Core Viewpoint - The China Securities Regulatory Commission (CSRC) has introduced a new action plan aimed at promoting high-quality development in the public fund industry, emphasizing the need to link fund manager compensation to fund performance, addressing long-standing issues of misalignment between manager pay and investor interests [1][3]. Group 1: Reform Objectives - The new regulations aim to establish a risk-sharing mechanism where active fund managers must invest a portion of their personal wealth in the funds they manage, fostering a sense of shared responsibility with investors [3]. - The reform emphasizes a meritocratic approach, where fund manager compensation will be closely tied to fund performance, with at least 80% of performance evaluation based on product performance metrics [3]. - Transparency and fairness are prioritized, with new disclosure requirements for active management equity funds to provide comprehensive information on long-term performance, investor losses, and management fees, thereby reducing information asymmetry [4]. Group 2: Industry Context - Historically, fund manager compensation has been linked to fund size rather than performance, leading to significant management fees despite poor fund performance, with the industry collecting over 270 billion yuan in management fees during a period of substantial losses [1][2]. - The proposed changes draw inspiration from the performance-based compensation models prevalent in Western capitalist countries, where managers are incentivized to generate excess returns for shareholders [2]. - The action plan is seen as a significant step towards enhancing the quality of the fund industry in China, protecting investor rights, and addressing the issue of excessive compensation in the financial sector [4].

Core Viewpoint - The China Securities Regulatory Commission (CSRC) has issued a new action plan aimed at promoting the high-quality development of public funds, linking fund manager compensation directly to long-term performance, which addresses the industry's longstanding issue of prioritizing scale over performance [1]. Summary by Relevant Sections Fund Manager Compensation - The new regulations stipulate that fund managers will face salary reductions if their performance lags the benchmark by more than 10%, while those who outperform will receive salary increases [1]. - This policy aims to rectify the industry's focus on scale rather than performance, highlighting the significant performance disparities among fund managers [1]. Performance Data - Among the 111 equity fund managers managing over 10 billion yuan, 45 have underperformed the benchmark, with 24 of them lagging by more than 10% [1]. - Conversely, 66 fund managers have outperformed the benchmark, with 38 exceeding it by more than 10% [1]. Specific Fund Manager Cases - Fund manager Feng Bo from E Fund has a three-year return of -33.56%, underperforming the benchmark by 33 percentage points, making him one of the worst performers [2][3]. - E Fund's Research Selected Fund has experienced significant losses over the past four years, with a total loss of 31.01 billion yuan in 2022 and 21.23 billion yuan in 2023 [4]. Financial Performance and Fees - Despite the losses, the Research Selected Fund has collected a total of 562 million yuan in management fees over the past four years, with a notable reduction expected due to the new floating management fee reform [4]. - The fund's asset allocation has shifted towards sectors like automotive, consumer electronics, and semiconductors, while reducing exposure to food and beverage, home appliances, and pharmaceuticals [9]. Market Implications - The new regulations are seen as a move to bring the industry back to its asset management roots, with long-term performance becoming critical for fund managers' careers [12]. - For investors, this could lead to a reduction in risks associated with poor-performing funds and allow them to share in the capital market's growth [12].

Group 1 - The "Action Plan" aims to achieve a turning point for high-quality development in the public fund industry within approximately three years, introducing 25 policy measures to regulate the industry [1] - The plan emphasizes a virtuous cycle of "increased returns - influx of funds - market stability," reflecting a commitment to mutual development between fund managers and investors [1] - The introduction of clear performance benchmarks for funds is expected to enhance investor confidence and stabilize investment styles in the long term [2][4] Group 2 - The management fee structure will shift from a focus on scale to a focus on returns, with floating management fees linked to performance benchmarks for newly established actively managed equity funds [2][3] - The plan mandates that the management fee for these funds will be determined based on their performance relative to a set benchmark, with specific fee rates applicable depending on performance outcomes [2][3] Group 3 - Fund manager compensation will be closely tied to fund performance, with a requirement that performance metrics account for at least 80% of their evaluation [4][6] - The plan aims to reduce costs for investors by lowering management fees and sales service fees, particularly for index and money market funds [4][5] Group 4 - The overall salary levels in the public fund industry are expected to decline, with a reported 17% decrease in average salary from 2023 to 2024 for a leading fund management company [5] - Concerns have been raised about the potential increase in the trend of high-performing fund managers leaving for private equity, which may complicate investment choices for average investors [5] Group 5 - The "Action Plan" includes measures to enhance investor services, such as optimizing investment research and risk management resources, and establishing a direct sales platform for institutional investors [6][7] - The plan also addresses issues like "style drift" and aims to ensure that each fund has a clear performance benchmark to prevent misalignment between fund behavior and investor expectations [7] Group 6 - The public fund industry is currently facing challenges such as shrinking scales and declining revenues, with some companies reporting significant drops in net profits due to the fee reform [8][9] - The regulatory stance supports innovation and development among leading fund companies while promoting the growth of smaller firms through differentiated strategies [9]

