Executive Summary
Industrial Fund (兴业基金), a major Chinese asset manager, has undergone a significant leadership transition with Liu Zongzhi (刘宗治) assuming the chairman role. This change comes as the company grapples with structural imbalances and growth pressures in a evolving market environment.
- Liu Zongzhi (刘宗治), 51, succeeds Ye Wenhuang (叶文煌) as chairman, marking the second leadership change in under three years at the nearly 500 billion yuan fund house.
- The fund faces a pronounced product structure imbalance, with fixed income products dominating over 95% of its 460 billion yuan assets under management, while equity offerings remain underdeveloped.
- Financial performance shows stagnation, with净利润 failing to surpass 2021 peaks despite asset growth, reflecting pressure from industry fee reforms and competitive dynamics.
- Strategic reorientation toward equity products and diversified offerings represents the primary challenge for new leadership, with recent hires signaling intent to address structural weaknesses.
- Bank-affiliated fund companies like Industrial Fund must navigate the tension between leveraging parental advantages and developing independent competitive capabilities in a changing regulatory landscape.
A New Era Begins at Industrial Fund
The Chinese asset management industry witnessed another leadership transition as Industrial Fund welcomed its new chairman in October 2025. Liu Zongzhi (刘宗治) assumed leadership of the 460 billion yuan fund house, succeeding Ye Wenhuang (叶文煌) who retired due to age considerations. This appointment continues the pattern of frequent executive changes at the bank-affiliated fund manager, raising questions about strategic continuity during a period of industry transformation.
At 51, Liu represents a generational shift in leadership while maintaining the tradition of executives rising through the ranks of parent company Industrial Bank. His extensive background spanning investment banking, corporate finance, and risk management within the Industrial Bank system provides valuable institutional knowledge but leaves open questions about his approach to the fund’s particular challenges. The fixed income dominance that characterizes Industrial Fund’s product lineup presents both a stable revenue base and a structural vulnerability in an era of fee compression and investor demand for diversified strategies.
Context of the Leadership Transition
The chairman transition follows a period of remarkable management volatility at Industrial Fund. Ye Wenhuang (叶文煌) had served merely two and a half years before reaching retirement age, continuing the pattern of relatively brief tenures in the top position. This marks the second chairman change in under three years, following the retirement of Guan Hengqiu (官恒秋) in 2023. The frequency of leadership changes is unusual for a fund company of Industrial Fund’s scale and suggests underlying tensions in strategic direction.
Complementing the chairman transition, the company also replaced its general manager in 2023, with Li Hui (李辉) from China Universal Asset Management taking over from Hu Bin (胡斌). The comprehensive refresh of both chairman and general manager positions within a short timeframe indicates deliberate restructuring at the highest levels. For investors and industry observers, the management stability question looms large, as consistent leadership typically correlates with effective strategy execution in the competitive fund management sector.
Profile of the New Chairman
Liu Zongzhi (刘宗治) brings a classic bank-executive profile to the chairman role, having progressed through multiple senior positions within Industrial Bank. His career path included roles as Assistant General Manager of the Investment Banking Department, Deputy General Manager of the Corporate Finance Headquarters Investment Banking Department, and Chief Risk Officer. This progression through critical banking functions provides comprehensive exposure to capital markets, corporate financing, and risk assessment—all valuable backgrounds for fund leadership.
However, the absence of direct fund management experience distinguishes Liu from professionals who have risen through investment or product development tracks. In an industry where specialized knowledge increasingly drives competitive advantage, his learning curve in understanding the nuances of fund operations, product development, and investment management may influence the pace of strategic initiatives. The fixed income dominance challenge requires nuanced understanding of both the strengths to preserve and the weaknesses to address in the current business model.
The Structural Imbalance of Fixed Income Dominance
Industrial Fund’s product structure reveals a profound concentration in fixed income strategies that defines both its market position and its vulnerability. Wind data indicates that as of October 2025, fixed income products, comprising bond funds and money market funds, account for over 95% of the company’s 460 billion yuan in assets under management. This extreme skew toward lower-margin, rate-sensitive products creates structural challenges in an environment of fee reform and evolving investor preferences.
The numbers tell a stark story: bond funds total 273.449 billion yuan while money market funds reach 173.959 billion yuan. By comparison, equity products represent a mere fraction of the business, with hybrid funds at 12.932 billion yuan and pure equity funds at just 3.756 billion yuan. This product concentration reflects the common pattern among bank-affiliated fund companies but appears particularly pronounced at Industrial Fund. The fixed income dominance provides stability during market turbulence but limits growth potential and fee income in a maturing industry.
