Core Viewpoint - The new regulation from Guangdong Province's Finance Department alters the management fee structure for government investment funds, requiring that management fees be paid from fund earnings or interest, rather than from the principal amount, which could lead to fund managers facing no management fees if investments do not yield profits [1][2]. Summary by Sections Management Fee Structure - The new regulation specifies that management fees for government investment funds must be derived from fund earnings or interest, and it is generally prohibited to charge these fees against the principal [1][2]. - Previously, management fees were often charged against the fund's assets without clear stipulations on their source, leading to a "guaranteed profit" model for fund managers [2][4]. Implications for Fund Managers - If the fund performs well and generates earnings, the management fees that were advanced from the principal can be reimbursed. However, if the fund incurs losses, fund managers may struggle to recover these fees [2][5]. - The regulation is expected to encourage fund managers to select projects that align with government investment goals, thereby enhancing the overall quality of fund management [2][5]. Market Reaction and Future Outlook - The regulation is seen as a potential model for other provinces to follow, promoting a more rigorous selection process for fund managers who can effectively manage government investments [2][5]. - The management fee is typically calculated based on actual contributions or investment amounts, with rates generally not exceeding 3%, often around 1% [2][5]. Implementation Details - The regulation will take effect on May 31, 2025, and is limited to Guangdong Province, with Shenzhen allowed to create its own management guidelines [3]. - Existing agreements signed before the regulation's publication will continue under previously established fee standards if they are explicitly stated [3].