Core Viewpoint - The China Securities Regulatory Commission (CSRC) has released an "Action Plan for Promoting the High-Quality Development of Public Funds," which links fund managers' compensation to long-term performance, addressing the industry's focus on scale over returns [2] Group 1: Fund Manager Compensation - Fund managers with products underperforming their benchmarks by more than 10 percentage points over three years will see a significant decrease in their performance-based compensation [2] - Conversely, fund managers whose performance significantly exceeds benchmarks may see reasonable increases in their compensation [2] Group 2: Underperforming Funds - As of May 21, nearly 6000 public funds have been managed for over three years, with 1341 funds underperforming their benchmarks by over 10 percentage points, involving 735 fund managers [3] - Among these, 31 funds have underperformed their benchmarks by over 50 percentage points, including notable managers like Yao Zhipeng from Harvest Fund and Shi Cheng from Guotai Junan [3] - The worst performer is Morgan Fund's Guo Chen, whose fund has a cumulative return of -23.03%, lagging behind the benchmark by 128 percentage points [3] Group 3: High-Performing Funds - There are 543 funds that have outperformed their benchmarks by over 10 percentage points, with 33 funds exceeding benchmarks by over 50 percentage points [6] - Notable high performers include the Huaxia North Exchange Innovation Small and Medium Enterprises Fund, managed by Guo Xin, which achieved a cumulative return of 194%, surpassing its benchmark by 176 percentage points [6][7] - The North Exchange theme funds have emerged as a concentrated area of excess returns, with several funds exceeding their benchmarks by over 60 percentage points [7] Group 4: Adjustments to Performance Benchmarks - In response to the new action plan, many fund companies have begun to adjust their performance benchmarks, with over 100 funds changing their benchmarks by May 26 [8][10] - Adjustments are made to ensure benchmarks accurately reflect the risk-return characteristics of the funds, addressing previous inadequacies in benchmark design [10][11] - The CSRC emphasizes the need for strict regulation of benchmark selection and modification to ensure alignment with investment strategies and product positioning [11]

Core Viewpoint - The China Securities Regulatory Commission (CSRC) has released an action plan to promote the high-quality development of public funds, emphasizing the importance of performance benchmarks for funds [1][7]. Group 1: Changes in Performance Benchmarks - A significant increase in the number of funds changing their performance benchmarks has been observed this year, with 82 funds making changes compared to only 37 in the same period last year [3]. - Several North Exchange theme funds have updated their performance benchmarks to align with relevant indices, although five companies have yet to make these necessary adjustments [3][6]. - The Tianhong Qingxiang Fund and Zheshang Huijin Quantitative Fund have both adjusted their performance benchmarks to better reflect their investment strategies, moving away from indices that do not accurately represent their risk-return profiles [4][5]. Group 2: Importance of Performance Benchmarks - Performance benchmarks are crucial for evaluating fund performance, yet many funds have benchmarks that do not serve their intended purpose, leading to a lack of accountability for fund managers [6][9]. - The CSRC's action plan aims to enforce stricter guidelines for setting and modifying performance benchmarks, linking them to fund company performance assessments and manager compensation [7][10]. - The current benchmarks often reflect a simplistic approach, with a high concentration of funds using major indices like the CSI 300, which may not accurately represent the diverse market landscape [9][11]. Group 3: Future Implications - The action plan is expected to lead to more refined management of performance benchmarks, encouraging fund companies to reassess their benchmarks and align them more closely with their investment strategies [8][10]. - As the industry evolves, there is a push for more sophisticated benchmark selection, including the potential use of composite indices instead of relying solely on broad indices [11].