident.

Younger groups have become the main force of index investors, with the proportion of investors under 35 increasing significantly, and the growth rate of holdings among post-2000 and post-2005 generations is outstanding. Additionally, in the context of declining interest rates, more investors are seeking higher yields, with many funds flowing out of short-term debt products and into medium- and long-term bond funds. Fixed income products with stronger yield elasticity, such as Fixed Income Plus (FiX+), are also attracting large amounts of spillover funds.

Industry insiders emphasize that falling interest rates drive investors to seek higher returns, highlighting the “deposit relocation” effect, with a large influx of funds into FiX+ and index products. Under this major trend, public fund institutions need to deepen inclusive finance, continuously enrich product offerings, and better seize industry development dividends.

Retail Investors Enter via Equity Indices, Accelerating Youthful Trends

In 2025, structural opportunities in the A-share market became prominent, with technological themes like artificial intelligence and robotics leading gains, while assets like dividends and gold also performed well. Index investing, with its efficiency, transparency, and low barriers, has become an important means for individual investors to participate in the stock market.

According to the annual report of Tianhong Fund, its equity ETFs (including connection funds) had 14.0675 million holders by the end of 2025, a 16.7% increase compared to 2024, despite the large user base. Meanwhile, on-exchange ETFs, with features like flexible trading and low fees, are attracting more and more individual investors. The number of holders of Tianhong’s on-exchange ETFs grew by 53.4% in 2025.

Notably, the trend of younger investors in index investing further accelerated in 2025.

According to internal data from Tianhong Fund, the younger generation is becoming the main force in index investing: by the end of 2025, among holders of Tianhong’s equity ETFs (including connection funds), those under 35 accounted for 48.2%, up from 43.6% at the end of 2024. The growth among those under 25 is especially rapid, with post-2000 holders increasing by 97.3% year-on-year, and post-2005 holders increasing by 227.8%. Among users making their first purchase in 2025, 59.5% were born in the 1990s or later.

Regarding asset preferences, on-exchange and off-exchange investors show significant differences in sector preferences.

On-exchange ETF investors pursue “sharpness.” Data shows that among ten age groups from post-2005 to pre-65, the robotics ETF ranks first in holdings across all age groups; securities ETFs, photovoltaic ETFs, and biomedicine ETFs follow closely, forming the main allocation directions for on-exchange investors. The growth in holders is even more pronounced: by the end of 2025, the robotics ETF held by 160.3k accounts, more than quadrupling from 30.2k at the end of 2024; similarly, the Tianhong photovoltaic ETF increased from 74k to 85.6k accounts.

Off-exchange index investors prefer more “balanced” allocations. Specifically, classic indices like CSI 300, Shanghai Gold, Food & Beverage, and Dividend Low Volatility are the “core holdings” for all age groups. Among these, the Shanghai Gold ETF connection fund ranks first in holdings among post-2005, post-2000, and post-1995 groups, demonstrating gold’s strong appeal to young investors in a low-interest-rate environment. Meanwhile, the 1990s and older groups tend to prefer allocations in CSI 300.

Industry experts point out that China’s ETF market is still in a rapid development and penetration phase. In this process, public fund institutions and brokerage channels are working closely together—improving product liquidity, implementing scenario-based operations, and accelerating the transformation toward financial advisory services—effectively lowering individual investment barriers. For example, Tianhong Fund has partnered with Ping An Securities to launch the “Institutional Express” investment tool, which constructs rotation strategies based on institutional fund flows and behavior trends, providing professional decision-making support for investors.

Some industry insiders also told reporters that in recent years, more public fund institutions have used mobile platforms to reach internet users, further expanding ETF marketing scenarios and improving online service experiences, which has attracted more young investors.

Low-Risk Populations Flow Out of Short-Term Debt, Into Medium- and Long-Term Debt and FiX+ Products

In 2025, equity assets were the biggest highlight, but from the overall trend of nationwide wealth management, the demand for more stable investments still dominates. Specifically, fixed income, FiX+, and money market funds have borne much of the steady demand.

Throughout 2025, the interest rate center continued to decline, and the bond market showed a volatile pattern. Against this backdrop, holdings of short-term bond funds decreased, while holdings of medium- and long-term bond funds, FiX+ funds, and money market funds increased significantly. Investors are upgrading their wealth management strategies to pursue higher yields, with deposit maturities leading to a focus on liquidity and safety.

According to Tianhong Fund data, the number of holders of short-term bond funds fell from 4.6921 million at the end of 2024 to 4.1416 million at the end of 2025, a decrease of 11.7%. Meanwhile, holders of medium- and long-term bond funds increased from 199.3k to 291.3k, a 46.2% year-on-year rise; money market fund holders grew by 5.2%.

Industry analysts note that the yield advantage of short-term debt products diminishes in a declining interest rate cycle, while medium- and long-term bond funds, with their higher durations, are expected to deliver better returns—mainly explaining the shift in investor preferences. It’s important to note that this migration is not simply about increasing risk exposure but reflects rational rebalancing of yields and risks in a low-interest-rate environment.

Additionally, amid bond market volatility and a strengthening stock market, FiX+ products have become key vehicles for absorbing spillover funds from fixed income. Market data shows that by the end of 2025, the total scale of FiX+ products reached 3.0 trillion yuan, a record high, up 56% from the end of 2024. The growth rate of FiX+ products far exceeds that of traditional fixed income categories, indicating that investors are actively seeking to enhance returns on a stable basis.

In terms of investor behavior, FiX+ products not only attracted many new investors but also encouraged existing holders to increase their positions. Tianhong Fund’s annual report shows that by the end of 2025, its FiX+ products had 2.7882 million holders, with 778.7k making their first purchase in 2025, and 429.4k existing holders adding to their holdings. Industry insiders point out that the influx of new investors combined with increased positions among existing holders shows that FiX+ strategies are gradually becoming standard for prudent investors.

Experts believe that with a clear product line, diverse risk levels, and convenient purchase channels, public funds remain the preferred tool for individual wealth management. During the declining interest rate cycle, investors seek higher yields, and the continued “deposit relocation” makes FiX+ products an important category for absorbing these funds.

Moreover, ETFs and off-exchange index funds, with their high transparency, low costs, and flexible trading, continue to attract more capital, growing faster than other categories. To adapt to this shift, public fund institutions should further diversify their product offerings and continue to expand inclusive financial services.

(Reporter Li Di, Cailian Press)