CCTV News: According to the website of the China Securities Regulatory Commission, implementing the decision-making and deployment of the Political Bureau meeting of the Central Committee on September 26, 2024 to "steadily promote the reform of public funds", the China Securities Regulatory Commission recently publicly issued the "Action Plan for Promoting the High-Quality Development of Public Funds".

The action plan adheres to the Party’s overall leadership over the public fund industry, highlights the political and people-oriented nature of industry development, adheres to the investor-oriented development concept, takes strengthening supervision, preventing risks, and promoting high-quality development as the main line, explores and establishes a new model of public fund development that suits China’s national conditions and municipal conditions; adheres to problem-oriented and goal-oriented, proposes a series of reform measures to respond to market and social concerns, and strives to urge fund companies, fund sales institutions and other industry institutions to transform from "focus on scale" to "focus on return", forming a "turning point" for the high-quality development of the industry. The action plan proposes a total of 25 measures, with the following key points: 1. Optimize the charging model for active management of equity funds. For active management of equity funds, a floating management fee charging model linked to fund performance is implemented. For investors who meet certain holding period requirements, differentiated management fee rates will be applied based on their product performance during their holding period. If the performance is significantly lower than the comparative benchmark, less management fees must be charged to effectively reverse the phenomenon of fund companies' "profits that are guaranteed by drought and flood".

2. Strengthen the interest binding between fund companies and investors. Comprehensively establish an industry assessment and evaluation system with fund investment returns as the core, introduce indicators such as performance comparison benchmarks, fund profit margins, etc. that directly affect investors' interests into the assessment system, and correspondingly reduce the assessment weight of indicators such as product management scale ranking, fund company income and profit. Increase the proportion and lock-up period requirements for fund company executives and fund managers to follow-up investment in the company's managed products. Urge fund companies to establish and improve a salary management system linked to fund investment returns, and require fund managers with poor medium and long-term performance to significantly reduce their performance salary, which better reflects the "sharing of joys and sorrows" with investors.

3. Improve the industry's ability to serve investors. Guide fund companies and fund sales institutions to comprehensively optimize resource allocation such as investment research, product design, risk management, and marketing promotion based on the best interests of investors, practice long-term investment, value investment, and rational investment, and strive to bring better returns to investors. We will speed up the issuance of regulations on the management of public fund investment consultants, promote the standardized development of fund investment advisory business, and provide investors with portfolio investment services that adapt to their characteristics and needs. Accelerate the launch of the direct sales service platform for institutional investors to facilitate various institutional investors to participate in fund investment.

4. Improve the scale and stability of equity investment in public funds. Optimize fund registration arrangements, launch more on-site and off-market index funds and medium- and low-volatility equity-containing products, and promote the innovative development of equity funds. Strengthen the binding force of the benchmark for performance of fund products, give full play to its role in reflecting product positioning and measuring product performance, fully implement long-term assessments of fund investment performance for more than three years, improve the stability of investment behavior of public funds, and promote the balanced development of investment and financing in the capital market.

5. Integrated promotion of strong supervision and risk prevention and promotion of high-quality development. Improve the regulatory system, enrich law enforcement methods, and implement "toothed thorns". Improve the level of fund company governance and urge major shareholders, board of directors and management to return to their posts and fulfill their responsibilities. Improve the industry's multi-level liquidity risk prevention and control mechanism and continuously improve the industry's compliance level. Improve the industry's reputation management capabilities, sing the theory of economic brightness, and give full play to the positive role of guiding and shaping expectations. Vigorously promote and practice the "five musts and five nos" financial culture with Chinese characteristics and accelerate the construction of first-class investment institutions.

In the next step, the China Securities Regulatory Commission will steadily and orderly promote the implementation of various policy measures, and promote the industry to continuously improve its ability to serve residents' wealth management, serve the reform, development and stability of the capital market, and serve the real economy and national strategies.