Root Causes of the Product Imbalance
Several factors explain the structural tilt toward fixed income at Industrial Fund. The company’s genesis within the Industrial Bank ecosystem naturally oriented it toward the bank’s core competencies and client base. Bank distribution channels historically emphasized capital preservation products aligned with traditional deposit alternatives, creating natural synergies for fixed income offerings. Additionally, the fund’s client composition skews toward institutional investors whose liability-driven investing typically prioritizes stable returns over capital appreciation.
The development path dependency in investment capability building further reinforced the fixed income dominance. Industrial Fund cultivated deep expertise in fixed income analysis, credit assessment, and liquidity management—skills directly transferable from its banking parent. Meanwhile, equity research and portfolio management capabilities received comparatively less investment and development focus. This capability gap becomes self-reinforcing, as weak performance in equity strategies reduces asset gathering potential, further limiting resources available for talent acquisition and system development.
Consequences of the Structural Bias
The heavy reliance on fixed income products creates multiple challenges for Industrial Fund’s competitive positioning and financial performance. From a revenue perspective, fixed income funds typically command lower management fees than equity products, compressing profit margins even at substantial asset levels. As the Chinese fund industry undergoes sweeping fee reforms, the pressure on already-thin fixed income fees intensifies, directly impacting the company’s bottom line.
Beyond financial metrics, the product imbalance affects strategic positioning. Industrial Fund risks being perceived as a one-dimensional manager incapable of delivering comprehensive solutions to investors seeking diversified exposure. In an era where asset allocators increasingly favor managers with multi-asset capabilities, the narrow product focus could limit relationship depth and cross-selling opportunities. The fixed income dominance also creates vulnerability to interest rate cycles and credit events that could simultaneously impact multiple product lines.
Financial Performance Under Pressure
Industrial Fund’s financial results reflect the tensions of its business model, with steady asset growth failing to translate into proportional profit expansion. Between 2022 and 2024, revenue increased modestly from 1.125 billion yuan to 1.237 billion yuan, while net profit grew from 383 million yuan to 426 million yuan. Despite managing nearly 500 billion yuan in assets, profitability remains below the 2021 peak of 491 million yuan in net profit, indicating efficiency challenges or margin compression.
The first half of 2025 showed improved momentum with revenue of 695 million yuan and net profit of 240 million yuan, representing year-over-year increases of 29.91% and 43.71% respectively. However, even this accelerated growth fails to recover the absolute profit levels achieved four years earlier. The divergence between scale expansion and profit stagnation highlights the fundamental challenge of Industrial Fund’s fixed income dominance in a margin-compressed environment.
Fee Reform Impact and Competitive Dynamics
The Chinese fund industry’s ongoing fee reform initiative directly pressures business models heavily reliant on traditional management fees. For Industrial Fund, with its overwhelming fixed income orientation, the impact is particularly acute. Fixed income products typically carry management fees between 0.15% and 0.50%, substantially below the 1.0% to 1.5% range common for active equity strategies. As regulators push for lower overall fees, the already-compressed fixed income fees face further downward pressure.
Competitive intensity compounds the fee pressure. Industrial Fund operates in a crowded segment of bank-affiliated fund managers with similar product emphasis and cost structures. Differentiation becomes challenging when multiple competitors offer comparable fixed income products through similar distribution channels. The lack of distinctive equity capabilities prevents Industrial Fund from competing effectively in higher-margin segments where fee pressure is less severe and performance differentiation can justify premium pricing.
Strategic Responses to Performance Challenges
Industrial Fund management has acknowledged the need for strategic adjustment, articulating a dual-track approach in statements to media including Hexun. The company describes intentions to “顺势而为” (go with the flow) in fixed income while “谋定后动” (plan before acting) in equities. This phrasing suggests recognition of both the need for change and the practical constraints of organizational capability and market positioning.
Recent personnel moves indicate concrete steps toward rebalancing the business. The September 2025 appointment of Pu Yanjie (蒲延杰) as assistant general manager brings experienced equity leadership from his previous role as Chief Equity Investment Officer at Industrial Bank Wealth Management. This hiring signals serious intent to develop equity capabilities, though the timeline for meaningful impact remains uncertain. Additionally, the company has referenced plans to “丰富不同策略产品的研发及创设” (enrich research, development, and creation of products with different strategies), suggesting broader product diversification beyond the core fixed income focus.
