On October 9, the China Securities Regulatory Commission (CSRC) released the "Administrative Measures for the Operation of Publicly Offered Securities Investment Funds (Draft for Comments)." This is the first systematic overhaul of the method in 12 years.

If previous policies were about "building roads," this time it's about "setting rules" and "adjusting structures."

The core logic is clear: lowering the threshold for equity funds to attract fresh water, cleaning out inefficient mini funds to purify the ecosystem, and strictly preventing "high-level new funds" from exploiting investors.

| Lowering the threshold: "Loosening restrictions" for equity funds

The most direct change in the new regulations is the lowering of the threshold for establishment.

The threshold for establishing equity funds (equity, mixed, FOF) has been cut directly from "200 million yuan scale + 200 million shares" to "50 million yuan + 50 million shares."

This is a very clever move. In the past, the threshold was high, and during market downturns, good products couldn't be launched, or people would seek "help funds" to fill the gaps to ensure establishment, planting hidden dangers.

Now that the threshold has been lowered, fund companies can position against the market at low prices and are no longer constrained by short-term scale control.

At the same time, passive index funds (ETFs) will be moderately exempted (such as restrictions on takeover and short-term trading), restrictions on FOF investment ETF feeder funds will be lifted, and the cap on non-FOF funds investing in other funds will be raised from 10% to 30%. All of this is to make the tools easier to use and the configuration more flexible.

| Clearing Stock: Mini Funds "Entering and Exiting"

There has long been a group of small-scale "mini funds" in the industry, which not only operate inefficiently but also dilute holders' returns with fixed fees. The new regulations are taking real action:

Mandatory exit mechanism: The contract must clearly stipulate that the net asset value will terminate if the net asset value continuously falls below a certain scale.

Initiated funds are "de-privileged": The special requirement for mandatory liquidation of initiated funds with a 3-year establishment but less than 200 million yuan has been removed, balancing them with ordinary funds.

Simplified process: For mini funds wishing to continue operating, holding a holders' meeting is no longer mandatory, but the manager must bear the fixed fees themselves.

This means that in the future, the fund industry will accelerate survival of the fittest, with resources concentrating on top-tier quality products, and investors' holding experience is expected to improve.

| Strict Regulation: Rectifying "Style Drift"

The new regulations especially emphasize "counter-cyclical layout." To address the chronic pro-cyclical problem in the industry where "the hotter the market, the more issuances; the cooler the market, the less issuance," regulators clearly require:

No inducing frequent subscriptions or redemptions: It is forbidden to deploy multiple products of similar styles on the same channel to induce trading.

Strictly control style drift: If it's called 'technology,' you have to invest in tech—no selling it under a sheep's name; Called "whole-market stock selection," it cannot bet on just one track.

Improved governance efficiency: Reduce the need to hold holders' meetings, making product operations more flexible, but provided information disclosure is in place.

This is actually protecting investors, preventing people from buying large amounts of homogeneous popular funds at market peaks due to emotional impulse, standing guard at high posts.

Kingtech's Perspective | Focus on the structural opportunities brought by ETFs and long-term money entering the market

Considering the current market, this amendment has a positive medium- and long-term impact on the capital market.

Positive for ETFs and index investing: The relaxation of trading restrictions and the increase in FOF allocation will further expand the ETF market, benefiting leading ETF managers and related brokers.

Medium- and long-term funds entering the market: The new "open-ended fund" is very suitable for long-term capital allocation such as insurance and pensions, providing a stable "ballast stone" for the market.

For investors: When choosing funds in the future, focus more on the manager's long-term performance and style stability, and avoid products with long-term mini-scale or unpredictable styles.

For the stock market: With lower entry barriers and improved mechanisms for long-term money entering the market, the institutionalization and index-driven characteristics of A-shares will become more pronounced. It is recommended to focus on broad-based ETFs, dividend low volatility, and hard technology allocation opportunities, avoid short-term gambling, and focus more on long-term allocation.