China cuts mutual fund sales fees to lower investor costs, boost long-term investment

China has proposed the first overhaul in 12 years of rules on mutual fund sales commissions, aiming to sharply reduce investor costs and encourage long-term holdings — part of a broader push to strengthen its capital markets.

The China Securities Regulatory Commission said on Friday it had updated and renamed the administrative measures governing sales charges for publicly offered securities investment funds. The draft rules are now open for public comment.

Originally introduced in 2009 and last amended in 2013, the measures form part of a multi-phase reform intended to improve market order and better protect investors.

Key changes include lowering subscription, purchase and service fee caps across equity, hybrid and bond funds, with reductions of roughly one-third to two-thirds across major fund categories. The CSRC estimates the reforms could cut investor costs by around 30 billion yuan ($4.2 billion) annually — about 34 percent.

For equity funds, the maximum subscription and purchase fees will be lowered from 1.2 percent and 1.5 percent to 0.8 percent, while the annual service fee cap will drop from 0.6 percent to 0.4 percent.

The draft also stipulates that all redemption fees must be returned in full to fund assets rather than partially retained by sales institutions. The move is intended to shift distributors away from one-off “traffic” income toward ongoing service-based income.

In a further step to promote long-term investment, funds held for more than one year will no longer charge service fees.

Analysts said the changes reflect China’s efforts to raise the quality of its fund industry and signal policymakers’ determination to make capital markets a foundation for sustainable wealth creation.