Strategic Imperatives for the New Leadership
Liu Zongzhi (刘宗治) assumes leadership at a pivotal moment for Industrial Fund, with the fixed income dominance challenge requiring careful navigation between preservation and transformation. His banking background offers advantages in maintaining strong relations with the parent company and leveraging institutional channels, but may need supplementation with specialized fund management expertise to address the product structure imbalance.
The new chairman’s immediate priorities likely include stabilizing the management team after recent volatility, articulating a clear strategic vision that acknowledges both strengths and weaknesses, and allocating resources to build competitive capabilities in underrepresented segments. The fixed income dominance provides a stable platform from which to launch initiatives, but also creates organizational inertia that may resist fundamental change. Balancing the core business’s cash generation needs with investment in future capabilities represents a classic challenge for leaders of established businesses facing disruption.
Building Equity Capabilities
Addressing the equity gap requires multi-faceted approach spanning talent acquisition, process development, and cultural transformation. Industrial Fund must compete for scarce investment talent in a market where top portfolio managers command premium compensation. Building credible equity research capabilities demands years of consistent investment and patience through inevitable performance cycles. The company’s institutional heritage may need adaptation to accommodate the different risk tolerances and decision-making processes required for successful equity investing.
The appointment of Pu Yanjie (蒲延杰) represents a promising start, but one hire cannot transform an organizational capability deficit. Industrial Fund likely needs to recruit additional equity professionals, potentially including sector specialists, quantitative researchers, and portfolio managers with proven track records. Simultaneously, the company must develop distinctive investment processes that can deliver consistent performance rather than merely replicating strategies available elsewhere. Success in equity management typically requires tolerance for short-term underperformance during strategy development, which may challenge the risk culture of a bank-affiliated institution.
Leveraging Banking Synergies While Building Independence
The relationship with Industrial Bank represents both Industrial Fund’s greatest advantage and a potential constraint on strategic flexibility. The banking distribution network provides cost-effective asset gathering capabilities unmatched by independent fund managers. Banking clients offer natural prospects for fixed income products aligned with their risk preferences. However, overreliance on the parent relationship can inhibit development of independent competitive advantages and distinctive market positioning.
Liu Zongzhi (刘宗治) must navigate the delicate balance of maximizing banking synergies while building capabilities that transcend the parent relationship. This might include developing products specifically for non-bank distribution channels, cultivating relationships with independent financial advisors, and creating investment strategies not directly tied to banking priorities. The fixed income dominance partly reflects over-indexing on banking synergies; rebalancing requires consciously developing capabilities and relationships beyond the comfort zone of parental support.
Path Forward for Industrial Fund
Industrial Fund stands at a crossroads, with new leadership arriving amid structural industry shifts and persistent business model challenges. The company’s substantial asset base and banking affiliation provide formidable advantages, but the fixed income concentration creates vulnerability to margin compression and limits growth avenues. Liu Zongzhi’s (刘宗治) tenure will likely be judged by his ability to preserve the strengths of the existing business while catalyzing evolution toward a more diversified and sustainable model.
The Chinese asset management industry’s continuing maturation suggests that specialized players can thrive alongside diversified giants, but each must develop distinctive competitive advantages. For Industrial Fund, the path may involve deepening fixed income expertise into adjacent strategies like absolute return, multi-sector, or ESG-focused approaches while simultaneously building basic equity capabilities. The fixed income dominance need not be completely abandoned, but rather supplemented with complementary offerings that address investor needs beyond traditional yield generation.
Market participants should monitor several indicators for signals of successful transformation: meaningful growth in equity assets beyond token levels, development of innovative fixed income strategies that command premium fees, recruitment of investment talent from outside the banking ecosystem, and financial metrics that show profit growth outpacing asset growth. The fixed income dominance challenge represents both a risk to mitigate and an opportunity to demonstrate strategic agility in responding to market evolution.
For investors and industry observers, the coming quarters will reveal whether new leadership can translate acknowledgement of structural challenges into concrete strategic actions. The appointment of Liu Zongzhi (刘宗治) begins another chapter for Industrial Fund, with the resolution of its fixed income dominance problem representing the central plotline determining whether this chapter concludes with renewal or repetition. Those tracking China’s financial sector evolution should watch this case closely as a bellwether for bank-affiliated asset managers navigating the transition from scale-driven to capability-driven competition.