The Securities Regulatory Commission today issued the “Administrative Measures on the Operation of Publicly Raised Securities Investment Funds” and publicly solicited comments from the public. In response to the “narrow base drift” problem where the investment scope of thematic funds is too vague, and actual investment may deviate from the direction indicated in the product name, the “Operation Measures” draft suggests that fund contracts should use identifiable and quantifiable methods to clearly define the investment direction indicated in the fund name. The relevant definition scope should be in line with market consensus and directly related to the investment direction indicated in the fund name. However, in response to the issue of market-wide stock selection funds being highly concentrated in a single industry or popular circuit, which has essentially become an “broad-based and narrow investment” issue of industry-themed funds, the draft solicitation of comments requires that if the name of the fund does not indicate a specific industry or theme, fund managers should strengthen diversified investment management and not concentrate on investing in a single industry or theme. This revision emphasizes that fund products must not “shift in style,” let alone allow investors to unknowingly bear the risk of not matching product names and contracts.

The Securities Regulatory Commission today issued the “Administrative Measures on the Operation of Publicly Raised Securities Investment Funds” and publicly solicited comments from the public. In response to the “narrow base drift” problem where the investment scope of thematic funds is too vague, and actual investment may deviate from the direction indicated in the product name, the “Operation Measures” draft suggests that fund contracts should use identifiable and quantifiable methods to clearly define the investment direction indicated in the fund name. The relevant definition scope should be in line with market consensus and directly related to the investment direction indicated in the fund name. However, in response to the issue of market-wide stock selection funds being highly concentrated in a single industry or popular circuit, which has essentially become an “broad-based and narrow investment” issue of industry-themed funds, the draft solicitation of comments requires that if the name of the fund does not indicate a specific industry or theme, fund managers should strengthen diversified investment management and not concentrate on investing in a single industry or theme. This revision emphasizes that fund products must not “shift in style,” let alone allow investors to unknowingly bear the risk of not matching product names and contracts.