Core Viewpoint - The China Securities Regulatory Commission (CSRC) has released an action plan aimed at promoting the high-quality development of public funds, focusing on changing the previous model of guaranteed returns and linking fund performance to differentiated fee rates for investors based on their holding periods [1][2]. Group 1: Key Highlights of the Action Plan - The action plan emphasizes that for investors with a holding period, differentiated fee rates will be applied based on the product's performance during that period [1]. - It mandates that leading institutions in the industry should issue no less than 60% of the number of actively managed equity funds compared to the total fund issuance in the coming year [1]. - Performance assessment for funds will place a weight of no less than 80% on medium to long-term returns over three years [2]. Group 2: Fund Manager Performance Evaluation - Fund managers whose products underperform the benchmark by more than 10 percentage points over three years will see a significant decrease in their performance compensation [2]. - Conversely, fund managers whose products significantly outperform the benchmark can receive reasonable increases in their performance compensation [2]. - The new rules will only apply to newly issued funds, while existing funds will continue under the previous assessment rules, indicating a clear distinction between old and new regulations [2]. Group 3: Industry Implications - The current public fund operation reflects a focus on individual fund managers rather than team collaboration, which may lead to talent retention issues as high-performing managers often leave for private funds [4]. - The action plan encourages better performance incentives for fund managers, suggesting that extending the assessment period to 3-5 years could enhance motivation and retention of top talent [4][5]. - Addressing the distribution of excess returns for fund managers is seen as a necessary step to prevent the loss of talented managers due to inadequate incentive mechanisms [5].