Beijing, April 26, 2024 - In the wave of rate reform in the mutual fund industry, individual pension funds have finally ushered in a substantial breakthrough. Wells Fargo Fund announced today that it has decided to significantly adjust the management fee and custody fee rate of its Wells Fargo Xinwang Stable Pension One-Year Holding (FOF) A share and Y share from April 29, 2024, so as to reduce the investment cost of investors and enhance the attractiveness of the product for long-term capital allocation.
This is the first time that a personal pension fund has announced a reduction in management fees, marking that the individual pension fund has officially joined the army of fee reductions. The previous wave of fee reductions was mainly concentrated in active equity funds, ETFs and bond funds, and only a few pension FOF had reduced the custody fee.
Wells Fargo Fund's fee reduction this time is eye-catching. Specifically, the annual management fee rate of the Class A share held by Fuguo Xinwang Stable Pension (FOF) for one year will be adjusted from 1% to 0.6%, and the annual custody fee will be adjusted from 0.2% to 0.15%. The annual management fee for Class Y shares will be adjusted from 0.50% to 0.3%, and the annual custody fee will be adjusted from 0.1% to 0.075%. This means that both Class A and Class Y shares have achieved significant reductions in management fees and custody fees.
Founded on December 13, 2018, Fuguo Xinwang Stable Pension One-Year Holding is the first batch of approved pension target funds and the first batch of products included in the list of individual pension funds. This fee reduction will undoubtedly inject new vitality into the fund. However, for Wells Fargo funds, fee reductions are not an easy task. Wells Fargo Fund said in the announcement that the fee reduction will have a certain impact on its income, but this is in response to national policies, reduce the burden on investors, and promote the development of individual pension funds.
In the eyes of industry insiders, this move by Wells Fargo Fund will undoubtedly have a far-reaching impact on the entire public fund industry. On the one hand, the fee reduction is conducive to reducing the investment cost of investors and improving the return on investment of investors. On the other hand, the fee reduction will also help to enhance the attractiveness of the product to long-term capital allocation and promote the development of individual pension funds.
It is understood that the personal pension fund refers to the public fund that invests in the pension target fund, aiming to provide investors with long-term and stable pension returns. However, due to the long investment period and high risk of individual pension funds, investors' acceptance of them has not been high. The fee reduction measure of Wells Fargo Fund is expected to improve the attractiveness of individual pension funds and attract more investors to participate.
In addition, the fee reduction measures of the Wells Fargo Fund are also in line with the guidance of national policies. In recent years, the mainland government has been promoting the rate reform of the mutual fund industry to reduce the investment cost of investors and improve the comprehensive competitiveness of the public fund industry. In its Q&A on the fund rate reform in July 2023, the China Securities Regulatory Commission (CSRC) said that fund managers are allowed to set lower management fees for fund shares invested by specific funds such as individual pensions in accordance with the law. Wells Fargo's fee reduction measures are in response to this policy.
However, fee reductions are not a one-and-done move. For the mutual fund industry, how to maintain the operation quality and investment return of the fund while reducing fees will be a challenge in the future. In this regard, Wells Fargo Fund said that it will optimize investment strategies and improve investment efficiency to ensure that the operation quality and investment return of the fund are maintained while reducing fees.
In general, the fee reduction of the Wells Fargo Fund marks the official entry of individual pension funds into the era of fee reduction. This measure will help reduce the investment cost of investors, improve the attractiveness of individual pension funds, and promote the development of the public fund industry. At the same time, it will also have a far-reaching impact on the entire mutual fund industry and promote the development of the industry in a healthier and more sustainable direction.
We expect that with the advent of the tide of fee reductions for individual pension funds, more investors will be able to participate in individual pension funds and enjoy long-term and stable pension returns. At the same time, we also expect the mutual fund industry to continuously improve the quality of operation and investment returns while reducing fees, so as to provide investors with better investment services.
For Wells Fargo, this fee cut is just the beginning. In the future, Wells Fargo Fund will continue to adhere to the principle of putting investors' interests first, continue to innovate products and services, and provide investors with a better investment experience. We expect Wells Fargo Fund to play a greater role in the mutual fund industry and promote the healthy development of the industry.
In this era full of changes and challenges, the individual pension firmly believes that as long as we insist on innovation and serve investors, the public fund industry will usher in a better future.
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