SHANGHAI/HONG KONG, Sept 6 (Reuters) – China aims to slash subscription and sales-related fees in the country’s $4.9 trillion mutual fund industry to reduce costs for investors and encourage long-term investment.
Draft rules published by China’s securities regulator late on Friday will also guide investment towards equity funds, potentially adding fuel to a stock market bull run.
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The measures – the final leg of China’s three-stage fund fee reform – will potentially save investors 30 billion yuan ($4 billion) a year, according to state media.
The rules will “increase the cost for short-term speculation while reducing the cost for long-term investment,” Zhongtai Securities said in a note to clients.
The fund industry will also be nudged to “prioritise investor returns, rather than fund size”, the brokerage said.
Fees related to fund sales will be slashed across the board, according to the draft rules published by the China Securities Regulatory Commission.
For example, subscription fees for equity funds will be capped at 0.8% of the invested amount, down from 1.2% previously. Sales service fees for exchange-traded funds and bond funds will be halved.
Investors who hold funds for more than a year will no longer be charged sales service fees. The rules also offer incentives for distribution channels to promote equity funds.
The rules will “further reduce fund investors’ costs, better regulate the fund sales market and protect investors,” the CSRC said in a statement.
In previous stages, regulators cut fund management fees and trading commissions.
The regulator will solicit public opinions on the draft rules until October 5.
($1 = 7.1529 Chinese yuan renminbi)
Reporting by Samuel Shen in Shanghai and James Pomfret in Hong Kong; Editing by William Mallard
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