Core Viewpoint - The China Securities Regulatory Commission (CSRC) has issued an action plan to promote the high-quality development of public funds, linking fund manager compensation directly to long-term performance, marking a shift from the previous "scale-first" approach [1][6]. Summary by Relevant Sections Fund Manager Compensation - The new policy stipulates that fund managers will face salary reductions if they underperform their benchmarks by more than 10%, while those who outperform will receive salary increases [1][6]. - This change highlights a significant performance disparity among fund managers, with 24 billion-level fund managers potentially facing substantial pay cuts, while 38 outperformers stand to benefit from the new regulations [1][3]. Performance Data - According to Wind data, among the 111 equity fund managers managing over 10 billion yuan, 45 underperformed their benchmarks, with 24 of them lagging by more than 10% [3]. - Conversely, 66 managers outperformed their benchmarks, with 38 exceeding their benchmarks by over 10% [3]. Notable Fund Managers - Zhai Xiangdong from招商基金 achieved a remarkable 98.81% return over three years, outperforming his benchmark by 98.79 percentage points, managing a single fund with a scale of 10.146 billion yuan [5]. - Other top performers include Bao Wuke from 景顺长城基金 and Chen Yunzong from 广发基金, with returns of 44.47% and 42.04%, respectively [5]. Industry Implications - The new regulatory focus on performance is expected to reshape the public fund industry, potentially eliminating complacent fund managers and improving capital allocation efficiency [6]. - The contrasting performance between top firms like 广发基金 and 景顺长城基金 and those facing pay cuts illustrates the ongoing industry reshuffling [6].

Core Viewpoint - The China Securities Regulatory Commission (CSRC) has issued a new action plan aimed at promoting the high-quality development of public funds, linking fund manager compensation directly to long-term performance, which marks a shift from the previous focus on scale to performance-based metrics [1][11]. Summary by Category Fund Manager Compensation Changes - The new policy stipulates that fund managers will face salary reductions if they underperform their benchmarks by more than 10%, while those who outperform will receive salary increases [1][11]. - This change highlights a significant performance disparity among fund managers, with 24 managers potentially facing substantial pay cuts and 38 outperformers likely to benefit from the new rules [1][3]. Performance Data - Among the 111 fund managers with over 10 billion yuan in assets under management, 45 underperformed their benchmarks, with 24 of them lagging by more than 10% [3]. - Notable fund managers facing pay cuts include Zheng Chengran from GF Fund, who had a return of -45.12%, and others like Feng Bo and Ge Lan, who also significantly underperformed [5][6]. High Performers - In contrast, fund managers such as Zhai Xiangdong from China Merchants Fund achieved a remarkable return of 98.81%, significantly outperforming their benchmarks [9]. - Other high performers include Bao Wuke and Chen Zhezhong, with returns of 44.47% and 42.04%, respectively, showcasing the potential for smaller funds to excel [9]. Industry Implications - The new regulations are expected to accelerate industry reshuffling, moving from a "star-making" era to one focused on genuine performance and adaptability [10]. - The performance of fund managers does not necessarily correlate with their years of experience, indicating that market adaptability and strategy evolution may become more critical for success [10][11]. - The new rules may encourage fund companies to strengthen their research and investment teams, reducing reliance on individual star managers [10].