Core Viewpoint - The article discusses the significant growth of ETF funds in China, highlighting a historical turning point where passive equity fund sizes are set to surpass active equity funds by the end of 2024, driven by various market dynamics and investor preferences [2][5]. Group 1: Market Trends - By the end of 2024, the size of passive equity funds in China is projected to reach 3.61 trillion yuan, surpassing active equity funds at 3.46 trillion yuan, marking a significant shift in the investment landscape [2]. - The share of passive ETFs within passive equity funds has dramatically increased from 38% in 2015 to 90% in 2024, while passive open-end funds have decreased from 62% to 10% [5]. - The U.S. market has seen a similar trend, with passive funds surpassing active funds in total assets by the end of 2023, indicating a fundamental change in market structure [5]. Group 2: Fee Structure - The rapid development of domestic ETFs over the past seven years has led to a competitive environment where fund companies have reduced fees to differentiate their products [8]. - The net operating fee rate for domestic ETFs has remained stable from 2018 to 2023, with a notable decline in 2024, influenced by regulatory reforms and competitive pressures [9][10]. - Major ETFs have collectively reduced management and custody fees from 0.5% and 0.1% to 0.15% and 0.05%, contributing to the overall decrease in industry fee levels [10]. Group 3: Value Creation - The article emphasizes the importance of actual value creation in ETFs, with a focus on funds that have significantly increased their asset sizes after accounting for inflows and outflows [20]. - The top 10 value-creating ETFs in China are primarily large-scale funds tracking broad market indices, reflecting a prevailing investment strategy focused on low-cost, diversified exposure [20]. - Similar trends are observed in the U.S. market, where low-cost passive funds tracking major indices dominate the value creation rankings [24]. Group 4: Investment Risks - The article notes that ETFs focused on specific themes or sectors tend to exhibit higher volatility and risk, often leading to significant value losses for investors [28][29]. - The top 10 ETFs with the largest value losses in China are primarily thematic funds, highlighting the risks associated with narrow investment focuses [28]. - In the U.S., a majority of the funds with the highest value losses are also ETFs concentrated on specific sectors or themes, reinforcing the notion that broad market exposure generally mitigates risk [31].

Core Viewpoint - The launch of new floating fee rate funds by multiple public fund institutions marks a significant shift in the public fund industry, indicating the end of the traditional fixed management fee model and the beginning of a new era focused on performance-based fees [4]. Fund Performance and Market Response - As of mid-June, 13 out of 26 newly approved floating fee rate funds have successfully completed fundraising, with a total raised amount exceeding 12.6 billion yuan [1]. - Among the established funds, the top performer, Dongfanghong Core Value A, raised 1.991 billion yuan, making it the largest initial fundraising product among active equity funds this year [2]. - Efund Growth Progress A follows with a fundraising scale of 1.704 billion yuan, while Ping An Value Enjoy A raised 1.322 billion yuan, ranking third [2]. - The average number of effective subscriptions per fund is approximately 11,500, with Efund Growth Progress A attracting the highest number of subscriptions at 47,300 [3]. Market Dynamics and Future Outlook - The successful fundraising of these funds reflects strong market interest in the new fee structure, with a total of nearly 150,000 effective subscriptions across the 13 established funds [3]. - The introduction of floating fee rate products is expected to become a regular offering in the market, leading to a restructuring of the industry where only those fund companies with genuine research and investment capabilities will thrive [4]. - The ongoing fee reform wave in the fund industry is just beginning, suggesting a transformative period ahead [4].

Core Viewpoint - Several fund companies in China are purchasing their own newly launched floating rate funds, indicating confidence in the long-term stability and health of the capital market and their investment management capabilities [1][3][4]. Group 1: Fund Companies' Self-Purchases - On June 9, China International Fund announced a plan to invest 20 million yuan in its newly launched floating rate fund, "China International Fund Rui'an Mixed Securities Investment Fund" [1]. - Other leading public fund institutions, including China Europe Fund, Bosera Fund, and Orient Securities Asset Management, have also announced self-purchases, with a cumulative investment amount reaching 70 million yuan [3]. - Manulife Fund announced on June 7 that it would invest 10 million yuan in its "Manulife Smart Navigation Mixed Securities Investment Fund" [3]. - On June 3, Xingzheng Global Fund stated it would invest 20 million yuan in its "Xingzheng Global Heqi Mixed Securities Investment Fund" [3]. - China Europe Fund committed 10 million yuan to its floating rate fund, "China Europe Large Cap Smart Selection Mixed Initiated Fund," with a holding period of no less than three years [3]. - Bosera Fund announced investments of 10 million yuan each in two of its equity funds on May 28, one of which is a floating rate fund [3]. - Orient Securities Asset Management stated it would invest 10 million yuan in its "Orient Red Core Value Mixed Fund" [3]. - Tianhong Fund also announced a 10 million yuan investment in its floating rate fund, "Tianhong Quality Value Mixed Fund" [4]. Group 2: Purpose and Industry Trends - The introduction of floating rate products aims to alleviate the issue where funds do not generate profits for investors while fund companies do, and to promote high-quality development within the fund industry [4]. - Industry insiders view the recent reforms in public fund fees, particularly the launch of floating rate products, as a significant exploration and attempt to drive further high-quality development in the industry [5]. - According to CITIC Securities, the weighted management fee rates of various fund products have significantly decreased compared to the end of 2022, indicating a successful fee reduction trend [5]. - The fund industry in China still has considerable room for further fee reductions compared to overseas markets, suggesting that the practice of fee reform and product innovation is ongoing [5]. - Future developments in floating rate funds may extend to bond funds, with fixed income + products being prioritized [5]. - Huabao Securities noted that the asymmetric fee structure of new floating rate products will enhance the importance of performance benchmarks, which may influence investors' decisions [5].

