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 deepening reforms, enhancing the stability of investment behaviors, and improving services for investors [1] Group 1: Reform Measures - The action plan includes 25 reform measures across six areas, emphasizing a shift from "scale" to "investor returns" to achieve high-quality development in the industry [2] - A performance evaluation system centered on fund investment returns will be established, incorporating benchmarks and profit margins that directly affect investor interests [2][3] - The plan aims to strengthen the constraints of performance benchmarks, addressing issues such as style drift and excessive pursuit of market trends in actively managed equity funds [3] Group 2: Implementation Details - The CSRC will issue regulatory guidelines for performance benchmarks and establish a benchmark library, detailing the setting, modification, disclosure, and evaluation mechanisms [4] - A floating management fee model linked to fund performance will be introduced for actively managed equity funds, allowing for differentiated fees based on performance relative to benchmarks [5] - Fund companies will be required to adjust their existing products gradually, with a focus on ensuring that new registrations meet the floating fee structure [5][6] Group 3: Compensation and Governance - The action plan emphasizes aligning the interests of fund companies, executives, and fund managers with those of investors, with a significant weight on investment returns in performance evaluations [6][7] - Fund managers with underperformance relative to benchmarks will see a decrease in performance-based compensation, while those exceeding benchmarks may receive increases [7] - The plan encourages a higher proportion of personal investment by fund executives in their managed products to strengthen alignment with investor interests [7] Group 4: Support for Smaller Firms - The action plan includes measures to support the development of small and medium-sized fund companies, promoting their unique operations and enhancing their competitiveness [8] - It proposes to broaden the investment scope of risk reserves and reduce operational costs for smaller firms, facilitating their growth and efficiency [8] - The CSRC will provide a timeline for the implementation of these reforms, ensuring that the industry has adequate time to adapt [8]

Core Viewpoint - The recent reform of public funds in China, affecting over 800 million investors, introduces new floating fee rate products and upgrades the assessment criteria for fund companies and managers, aiming to align their interests with those of investors [1][7]. Floating Fee Rate Structure - The first batch of 26 new floating fee rate products has received approval from the China Securities Regulatory Commission, with products expected to be available for sale soon [1]. - Under the new floating fee structure, management fees will be linked to the fund's performance relative to a benchmark, with fees varying based on the holding period and performance outcomes [2][4]. - For example, if a fund outperforms its benchmark by over 6%, the management fee can be as high as 1.5%, while underperformance by 3% or more can reduce the fee to 0.6% [2][3]. Assessment Criteria Upgrade - The reform includes a comprehensive upgrade of the assessment criteria for all actively managed equity funds, shifting focus from management scale and profit to investment returns [5][6]. - The new assessment framework emphasizes long-term performance, with at least 80% of the evaluation weight on returns over three years [5]. - Fund managers will face stricter penalties for underperformance, with significant reductions in performance-based compensation for those whose funds lag behind benchmarks by over 10 percentage points [5][6]. Industry Trust Restoration - The public fund industry has faced challenges, with actively managed funds underperforming compared to passive index funds, leading to a shift in investor preference [7]. - The reform aims to restore trust by ensuring that fund managers are incentivized to generate excess returns for investors, thereby justifying management fees [7][8]. - The introduction of floating fee rates is seen as a significant innovation in fee structures, allowing for a more personalized fee arrangement based on individual fund performance [8].

Core Viewpoint - The introduction of the first batch of floating management fee rate products marks a significant innovation in the public fund industry, aligning with the "Action Plan for Promoting High-Quality Development of Public Funds" [1][2]. Group 1: Industry Innovation - The launch of floating management fee products provides more flexible and diverse management strategy options, stimulating industry vitality and promoting high-quality development [2]. - This new fee model is a response to regulatory requirements and represents a concrete action towards the high-quality development of the public fund industry [3]. Group 2: Investor Experience - The design of the floating management fee mechanism allows for more reasonable management costs for investors, enhancing their investment experience and satisfaction [2]. - By linking management fees to investment performance, the new model aims to increase investor trust in the public fund industry [2]. Group 3: Market Development - The introduction of floating management fee products contributes to a fairer and more transparent competitive environment in the market [2]. - The adjustable management fee rates incentivize fund managers to focus more on investment performance and risk control, thereby improving the overall investment level and risk management capabilities of the industry [2]. Group 4: Future Directions - The public fund industry should continue to optimize product structures, enhance investor education, and promote industry self-discipline to improve competitiveness and service levels [3].

