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China’s securities regulator cuts holding costs of mutual-fund investors, giving a boost to nation’s underperforming stock market

  • Management fees charged by new fund products will cost no more than 1.2 per cent, while the custodian-fee ratio will be capped at 0.2 per cent
  • Those reductions are estimated to provide about US$2.8 billion in savings for mutual-fund investors, based on calculations made by the Post

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A view of the China Securities Regulatory Commission office building, located in downtown Beijing, on December 18, 2019. Photo: Simon Song
Zhang Shidongin Shanghai
The China Securities Regulatory Commission (CSRC) has reduced the holding costs of mutual-fund investors in a bid to encourage more institutional participation and provide a boost to the nation’s 83-trillion-yuan (US$11.5 trillion) stock market, a laggard among the key benchmarks in Asia this year.
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Management fees charged by newly launched fund products will cost no more than 1.2 per cent, while the custodian-fee ratio will be capped at 0.2 per cent, according to the CSRC, which said on Saturday that these changes are effective immediately. The two types of fees for existing products, meanwhile, will be lowered to those same levels by the end of this year, the regulator said.

Those cuts are estimated to provide about 20 billion yuan in savings for mutual-fund investors, based on calculations made by the South China Morning Post.

“The CSRC has guided the mutual-fund industry to start fee-charging reform in a steady and orderly manner, and supports mutual-fund firms and other industry institutions to adjust funds’ fee ratios reasonably,” the CSRC said in a statement posted on its website on Saturday.

Yi Huiman, chairman of the China Securities Regulatory Commission, calls on investors to turn to long-term value investing in his speech at the Lujiazui Forum in Shanghai on June 8, 2023. Photo: Bloomberg
Yi Huiman, chairman of the China Securities Regulatory Commission, calls on investors to turn to long-term value investing in his speech at the Lujiazui Forum in Shanghai on June 8, 2023. Photo: Bloomberg

Management fees levied by China’s mutual-fund firms averaged 1.42 per cent last year and 1.41 per cent in 2021, according to Tianfeng Securities, an investment bank based in Wuhan, capital of central Hubei province.

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“Going forward, the CSRC will establish a fee-charging system that fits well with the development stage of China’s mutual-fund industry, promoting the industry’s healthy development and aligning it more with the interest of investors,” the regulator said.

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