Core Viewpoint - The recently released "Action Plan for Promoting the High-Quality Development of Public Funds" includes 25 measures aimed at addressing industry pain points and enhancing the overall management and performance of public funds [1][2]. Summary by Sections Fund Fee and Manager Compensation Reform - The action plan emphasizes a shift towards a floating management fee model for actively managed equity funds, linking fees to fund performance against benchmarks [4][6]. - Specific measures include establishing a floating fee mechanism based on performance, with different fee rates applicable depending on the fund's performance relative to its benchmark [4][5]. - Fund managers' compensation will be tied to fund performance, with penalties for underperformance and rewards for exceeding benchmarks [9][10][12]. Strengthening Interest Alignment - The plan aims to enhance the alignment of interests among fund companies, managers, and investors by increasing the proportion of personal investments by fund managers in their own products [15][16]. - It proposes a comprehensive evaluation system that includes long-term performance metrics, ensuring that fund managers focus on sustainable returns rather than short-term gains [12][17]. Stability of Investment Style - The action plan addresses issues of investment style drift by requiring clear performance benchmarks for each fund, ensuring that investment behavior aligns with the fund's stated objectives [19][20]. - It emphasizes the importance of long-term assessments, with a minimum of 80% weight on three-year performance metrics to discourage short-term trading behaviors [20][21]. Fund Sales and Evaluation Requirements - The plan calls for improved investor service capabilities, including the establishment of regulations for fund advisory services and a centralized platform for institutional investors [22][23]. - It introduces a classification and evaluation mechanism for fund sales institutions, focusing on long-term performance and investor outcomes [24]. Governance Improvement - The action plan highlights the need for enhanced governance within fund companies, including better accountability for major shareholders and board members [26][28]. - It proposes reforms to improve the independence and effectiveness of fund company governance structures, aiming to prevent conflicts of interest and ensure compliance [26][27]. Encouragement for Growth and Innovation - The plan encourages fund companies to strengthen their research capabilities and adopt new technologies, such as AI and big data, to enhance operational efficiency [29][30]. - It supports the establishment of employee stock ownership plans and promotes mergers and acquisitions to foster industry consolidation and innovation [31].