Group 1 - The core viewpoint of the news is the introduction of the "Action Plan for Promoting High-Quality Development of Public Funds" by the China Securities Regulatory Commission, which aims to address issues such as "guaranteed returns" and "emphasis on scale over performance" in the public fund industry [1][3] - The public fund market has seen rapid growth, with total assets increasing from 13 trillion yuan in 2019 to approximately 32 trillion yuan by the end of March this year [2] - The Action Plan includes 25 measures to enhance the governance and positioning of fund companies, emphasizing the importance of investor interests and adjusting the assessment of key personnel to align with investor benefits [3][10] Group 2 - The introduction of a floating management fee model based on performance benchmarks for newly established actively managed equity funds is a significant focus of the Action Plan [4] - As of the end of 2024, there are 59 floating fee funds established since 2013, with a total scale of 71.481 billion yuan [5] - The floating management fee mechanism is expected to incentivize fund managers to improve investment capabilities and performance, thereby enhancing the relationship between fund managers and investors [5][6] Group 3 - The Action Plan is seen as both a challenge and an opportunity for fund companies, with those providing long-term stable returns likely to stand out [9] - Fund companies are expected to enhance their core investment research capabilities as a foundation for high-quality development [10] - The emphasis on investor education and understanding of fee structures is crucial for better investment decision-making [9][10]

Core Viewpoint - The Chinese public fund industry is undergoing a historic transformation with the introduction of the "Action Plan for Promoting High-Quality Development of Public Funds" by the China Securities Regulatory Commission, which includes 25 specific reform measures aimed at prioritizing investor interests and enhancing industry quality [1] Group 1: Reform Measures - The plan emphasizes the establishment of a mechanism linking fund company income to investor returns, requiring a floating management fee structure based on fund performance for investors meeting certain holding period requirements [2] - It mandates that leading fund management firms issue floating fee rate funds that account for no less than 60% of their actively managed equity fund issuance within the next year [2] - The plan also strengthens the regulatory oversight of performance benchmarks used by fund companies, ensuring they effectively define product positioning, clarify investment strategies, and measure performance [2] Group 2: Performance Evaluation - Fund companies are required to establish a performance evaluation system centered on fund investment returns, reducing the weight of operational metrics like scale ranking and profit [2] - The evaluation metrics for fund investment returns will include both fund performance and investor profit/loss, with long-term performance assessments (over three years) accounting for at least 80% of the evaluation [2] Group 3: Addressing Industry Issues - The plan aims to address the prevalent issue where fund companies profit while investors incur losses by incorporating investor profit/loss into performance evaluation metrics [3] - It highlights that many investors tend to buy funds during market peaks, often leading to significant losses when the market turns, exacerbated by aggressive marketing tactics from fund companies [3] - The long-term performance of many thematic funds has shown overall losses, indicating a need for better alignment of interests among all parties involved in fund investment [3][4] Group 4: Stakeholder Interests - The interests of fund companies, fund managers, sales institutions, and investors have historically been misaligned, with a focus on sales rather than investor outcomes [4] - The implementation of the action plan is expected to better align the interests of all parties involved in fund investments, potentially leading to a more stable and sustainable industry [4]

Core Viewpoint - The public fund industry in China is undergoing significant reforms aimed at addressing long-standing issues such as the disconnect between fund company profits and investor returns, with a focus on performance-based fee structures and manager compensation [1][2][3] Summary by Sections Industry Reform - The public fund industry has experienced rapid growth, with total assets exceeding 32 trillion yuan and over 12,600 products as of Q1 2023 [1] - Recent regulatory changes, including the "Action Plan for Promoting High-Quality Development of Public Funds," target key pain points in the industry, particularly fee structures and manager compensation [1][2] Fee Structure Changes - A new floating fee model linked to fund performance will be implemented for actively managed equity funds, moving away from the traditional fixed fee model [3][4] - This floating fee mechanism aims to align the interests of fund managers with those of investors, addressing the issue of "funds making money while investors do not" [3][4] - Historical examples show that some funds have already returned management fees when performance was below benchmarks, indicating a shift towards accountability [3] Manager Compensation Reform - Fund manager compensation will now be directly tied to fund performance, with at least 80% of performance evaluations based on investment returns [6][7] - A significant portion of funds has underperformed their benchmarks, with 23.25% of funds lagging by over 10 percentage points, indicating potential salary reductions for many managers [6][7] - The reform aims to create a more competitive environment where only capable managers and high-performing funds thrive [8] Performance Benchmarking - The establishment of clear performance benchmarks for each fund is a critical aspect of the reforms, intended to prevent "style drift" and ensure that investment actions align with fund names and objectives [9][10] - Over 60 funds have already adjusted their performance benchmarks this year to better reflect their investment strategies [10] - This focus on performance benchmarks is expected to enhance transparency and stability in risk-return profiles, improving investor confidence [11]

