Core Viewpoint - The newly released "Action Plan for Promoting the High-Quality Development of Public Funds" introduces significant reforms aimed at linking fund company income and investor returns, establishing a performance evaluation system, and implementing a reward and punishment mechanism for fund managers based on their performance relative to benchmarks [1][3][5]. Summary by Relevant Sections Fund Management Fee Structure - The plan proposes a floating management fee structure linked to fund performance, particularly for newly established actively managed equity funds, with a target for leading institutions to issue at least 60% of their new funds under this model within a year [3][4]. - As of the first quarter of 2023, there are currently 131 funds utilizing the floating fee model, indicating a shift towards performance-based fee structures [4]. Performance Evaluation and Accountability - The plan emphasizes the importance of performance benchmarks, with strict regulations on how fund companies select and utilize these benchmarks to ensure they accurately reflect product positioning and investment strategies [6]. - Fund managers whose products underperform benchmarks by more than 10 percentage points over three years will face significant reductions in their performance-based compensation, while those who exceed benchmarks may see their compensation increase [6][7]. Long-Term Investment Focus - The plan mandates that long-term performance (over three years) will account for at least 80% of the evaluation criteria for fund managers, discouraging short-term performance chasing [7][8]. - This long-term focus is expected to stabilize fund performance and encourage the inflow of long-term capital into the market, benefiting both the capital market and the real economy [7][8]. Market Impact and Investor Confidence - The reforms are anticipated to shift the focus of fund companies and managers from scale to investor returns, enhancing the overall quality of public funds and potentially increasing investor confidence in the market [9]. - The introduction of clear performance benchmarks is expected to improve resource allocation efficiency in the market and attract more long-term investments, contributing to a healthier market environment [8][9].

Core Viewpoint - The article outlines the "Action Plan for Promoting High-Quality Development of Public Funds" by the China Securities Regulatory Commission (CSRC), aiming to address existing issues in the public fund industry and enhance its contribution to the economy and investor satisfaction [4][5]. Group 1: Overall Requirements - The plan is guided by Xi Jinping's thoughts and aims to implement decisions from various key meetings, emphasizing strong regulation, risk prevention, and high-quality development [5]. - It stresses the importance of aligning fund company operations with investor interests and transitioning from a focus on scale to investor returns [5]. Group 2: Optimizing Fund Operation Models - A floating management fee mechanism linked to fund performance will be established, encouraging fund companies to align fees with investor returns [6][7]. - Transparency will be enhanced through improved disclosure templates for actively managed equity funds, showcasing performance, fees, and investor outcomes [8]. Group 3: Improving Industry Assessment and Evaluation - Fund companies will be required to adopt a performance-based assessment system, prioritizing investment returns over size and profit metrics [9][10]. - The evaluation system will incorporate long-term performance metrics, with a significant weight on three-year returns [9][10]. Group 4: Enhancing Equity Investment Scale - The plan aims to increase the proportion of equity investments in public funds, with regulatory support for equity fund development [11]. - Innovations in equity fund products will be encouraged, including performance-linked fee structures and the development of index funds [11]. Group 5: Promoting High-Quality Development - Governance structures of fund companies will be improved, emphasizing the role of independent directors and preventing undue influence from major shareholders [14]. - The plan supports the enhancement of investment research capabilities and the adoption of new technologies in fund management [14][15]. Group 6: Risk Management and Compliance - A multi-layered liquidity risk prevention mechanism will be established, along with guidelines for fund participation in swap transactions [18][19]. - The plan emphasizes the need for strict compliance and regulatory enforcement to enhance the industry's reputation and operational integrity [20][21].