Core Viewpoint - The fund industry is undergoing significant reform in its compensation system, emphasizing performance-based pay for fund managers, which may lead to salary reductions for nearly a thousand fund managers [1][4]. Summary by Sections Compensation Reform - New regulations from the Asset Management Association of China stipulate that if a fund manager's product returns are more than 10 percentage points below the benchmark over the past three years and the fund is unprofitable, their performance pay must be reduced by at least 30% [1][4]. - Fund companies are required to assess fund managers managing multiple products based on weighted performance metrics, considering fund size and management duration, excluding funds managed for less than a year from evaluations [1][4]. Performance Analysis - Fund manager Zheng Chengran's portfolio has gained attention, managing eight funds with a total size of 13.877 billion yuan as of December 8 [1][4]. - The best-performing fund, Guangfa Carbon Neutrality Theme A, has achieved a return of over 76% since its management began in June 2024 [2][6]. - Over the past three years, Guangfa New Energy Select A outperformed its benchmark by 17.99%, while other funds managed by Zheng Chengran significantly underperformed, with Guangfa High-end Manufacturing A lagging by 81.71% [7][9]. Structural Implications - There is a notable divergence between fund performance and size, with Guangfa High-end Manufacturing A being the largest fund at 5.272 billion yuan but having shrunk by 12.973 billion yuan over three years [9]. - The new regulations will fundamentally change the incentive structure for fund managers, shifting from a focus on standout products to an overall weighted performance approach, promoting accountability for each product [3][9].

Core Viewpoint - The China Securities Regulatory Commission (CSRC) has issued a new action plan aimed at promoting the high-quality development of public funds, linking fund manager compensation directly to long-term performance, which addresses the industry's longstanding issue of prioritizing scale over performance [1] Group 1: Regulatory Changes - The new regulations stipulate that fund managers will face salary reductions if their performance lags the benchmark by more than 10%, while those who outperform will receive salary increases [1] - This policy aims to rectify the industry's focus on asset size rather than investment performance, highlighting the significant performance disparities among fund managers [1] Group 2: Performance Analysis - Among the 111 fund managers overseeing over 10 billion yuan in equity funds, 45 have underperformed the benchmark, with 24 of them lagging by more than 10% [1] - Conversely, 66 fund managers have outperformed the benchmark, with 38 achieving excess returns exceeding 10% [1] Group 3: Individual Fund Manager Performance - Notable underperformers include Zheng Chengran from GF Fund, whose three-year return is -45.12%, significantly underperforming the benchmark by 45.14 percentage points [3] - Other underperforming managers include Feng Bo (-33.56%), Ge Lan (-32.93%), and Lu Bin (-29.33%), all of whom manage substantial fund sizes [2][3] Group 4: Fund Performance Insights - The performance of specific funds shows that the new energy theme funds have performed well in a volatile market, with GF New Energy Select A being the top performer year-to-date and over the past year [5] - In contrast, GF High-End Manufacturing A has been the worst performer, with a year-to-date return of -11.28% and a one-year return of -17.87% [5] Group 5: Long-term Performance Trends - GF Xinxiang A is the only fund with a positive five-year return, achieving an annualized return of approximately 6.96%, indicating some resilience against market volatility [6] - Many funds, however, have negative three-year returns, such as GF Chengxiang A, which has a return of -18.17%, reflecting challenges in adapting to market conditions [6] Group 6: Market Sentiment and Future Outlook - Market analysts suggest that the new regulations will push the industry back to its asset management roots, making long-term performance a critical factor for fund managers' careers [8] - The future performance of fund managers like Zheng Chengran will be closely monitored to see if they can navigate market cycles and generate excess returns [8]