(Yicai) July 26 -- China’s scale of active equity funds has shrunk by almost half from a peak three years ago as investors withdrew their money amid underperforming stocks, according to a brokerage.

Investors redeemed CNY279.7 billion (USD38.6 billion) of active equity funds in the first quarter and CNY240.2 billion in the second quarter so the scale of such actively managed funds fell to CNY3.2 trillion (USD441.4 billion) as of June 30 from a peak of CNY6 trillion on Dec. 31, 2021, Changjiang Securities noted in a recent research report.

A major reason behind the slumps is the poor performance of mainland-listed shares, per the Wuhan-headquartered brokerage. The Shanghai Stock Exchange Composite Index declined by 2.4 percent in the second quarter, the Shenzhen Stock Exchange Component Index dropped by 5.9 percent, and the ChiNext Index plummeted by 7.4 percent.

China's macroeconomic conditions were moderate in the first six months of this year but fixed-asset investment and retail sales of consumer goods were still weak, indicating prudent social expectations as investors were risk-averse and shifted their investments to products with more stable profits, Zhao Feng, a fund manager of Foresight Fund Management, wrote in the Shanghai-based firm's second-quarter report.

Funds that track indexes were more stable. The scale of China's passive equity funds amounted to CNY2.3 trillion (USD317.3 billion) as of June 30, up 1 percent from a quarter ago, showing that some investors chose passive funds to ride the wave of bottoming out, according to TX Investment Consulting.

The current valuation of mainland stocks is attractive from a long-cycle perspective, so investors are appropriately withstanding short-term market fluctuations to obtain returns in the future, Zhu Shaoxing, a fund manager at Fullgoal Fund Management, wrote in the asset manager's second-quarter report.

Editors: Dou Shicong, Emmi Laine