Core Viewpoint - A new wave of fund fee reductions has emerged, primarily affecting bond funds, as various asset management companies announce lower management and custody fees in response to regulatory reforms aimed at reducing overall fund costs for investors [1][3]. Group 1: Recent Fee Reductions - Nearly 10 funds have announced fee reductions in June, with a focus on bond products [1]. - Citic Securities Fund announced a reduction in the custody fee for its bond fund from 0.1% to 0.05%, effective June 9, 2025 [1]. - Zheshang Securities Asset Management reduced the custody fee for its bond fund from 0.15% to 0.08%, effective June 5, 2025 [1]. - Jianxin Fund lowered the management fee from 0.7% to 0.3% and the custody fee from 0.2% to 0.1% for its bond fund, effective June 6, 2025 [1]. - Southern Fund announced a reduction in management and custody fees for its mixed fund, with management fees dropping from 1.0% to 0.6% and custody fees from 0.2% to 0.1%, effective June 9, 2025 [1]. Group 2: Background and Regulatory Context - The current wave of fee reductions began in July 2023, following the China Securities Regulatory Commission's announcement of a fee reform plan for public funds [3]. - The fee reform is structured in three phases: reducing management fees, trading commissions, and sales service fees [3]. - By 2025, the reform will enter its third phase, with further reductions in sales fees expected, potentially saving investors a total of 45 billion yuan annually [3]. - As a result of the ongoing fee reform, the number of funds with management fees at or below 0.15% has exceeded 1,000, while those with custody fees at or below 0.05% have surpassed 2,100 [3].

Group 1 - A total of 512 new funds have been established this year, with a combined issuance of 4060.84 billion units as of May 28 [1][2] - Among the new funds, 317 are equity funds with an issuance of 1648.46 billion units, accounting for 40.59% of the total issuance [1][3] - Bond funds remain dominant in terms of issuance scale, with 93 new bond funds totaling 1885.90 billion units, representing 46.44% of the total [1][2] Group 2 - The issuance of equity funds has significantly increased, with the proportion of equity funds rising from 21.14% to 40.59% this year [3][4] - There are currently 88 funds in the process of issuance, including 24 passive index products and 11 enhanced index products [3][4] - The market is expected to see 38 new funds launched in June, with 14 being passive index products, indicating a growing variety of investment options for investors [3][4] Group 3 - The recent introduction of floating management fee products is a key focus for fund companies, with 26 new floating fee funds approved [4][5] - The floating management fee model links fees to the investor's holding period and fund performance, enhancing the investment experience for investors [5] - Fund companies are prioritizing the issuance of these new products, indicating a significant step in the fee reform of public funds [5]

Core Viewpoint - The recent introduction of floating management fee products represents a significant step in the fee reform of public funds, providing new choices for investors while posing challenges to the operational models and investment strategies of the fund industry [2][4]. Product Submission - Recently, 26 major fund management companies, including E Fund, Huaxia Fund, and GF Fund, have submitted floating management fee products for approval, indicating a strong industry response to the fee reform [4]. - The first batch of submitted products primarily targets mainstream broad-based indices such as CSI 300 and CSI 500, focusing on full-market stock selection [4]. Fee Structure Innovation - The new floating management fee products innovate the fee structure by linking management fees to both the holding period and the performance during that period, unlike previous models that were primarily based on fund size or investor holding time [6]. - For instance, if an investor holds the product for over one year and achieves an annualized excess return exceeding 6%, the management fee could be set at 1.50% [6]. Challenges Faced - Fund managers face new challenges in managing floating fee products, as their management fees are closely tied to performance, necessitating precise market trend analysis and portfolio optimization [8][9]. - The complexity of the new fee structure requires significant system upgrades for fund companies, especially for smaller firms, to handle the individualized fee calculations for each investor [10][11]. Ecosystem Development - The introduction of floating management fee products is seen as a crucial exploration for the public fund industry, aiming to strengthen the alignment of interests between fund managers and investors [14]. - As regulatory guidance evolves, floating management fee products are expected to become a mainstream model in fund issuance, promoting a shift away from short-term profit chasing towards sustainable investment returns [15].