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 implemented a new action plan aimed at promoting high-quality development in the public fund industry, introducing 25 measures to address industry pain points and improve fund performance and investor confidence [1][4][9]. Group 1: Fund Performance and Management Fees - A significant portion of funds have underperformed their benchmarks, with 2,071 funds (approximately 23.2%) having a net value growth rate that lags behind their benchmarks by over 10 percentage points in the last three years [1][6]. - The new plan includes a floating management fee structure that ties fund company income to investor returns, encouraging long-term investment and improving the focus on performance rather than scale [4][5]. - Fund managers whose products underperform their benchmarks by more than 10 percentage points over three years will see a reduction in their performance compensation, while those who exceed benchmarks may receive increased compensation [6][10]. Group 2: Regulatory and Performance Evaluation Enhancements - The action plan emphasizes the importance of establishing clear performance benchmarks for funds, which will help investors better assess fund performance and enhance market stability [6][9]. - The plan proposes a comprehensive overhaul of the performance evaluation system for fund companies, prioritizing investment returns over operational metrics like scale and profit [9][10]. - Fund companies will be evaluated based on long-term performance, with a minimum of 80% weight given to investment performance metrics in assessing fund managers [9][10]. Group 3: Industry Development and Investor Confidence - The introduction of floating fee structures is seen as a positive step towards aligning the interests of fund companies and investors, fostering a healthier industry ecosystem [5][10]. - The measures aim to address the issue of funds making profits while investors do not, thereby enhancing investor confidence and attracting more long-term capital into the market [9][10]. - The plan encourages the issuance of floating fee funds by leading firms, with a target of at least 60% of new active management equity funds to adopt this model within a year [4][5].

Core Viewpoint - The China Securities Regulatory Commission (CSRC) has issued an "Action Plan for Promoting High-Quality Development of Public Funds," which includes 25 measures aimed at enhancing the performance and accountability of fund managers, emphasizing the need for alignment between fund managers and investors' interests [1][2]. Group 1: Fund Manager Accountability - Fund managers with products underperforming the benchmark by more than 10 percentage points over three years will see a significant decrease in their performance-based compensation [1]. - Conversely, fund managers whose products significantly outperform the benchmark can receive reasonable increases in their performance-based compensation [1]. Group 2: Shift in Industry Focus - The action plan encourages a shift from prioritizing scale to focusing on returns, urging fund companies and sales institutions to enhance their service capabilities for investors [2][4]. - It emphasizes the need for a performance-based fee structure for actively managed equity funds, where management fees are linked to fund performance, reducing fees for underperforming funds [4]. Group 3: Strengthening Investor Interests - A comprehensive evaluation system will be established, focusing on investment returns, incorporating metrics like performance benchmarks and fund profitability, while reducing the emphasis on management scale and company profits [4]. - Fund companies are encouraged to increase the proportion of their executives and fund managers investing in their own products, with stricter lock-up periods to align their interests with those of investors [4]. Group 4: Enhancing Fund Stability and Innovation - The plan aims to optimize fund registration processes and promote the development of more index funds and low-volatility products to enhance the scale and stability of equity investments [4]. - It also seeks to strengthen the binding force of performance benchmarks and implement long-term assessments of fund performance over three years to promote stable investment behaviors [4].

Core Viewpoint - The China Securities Regulatory Commission (CSRC) has released the "Action Plan for Promoting High-Quality Development of Public Funds," marking a new phase focused on investor returns and high-quality transformation in the public fund industry [2][3][4]. Summary by Sections Industry Background - The public fund industry in China has played a positive role in serving the real economy, promoting capital market stability, and meeting residents' wealth management needs, but it faces issues such as inadequate operational concepts and uneven development [4]. Key Measures of the Action Plan - The Action Plan consists of 25 measures organized around five core areas aimed at enhancing the public fund industry's quality [5]. 1. Optimize Fee Structures - Implement a floating management fee model linked to fund performance for actively managed equity funds, reducing fees when performance is below benchmarks [5][11]. 2. Strengthen Investor-Manager Alignment - Establish an evaluation system focused on investment returns, reducing the emphasis on management scale and profits, and increasing the proportion of fund managers' investments in their own products [5][6]. 3. Enhance Investor Services - Encourage fund companies to optimize research, product design, and risk management to better serve investors, including the introduction of investment advisory regulations [6][9]. 4. Increase Equity Investment Scale and Stability - Promote the development of more index funds and low-volatility products, and implement long-term performance assessments for funds [6][9]. 5. Strengthen Regulation and Risk Management - Improve regulatory frameworks and enhance governance standards within fund companies to ensure compliance and risk management [6][9]. Industry Expert Opinions - Experts believe the Action Plan will enhance investor confidence and attract long-term capital into the stock market, leading to a more stable investment environment [3][8][13]. Market Impact - The reforms are expected to improve the operational mechanisms of public funds, leading to a focus on long-term returns and a healthier market ecosystem [8][14].