Fund managers control millions in capital and call the shots in the stock market. They can make a fortune from a single judgment. The debut of fund management operations in China came in March 1998 when the China Securities Regulatory Commission (CSRC) approved two closed-end funds: Kaiyuan and Jintai. Since then, the Chinese fund management business has gone through eight years of twists and turns and has become more prosperous than anyone could have predicted at the start.

Backed by the buoyant stock market, fund management companies have become hot commodities. More and more investors believe investing in a fund to be the most important aspect of their wealth management.

By the end of the first quarter this year, 318 different kinds of funds were available on China's mainland, managing a total of 822.5 billion yuan, according to the central bank's first quarter monetary policy report. The report also stated that in that period, aggregate wealth generated from the 822.5 billion yuan amounted to 1.1216 trillion yuan.

However, faced with a bullish market that is continuing to break record highs, many fund managers cannot feel at ease. While such a massive amount of capital is pouring in, there are also huge risks of sudden pullouts. Many retail investors not familiar with financial market rules could make the market fickle.

The fund rush

A branch of the Industrial and Commercial Bank of China (ICBC) on Gulouwaidajie Street in Beijing opens at 9 a.m everyday. By 10:30 a.m. on May 13, the number of accounts waiting to be serviced had reached 276. Most were there to buy or redeem funds. Only a few needed other services.

"I bought a fund from CITIC Securities at the end of 2005," said Beijing resident Wang Qiming. "When the yield per share came out in January this year, I found that I earned 300,000 yuan, which was an increase of 80 percent." Wang later went to ICBC, a distributor for many fund companies, to see which fund was worth investing in.

Success stories like Wang Qiming's have attracted a wave of new investors to fund management companies. Standing in line at banks to buy funds has become a favorite pastime. The most frequently asked question on many people's lips is "have you bought any funds?"

Sensing this fund mania, the CSRC has issued regulations that new funds must register the amount of the transaction in order to track abnormal transactions.

While the fund market may be flourishing, banks are seeing less and less deposits. The People's Bank of China reported that household deposits in April decreased sharply by 167.4 billion yuan, compared with an increase of 60.6 billion yuan at the same time last year. Meanwhile, household loans went up 123.6 billion yuan in April, a year-on-year increase of 63 billion yuan, according to the bank.

"The deposits at many of our branches have been shrinking by millions of yuan, and we have felt the pressure of the deposit shrinkage," said Wei Yi, an employee with Agricultural Bank of China. "However, people are putting more money into funds."

Under pressure

"The bullish market last year has greatly spurred the fund investment rush, bringing in huge income for fund operators," said Wang Changjiang, a headhunter with Beijing Topjobway. He said that the salary of a prominent fund manager is now increasing 50-200 percent compared with previous years.

"Income is proportional with pressure," said Wang Jian, a 40-year-old fund manager with China Asset Management Co. Ltd. "The average age of Chinese fund managers is about 35, and I am already an elder citizen in this field. For a fund manager, the biggest strength is actual fund operating experience. The longer the experience is, the better solution he will be able to come up with."

From the perspective of Li Xuli, a 30-year-old fund manager with Huayin Fund Management, the overall quality of a fund manager is the key, including research ability, critical point of view and international vision.

"Research is the basis," said Li. "Investment is all about research." He said that actual fund management experience is not that important, but a fund manager should know the intricacies of changes within the macroeconomic and industrial structure.

Investors all buy funds in the hope of earning money from them. Whatever it is, bear market or bull market, the ultimate goal for a fund manager is to reach the ideal profitability of investors.