China mutual funds cut fees as regulator targets US$3.7 trillion sector
MORE than a dozen major mutual fund companies in China cut fees in roughly 1,500 fund products on Monday (Jul 10) as regulators started reforming fee practices in the US$3.7 trillion industry.
The money managers, including China Asset Management and Bank of Communications Schroder Fund Management, said in separate statements that management fees in certain equity-focused products would be cut to 1.2 per cent of fund assets, from 1.5 per cent previously. The custodian fee would be reduced to 0.2 per cent of assets from 0.25 per cent.
The cuts, which the fund companies said in identical phrasing were “aimed at reducing investors’ costs in managing their wealth”, come after China’s securities regulator on Saturday vowed to guide mutual fund fees lower.
The China Securities Regulatory Commission said it had drafted reform plans after listening to opinions from market participants, and would optimise mutual funds’ fee-charging model and steadily lower the industry’s fee rates.
The reform comes as regulators also seek to limit executive pay at fund management companies and banks in a so-called “common prosperity” drive designed to reduce wealth gaps.
Fund managers are often blamed by retail investors in a sluggish market for pocketing fat fees despite their underperformance.
An index tracking the performance of China’s actively-managed equity funds tumbled 22.3 per cent last year, more than the 15.1 per cent fall in the benchmark Shanghai Composite Index.
Nevertheless, the industry collected 144.1 billion yuan in management fees in 2022, up 1.7 per cent from a year earlier, according to TX Investment Consulting.
The industry’s total assets under management doubled over the past four years to 26.68 trillion yuan (S$4.98 trillion) at the end of March. REUTERS
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