Core Viewpoint - The public fund industry in China is undergoing significant reforms aimed at improving performance and aligning fund manager compensation with fund performance, as outlined in the "Action Plan for Promoting High-Quality Development of Public Funds" issued by the China Securities Regulatory Commission (CSRC) [1][3]. Group 1: Reform Details - The new plan includes a performance-based compensation structure for fund managers, where those managing funds that underperform their benchmarks by more than 10% over three years will see a significant decrease in their performance pay [1][6]. - The plan mandates that, within the next year, leading fund management companies must issue at least 60% of their new funds as floating management fee products, which are linked to fund performance [1][6]. - Currently, only 138 public fund products charge floating management fees, indicating a need for increased adoption of this fee structure [1]. Group 2: Industry Context - The public fund industry has experienced volatility over the past five years, with many investors facing disappointing returns, leading to a decline in new investors [2]. - A significant portion of funds, approximately 23.2%, have underperformed their benchmarks by over 10% in the last three years, highlighting the need for reform [5]. - The reforms aim to address the issue of fund managers profiting while investors do not, a situation that has been increasingly scrutinized [3][5]. Group 3: Fee Structure Changes - The new floating management fee structure will adjust fees based on performance relative to benchmarks, with lower fees for underperformance and higher fees for exceeding benchmarks [3][6]. - The reforms are designed to create a more investor-friendly environment by aligning the interests of fund managers with those of investors, promoting long-term investment strategies [8][10]. - The shift towards floating fees is part of a broader trend to reduce costs for investors and improve the overall competitiveness of the public fund industry in China [10].