Major reforms introduced in the public offering industry! Wu Qing announced that the reform plan for high-quality development would be released this afternoon.

The reform of public funds will be implemented today.

On May 7, Wu Qing, Chairman of the China Securities Regulatory Commission (CSRC), stated at a press conference held by the State Council Information Office that the "Action Plan for Promoting High-Quality Development of Public Funds" would be released today. The plan aims to optimize the fee structure of actively managed equity funds, reverse the phenomenon of fund companies enjoying "guaranteed profits regardless of market conditions," improve the industry's performance evaluation system, and urge fund companies to shift their focus from "emphasizing scale" to "emphasizing returns," better reflecting the shared interests, mutual development, and reciprocal success between fund managers and investors, and striving to form a virtuous cycle of "increased returns, inflow of funds, and market stability."

"The Action Plan for Promoting High-Quality Development of Public Funds has undergone over 30 thematic surveys, gathering opinions from investors, institutions, and other stakeholders, with a particular focus on the bottlenecks, challenges, and pain points that investors care about," Wu Qing said. With the implementation of the reform plan, public funds will place greater emphasis on the best interests of investors, further enhancing investors' sense of gain.

What are the key points of this public fund reform plan? Wu Qing has already outlined the priorities for the industry when answering questions from reporters.

First, optimize the fee structure of actively managed equity funds, with those underperforming required to charge lower management fees. Cailian Press reporters have learned that multiple fund companies are about to launch a series of innovative products with "fulcrum-style" floating fee rates.

Second, incorporate whether performance outperforms benchmarks and investors' profit and loss situations into performance evaluation indicators.

Third, clear performance comparison benchmarks will serve as a yardstick for measuring the true performance of products.

Fourth, clarify that the weight of performance evaluation over a three-year period should be no less than 80%.

Fifth, expedite the formulation of regulations on the management of public fund investment advisors.

Sixth, Wu Qing mentioned Warren Buffett's value investing philosophy, calling for the emergence of century-old firms and outstanding investment institutions in the market.

Four "Prominences" to Drive High-Quality Development of Public Funds

Wu Qing introduced that the upcoming public fund reform will focus on four key areas:

First, prominently strengthen the alignment of interests with investors. The reform will prominently strengthen the alignment of interests between public funds and investors by optimizing the fee structure of actively managed equity funds, requiring those underperforming to charge lower management fees, and reversing the phenomenon of fund companies enjoying "guaranteed profits regardless of market conditions" through a floating management fee mechanism.

At the same time, indicators directly related to investors' vital interests, such as whether performance outperforms benchmarks and investors' profit and loss situations, will be incorporated into the performance evaluation system of fund companies and fund managers, urging fund companies to shift their focus from "emphasizing scale" to "emphasizing returns."

Second, prominently enhance the stability of fund investment behavior.To address issues such as style drift and mismatched products, clear performance benchmarks should be established for each fund to serve as a yardstick for measuring the true performance of the products, thereby preventing product investment behaviors from deviating from their names and positioning. Meanwhile, companies should establish comprehensive incentive and restraint mechanisms, specifying that the weight of assessments over three years should be no less than 80%, to reduce the phenomenon of fund managers rushing to buy amid continuous price rise and selling amid continuous price decline, and improve the long-term returns of products.

Third, we should prioritize enhancing the ability to serve investors.We should expedite the introduction of regulations on the management of public fund investment advisors to promote standardized development.

Fourth, we should emphasize the work orientation of developing and expanding equity funds.With the implementation of the reform plan, public funds will place greater emphasis on the best interests of investors, and investors' sense of gain will be further enhanced.

Wu Qing also mentioned Warren Buffett, who is set to retire this year. He said that although Buffett is retiring this year, the fundamental principles of long-term value investing, rational investing, and striving to reward investors will not retire. After Buffett's retirement, this era is also calling for new great investors. Our market has a group of outstanding enterprises and entrepreneurs, and it is believed that a group of excellent investors and investment institutions will surely emerge. There may not be one or two stock market gurus, but there will definitely be some century-old firms, investment institutions, and excellent investment teams emerging in our market.

This year, Wu Qing has repeatedly disclosed the key points of public fund reforms

On September 26 last year, the meeting of the Political Bureau of the Central Committee proposed to "steadily advance the reform of public funds," and this topic has also been mentioned multiple times in subsequent major meetings.

Regarding the deployment of high-quality reforms of public funds, Wu Qing had previously disclosed the basic ideas of relevant reforms in January and March this year.

In January this year, at a press conference held by the State Council Information Office, the China Securities Regulatory Commission (CSRC) disclosed the reform plan for the first time. When introducing the work related to the entry of medium and long-term funds into the market, Wu Qing disclosed that after careful survey and demonstration, the CSRC had proposed some targeted reform measures, and a preliminary reform plan had been formulated.

Wu Qing's speech provided reform indicators across multiple dimensions:

First, we should continue to promote fee reductions. Starting from 2025, fund sales fees will be further reduced, which is expected to save investors approximately 45 billion in total fees annually;

Second, we should vigorously develop equity funds. The reform of public funds will help increase the free-float market capitalization of A-shares by at least 10% annually over the next three years;

Third, we should increase the innovation of medium-to-low volatility products and transition the pilot programs of floating-rate products into regular ones;

Fourth, we should establish a rapid registration mechanism for stock ETFs.In principle, registration should be completed within five working days from the date of acceptance;

Fifth, strengthen the guidance of regulatory classification and evaluation. Increase the weight of indicators such as the proportion of equity fund scale and long-term performance in regulatory classification and evaluation;

Sixth, guide self-purchases. Fund management companies will self-purchase a certain proportion of their annual profits in equity funds under their management;

Seventh, on the trading side, allow institutional investors such as public funds to more actively participate as strategic investors in private placements of publicly listed firms, etc.

Eighth, resolutely rectify excessive speculative behaviors such as "high turnover rates" and "style drift," and increase the intensity of investigations and punishments for illegal and non-compliant activities.

At the Two Sessions press conference in March this year, the reform of the public fund industry was once again brought to the forefront.

Wu Qing stated that a reform plan for public funds is about to be launched, with a focus on the assessment system arrangements. The long-term assessment system for public funds with a period of over three years will be further improved to guide long-term value investment.

In fact, in addition to the upcoming reform plan for public funds, since the beginning of this year, multiple measures have been implemented, including the "Action Plan for Promoting the High-Quality Development of Indexed Investment in the Capital Market" and the reform of public fund fee rates. While the scale of public funds has expanded rapidly and their proportion has increased, their returns have also gradually improved.

Taking the reform of public fund fee rates as an example, by reducing the comprehensive fee rate in stages, it is estimated that investors can save costs exceeding 45 billion yuan annually. Meanwhile, by advancing the fee rate reform, the interests of fund management companies and investors will be more closely aligned.