A number of the largest asset managers in China have announced a cut in fees for their mutual funds in response to proposed reforms to the market from regulators.
As many as 19 mutual fund companies have reportedly announced fee cuts on more than 1,500 mutual fund products.
The companies include E Fund, the largest by size in China, China Asset Management and GF Fund Management, as well as Bank of Communications Schroder Fund Management Co, the Sino-British joint venture.
All the firms released statements explaining that the cuts were “aimed at reducing investors’ costs in managing their wealth”.
The announcements also came two days after the China Securities Regulatory Commission (CSRC) issued its planned reforms for the sector aimed at increasing investor participation.
According to the South China Morning Post, the cuts could provide mutual fund investors with savings exceeding US$2.5 billion. It is also hoped that this will, in turn, boost China’s stock market.
As of immediate effect, management fees for new funds will be capped at 1.2%, while custodian fees will be limited to 0.2%. The same caps will be applied to existing products by the end of the year.
“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,” stated the regulator.
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