A big hit for the fund industry! Three types of floating rate funds were collectively approved! | rtp yuk88, raja maxwin metro77

"Fee reduction + optimization" is a two-way strategy.

As the trend of fee reductions for public funds continues to advance, new products with floating fee rates are also coming.

On August 26, the official website of the China Securities Regulatory Commission showed that the first batch of three types of floating rate products linked to the scale, such as China Shunxing's return, the first batch of three-year returns of China Merchants, and the first batch of performance-linked, and the first batch of three types of floating rate products linked to the holding period, such as China-Europe Era Win-Win, have been approved recently.

Industry insiders said that floating fee funds can meet the different needs of different investors and are an exploration of a benefit-sharing mechanism between fund managers and holders. It will help encourage managers to further fully utilize their active management capabilities, improve the product spectrum of public funds, and enhance investors’ investment experience.

Three categories of floating rate fund products were approved

On August 26, the China Securities Regulatory Commission officially approved the fundraising applications for three major categories of floating rate funds. A total of 20 floating rate funds were approved this time.

Specifically, 3 of them are linked to scale, namely China Shun Hing Return Hybrid Fund, Wells Fargo Core Advantage Hybrid Fund, and China Merchants Selected Enterprise Hybrid Fund; 8 are linked to performance, namely Wells Fargo Selection, which is scheduled to open in three years, China Merchants Foresight Return, which is scheduled to open in three years, Industrial Securities Global Sustainable Investment, which is scheduled to open in three years, Southern Forward-looking Win-Win, which is scheduled to open in three years, and Yinhua Benefit, which is scheduled to open in three years. There are 9 floating rate funds linked to the investor’s holding period, namely China Europe Times Win-Win, ICBC Credit Suisse Vision Win-Win, Boshi Huize, Harvest Innovation Power, E Fund Balanced Vision, GF Ruijie Selection, Huaan Vision Wisdom Selection, Invesco Great Wall Value Discovery, and Huaxia Ruiyi.

It is understood that currently, there are three main models for designing the fee structure of floating fee funds:

The first type is products linked to the holding time of investors. Management fees are charged in stages according to the time investors hold the product shares. The longer the investor holds such fund shares, the lower the fee level paid.

The second category is scale-linked products, that is, management fees are charged in stages according to the fund management scale. The larger the product management scale, the lower the applicable fee level.

The third category is performance-linked floating fee products. Management fees are charged in stages according to fund performance. The fee level floats in both directions. When the income performance does not reach the agreed level, the management fee level is appropriately lowered. When the income performance exceeds the agreed benchmark, the management fee level is appropriately floated upward.

In recent years, since most fund products charge management fees at a fixed rate, fund managers can still achieve guaranteed income despite droughts and floods when the products suffer losses. The problem of "funds making money but the public not making money" has become increasingly prominent.

Some insiders in the public offering industry said that floating fee fund products explore a benefit-sharing mechanism between managers and holders, encourage managers to further fully utilize their active management capabilities, and are conducive to improving investors’ investment experience.

In July, the China Securities Regulatory Commission stated that on the basis of insisting on focusing on fixed-rate products, and in accordance with the principle of "one mature product, one launched", the industry will study and launch more types of floating rate products, improve the product spectrum of public funds, and provide investors with more choices.

Floating rate fund products are continuously optimized

Floating rate fund products are the exploration and practice of the public fund industry in optimizing the rate structure. Brokerage China reporters discovered that the intensive issuance of fund products with floating management fees began in 2013.

In 2014, the China Securities Regulatory Commission mentioned in its "Opinions on Vigorously Promoting the Innovative Development of the Securities Investment Fund Industry" that it supports the establishment of management fees and rebates.The floating management fee fund linked to the report further lowers the threshold for the establishment of sponsored funds.

In the following years, due to various factors, the approval of new floating rate bases stalled from 2016 until issuance started again in 2019.

According to incomplete statistics, among the funds established since 2019 or still existing after transformation, there are more than 50 active equity fund products that charge floating management fees.

It is reported that the management fees of the above products are mainly divided into two forms: one is that the management fees are charged in stages according to the performance of the fund; the other is that on the basis of charging fixed management fees, when the fund performance exceeds the preset benchmark, performance remuneration is charged according to a certain proportion of the excess return. At the same time, there are also different management fee collection methods for different shares in the same fund product.

The latest approved three types of floating rate funds are an optimization attempt based on previous practices. The management fees are linked to the holding time, scale and performance, which is conducive to further aligning with the interests of investors.

However, some people from the fund product department said that floating fees can also easily encourage fund managers to take excessive risks. The asymmetric floating fee model is equivalent to giving fund managers a call option with the goal of increasing fund income. For this reason, fund managers may try to increase risk exposure to gain high returns, while ignoring the actual risk investment needs of investors.

Domestic and overseas practice shows that floating fee products will amplify the moral hazard and operational risks of the public fund industry, and are not conducive to fund companies maintaining the stability of investment behavior. They may have the effect of "helping rise and fall" in the capital market, exacerbating market fluctuations, and a cautious attitude should be taken in their large-scale development and promotion.

The China Securities Regulatory Commission has also publicly stated that public funds should still insist on focusing on fixed-rate products. The fixed-rate model is not only in line with international mature market practices, but also consistent with the characteristics of the development stage of my country's capital market, and should be adhered to.

The reform of public fund fee rates is advancing in an orderly manner

Since the launch of the public fund fee rate reform in early July, from the first batch of large public funds to small and medium-sized fund companies, the wave of fee reductions for public funds has continued.

On August 26, Zhonggeng Fund announced that in order to better meet the investment and financial management needs of investors and reduce investors’ financial management costs, starting from August 28, 2023, it will reduce the management fee rate and/or custody fee rate of some of its funds, and revise the relevant terms of the fund contract. Specifically, this adjustment involves Zhonggeng Value Smart and Flexible Allocation, Zhonggeng Value Quality One-year Holding Period Hybrid Fund, and Zhonggeng Hong Kong Stock Connect Value 18-month Closed Operation Stock Fund. Among them, the fund management fee rate is adjusted from 1.5% to 1.2%, and the custody fee rate is adjusted from 0.25% to 0.2%.

The previous day, Oriental Fund announced that the management fees and custody fees of its 29 funds, including Oriental New Energy Vehicle Theme Mix, Oriental Growth Return Balanced Mix, and Oriental Core Power Mix, were reduced to 1.2% and 0.2% respectively.

According to incomplete statistics, as of now, the number of fund companies that have announced fee reductions has exceeded 100, and the number of funds that have reduced fees is nearly 3,000, mainly active equity products.

At the same time, the scope of adjustment of public fund fee rates is expanding, from equity products to other types of products such as bond products. On August 25, Haifutong Fund announced that it had decided to reduce its one-year debt base management fee and custody fee rate from August 28, 2023. Specifically, the annual rate of fund management fees will be reduced from 0.5% to 0.3%, and the annual rate of custody fees will be reduced from 0..2%, down 0.1%.

From the reduction of fixed rate products to the introduction of new floating rate products, the pilot and exploration of new models for active equity fund management fees are constantly advancing.

Some insiders said that the core competitiveness of public funds is to create sustained and stable returns for investors. Whether it is fixed fee reform or new floating fee products, in the final analysis, it still depends on performance.