China's investment fund industry will likely continue to grow after strong performance last year, global rating agency Moody's said Wednesday.

The sector's total net assets boomed by 87 percent year on year in 2015, mainly led by money market funds and balanced funds, with bond funds also catching up from a smaller base.

"There is room for further growth as the country's fund market has a low net asset under management to GDP ratio compared to developed countries and only half of China's social security fund is currently managed by approved fund managers," Nino Siu, a Moody's analyst, said in a research note.

The low base, along with expected regulatory liberalization and financial market reforms, will lead to continued strong growth for the sector in the next five years, according to the report.

China's money market fund sector, already the second-largest globally, will brace for broader investment opportunities thanks to China's market-oriented reform on interest rates, while balanced funds will remain attractive due to stable yields and flexibility.

China's bond fund market will also rise significantly in the coming two to three years driven by growing institutional demand, and sluggish equity funds are likely to gather steam after the possible inclusion of China into international equity indices. Endi

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