Core Viewpoint - The "Dongxu System," led by Li Zhaoting, has faced severe penalties for multiple violations, including fraudulent issuance of stocks and bonds, resulting in a total fine exceeding 1.66 billion yuan, marking a record in A-share market regulatory penalties [2][3][5]. Summary by Relevant Sections Regulatory Actions - On June 6, the Hebei Securities Regulatory Bureau issued an administrative penalty decision against Dongxu Group and Li Zhaoting, imposing fines totaling over 1.24 billion yuan for various violations, including fraudulent bond issuance and misleading disclosures [3][5]. - Li Zhaoting and several executives received lifetime bans from the securities market, while Dongxu Group's total penalties reached 1.66 billion yuan [5][6]. Financial Misconduct - From 2015 to 2019, Dongxu Group inflated revenues by 645.85 billion yuan and profits by 207.83 billion yuan, leading to the delisting of Dongxu Optoelectronics and Dongxu Lantian [2][5]. - Dongxu Group's financial misconduct included the misappropriation of funds, with a total of 169.59 billion yuan still occupied by Dongxu Optoelectronics and Dongxu Lantian as of the end of 2023 [5][6]. Impact on Affiliates - Dongxu Group is the largest shareholder of Jinying Fund, holding a 66.2% stake, but the shares are frozen, affecting over 340 million yuan for a duration of four years [2][8]. - Li Zhaoting's lifetime ban raises questions about his continued role at Jinying Fund, where he serves as a director [8][11]. Historical Context - Li Zhaoting, once a prominent figure in the photovoltaic industry, saw his wealth peak at 23.5 billion yuan in 2019 before the financial crisis of Dongxu Group began [6][7]. - The crisis escalated in late 2019 when Dongxu Optoelectronics failed to meet bond payment obligations, leading to a series of financial troubles [7][8]. Current Status - As of June 6, 2023, the only remaining listed company under Dongxu Group is Jialinjie, which has seen a significant drop in net profit from 93.16 million yuan in 2022 to 19.11 million yuan in 2024 [7][8]. - Jinying Fund has faced challenges, with its asset management scale declining and a significant number of its funds underperforming against benchmarks [12][20].

Core Viewpoint - The China Securities Regulatory Commission has released an action plan to promote high-quality development of public funds, emphasizing the importance of performance benchmarks and their impact on fund managers' evaluations and compensation [2][8]. Group 1: Fund Performance and Benchmarking - The action plan requires fund performance deviations from benchmarks to be included in the evaluation and reward systems for fund companies and managers [2]. - Three funds, namely the Jiashi Intelligent Automotive Stock Fund, Jinying Multi-Strategy Mixed A Fund, and Tianzhi New Consumption Mixed Fund, have underperformed their benchmarks by over 60 percentage points in the past three years, highlighting significant deviations [2][6][7]. - Jiashi Intelligent Automotive Stock Fund has underperformed its benchmark by 81.83 percentage points, primarily due to a misalignment in investment strategy focusing heavily on upstream lithium battery materials while neglecting downstream automotive sectors [3][4]. Group 2: Fund Manager Strategies and Changes - The Jiashi Intelligent Automotive Fund's manager has maintained a concentrated position in lithium battery stocks despite market shifts towards vehicle intelligence and optimization, resulting in significant losses [3][4]. - The Jinying Multi-Strategy Mixed A Fund has changed managers six times in nine years, leading to inconsistent investment strategies and a 71.14 percentage point underperformance against its benchmark [6]. - The Tianzhi New Consumption Mixed Fund has struggled with a heavy allocation in the pig farming sector amid a slow consumer recovery, resulting in a 61.45 percentage point underperformance [7]. Group 3: Regulatory Impact and Industry Trends - The new regulatory framework aims to enhance the stability and consistency of fund investment strategies by linking fund manager compensation to performance benchmarks [8]. - The emphasis on performance benchmarks is expected to lead to a more transparent investment environment, reducing the difficulty for investors in selecting funds and increasing trust in public funds [8]. - The industry may see a shift towards more conservative investment styles as fund managers align their strategies with mainstream broad-based indices [8].

Core Viewpoint - The newly released public fund reform plan emphasizes performance assessment for fund managers, linking their compensation to fund performance, which aims to improve long-term returns for investors [2][3][4]. Summary by Sections Fund Performance Issues - Over the past three years, more than 30% of mixed funds have underperformed their benchmarks by over 10%, and approximately 6.6% of equity funds have also lagged by the same margin [2][8]. - Notable underperformers include 52 mixed funds and 8 equity funds that have underperformed their benchmarks by over 50%, including products managed by renowned fund managers [2][8]. Reform Measures - The reform plan includes 25 measures, with a significant focus on linking fund manager compensation to performance metrics, where performance indicators must account for at least 80% of the assessment [3][4]. - Fund managers whose products underperform their benchmarks by over 10% for three years will see a significant reduction in their performance-based compensation, while those who exceed benchmarks may receive increased compensation [3][4]. Long-term Focus - The reform aims to shift the focus from scale to performance, encouraging fund managers and companies to prioritize long-term returns for investors [4][5]. - The introduction of metrics such as net asset growth rate and fund profit rate is expected to mitigate the industry's short-sighted focus on scale [5]. Performance Data - As of May 8, among 4,693 equity funds, 308 funds (approximately 6.6%) have underperformed their benchmarks by over 10%, while 418 funds (about 8.9%) have outperformed by the same margin [6]. - The worst-performing fund, Jia Shi Intelligent Automotive, has a return of -35.39%, significantly underperforming its benchmark by 81.88% over three years [7][8]. Mixed Fund Performance - In the mixed fund category, 2,660 out of 8,634 funds (30.8%) have underperformed their benchmarks by over 10%, with only 686 funds (7.9%) outperforming [8][9]. - The worst-performing mixed fund, Jin Ying Multi-Strategy, has a return of -60.58%, underperforming its benchmark by 69.26% [9][10].