Editor's note:
In July 2023, the China Securities Regulatory Commission (CSRC) formulated a work plan for the reform of the rate of the public fund industry based on the actual development of the industry and the needs of investors, guiding the public fund industry to carry out the reform of the rate mechanism in a steady and orderly manner, and supporting public fund managers and other industry institutions to reasonably reduce fund rates.
Previously, we have studied that some brokerages and their asset management funds actually charge investors a management fee of up to 0.9%, which has problems such as high fees and low returns. This article will review the case studies of Chengtong Securities' products against regulatory documents and the latest financial report data.
According to the 2023 annual report, Chengtong Tiantianli Currency achieved a return of 1.0305% in 2023, underperforming the performance benchmark by 0.3286 percentage points, with a total return of about 1.39% since its inception (as of April 2), ranking 755/763 in the same category, and a total return of about 2.65% for money market funds in the same period.
Although the performance is not good, according to the rate rules set by Chengtong Tiantianli currency, the product may still charge a management fee of 0.9% in 2023, which is the highest level in the public offering base and 2 times higher than the average of similar products.
The analysis found that the products currently charged with a 0.9% management fee are mainly transformed from the asset management products of securities firms and their asset management companies. Under the high management fee, the performance of such products has been greatly compressed, and they generally rank low in the public offering base.
The yield in 2023 is 1.0305%, which is lower than the seven-day call deposit rate
Chengtong Tianli Currency was established on November 16, 2022, and the net asset value of the fund reached about 204 million yuan at the end of 2023.
The performance of this product is based on the seven-day call deposit rate (after tax) announced by the People's Bank of China. It can be seen from the trend of the cumulative return of the fund that since 2023, the gap between the cumulative return of the fund and the performance benchmark has become wider and wider.
According to the data, the fund achieved a return of 1.0305% in 2023, underperforming the performance benchmark by 0.3286 percentage points, and in the fourth quarter of 2023, it achieved a return of 0.2916%, underperforming the performance benchmark by 0.0492 percentage points.
Underperforming the benchmark also means that investors are paying less for the fund than they would have been on a seven-day call deposit with a bank over the same period.
The "floating" rate is a mystery, and the management fee is 2 times higher than the market average
Even if the performance ranks low and underperforms the performance benchmark, Chengtong Tiantianli Currency can still charge a high management fee.
The management fee rate of Chengtong Tianli currency has set up a "floating" mechanism. According to the fund contract, when the 7-day annualized provisional rate of return calculated with a management fee of 0.90% is less than or equal to 2 times the current deposit interest rate, the fund manager will adjust the management fee to 0.30% to reduce the risk of negative provisional net income per 10,000 shares of the fund and triggering the overdraft of the sales agency, until such risk is eliminated, and the fund manager can resume the provision of 0.90% management fee.
Wind data shows that since its establishment, the fund's 7-day annualized provisional yield has been the lowest value of 0.7220%, which has not touched the benchmark of the rate downgrade (about 0.7% for 2 times the current deposit rate), and the management fee may be charged at 0.9% during the period.
At present, the management fee rate of the public offering base is mainly concentrated in 0.15-0.33%, and the 0.9% management fee of Chengtong Tiantianli currency ranks the highest in the industry. In 2023, Chengtong Tiantianli Currency has collected about 2.4284 million yuan in management fees.
In addition to the management fee, the fee structure of Chengtong Tiantianli currency also includes 0.05% custody fee, 0.25% sales service fee, and the annualized total fee rate of the product is about 1.2%, which is at a high level in the public offering base.
High management fees dragged down product performance
At present, there are more than 20 money market funds with a maximum management fee of 0.9%, all of which are products of securities firms and their asset management companies. Affected by the new regulations on asset management, when the large-scale asset management plan is transformed into a public offering, while abolishing the performance remuneration, it actually charges a higher management fee than the same kind by designing a "floating" management fee rate.
Under the high management fee, the performance of the above-mentioned products has been greatly compressed, and they generally rank low in the public offering base. Taking stock of the 2023 annual report, the average rate of return of the above products in 2023 is 1.1573%, and the average rate of return of the public offering base is about 1.91% in the same period.
(Article Serial Number: 1776874600127401984)
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