Hong Kong retail funds achieved gross sales of USD 81.7 billion in the full year of 2024, a 47% increase from a year earlier and the strongest in three years, according to data from the Hong Kong Investment Funds Association (HKIFA). Net inflows reached USD 12.3 billion in 2024, a significant improvement from the USD 187 million of net inflows in 2023.
Mr. Nelson Chow, co-chair of the Unit Trust Subcommittee, said, “The net inflows in 2024 were primarily driven by fixed income funds, despite the overall strong performance of global equity markets during the year. While equity funds and mixed assets funds continued to experience net outflows last year, the extent of these outflows has narrowed compared to a year earlier.”
Mr. Simon Wong, co-chair of the Unit Trust Subcommittee, added, “As the local equity markets continued to show signs of recovery, we observed more investors allocating into mixed assets funds particularly since the last quarter of 2024. This marks a reversal of the net outflow trend that persisted over the past two years.”
Fund Performance vs Flows
The majority of the fund categories posted positive one-year returns as of Feb 22, 2025. Notably, equity funds stood out as the top performers: Hong Kong equities led the chart by gaining 34.4% in the past 12 months, followed by Greater China equities (27.3%) and China Equities (26.2%).
Net sales of equity funds, however, have remained negative for 10 consecutive quarters. Equity funds recorded net outflows of USD 2.7 billion in 2024, a slight improvement from USD 3.2 billion of net outflows in 2023.
Among the 12 equity fund categories, Sectors & Themes Equities (ex-APAC) saw the largest net withdrawals at USD 1.2 billion last year, followed by China Equities (net outflows of USD 474 million) and Asia Pacific Equities (net outflows of USD 438 million). In contrast, Global Equities attracted the most net inflows of USD 439 million during the year.
Bond Funds & Money Market Funds In Favor – For How Long?
By asset class, fixed income funds drew the most net inflows of USD 11.8 billion in 2024; followed by money market funds (USD 3.3 billion). Mixed asset funds shed USD 443 million on a net basis in the same period.
Among the 34 fund categories, Global Bonds and North America Bonds captured the most net inflows during the year, netting USD 6.7 billion and USD 5.3 billion respectively. Money Market ranked third with USD 3.3 billion of net inflows, followed by Global High Yield Bonds and Global Corporate Bonds, which pulled in USD 822 million and USD 614 million respectively last year.
Nevertheless, in the last quarter of 2024 alone, net sales of bond funds narrowed to USD 666 million from USD 5.5 billion a quarter earlier; while mixed assets funds recorded quarterly net inflows (USD 498 million) for the first time since the second half of 2022.
Positive Outlook for China
Chow said: “We are seeing renewed interest globally in the Mainland China and Hong Kong equities. Notably, investors are optimistic about the robust development in artificial intelligence and the broader technology sector thanks to DeepSeek’s breakthrough developments. We expect this positive momentum to continue in 2025.”
Wong remarked: “While we maintain a constructive outlook on equities in general, we anticipate greater volatilities ahead amid high valuations in the US and growing geopolitical tensions. It is important for investors to maintain a balanced and diversified portfolio to effectively capitalize on the potential growth while managing risks.”
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