China to cut fees on $4.9 trillion MF industry to promote investment

SHANGHAI/HONG KONG, Sept 7 (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.

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 per cent of the invested amount, down from 1.2 per cent previously. Sales service fees for exchange-traded funds and bond funds will be halved