China's Proposed Mutual Fund Sales Fee Cuts: Impacts Analysis

The following analysis is based on obtained tool results and public market information, combined with the mechanistic logic of policy clauses for deduction. For quantitative parts lacking direct support from public tool data, situational expressions such as “may/will possibly” will be used for illustration, and they should not be regarded as established facts.

1. Policy Key Points and Background (Verifiable by Tools)

• Reuters reported on September 6, 2025: The China Securities Regulatory Commission (CSRC) is publicly soliciting opinions on the mutual fund sales fee rules, proposing to lower the maximum subscription fee for equity funds from 1.2% to 0.8%, halve the sales service fees for ETFs and bond funds, and “no longer charge sales service fees for holdings exceeding one year”; the rules aim to “reduce short-term speculation costs, lower long-term investment costs” and guide “greater emphasis on investor returns rather than fund size” [1].
• Cross-market reference: Investopedia’s explanation of 12b-1 fees points out that such annual marketing/distribution fees (usually 0.25%–0.75%) are continuously included in the expense ratio, thereby eroding long-term returns [4].

2. Impact on Third-Party Sales Platforms (Qualitative Deduction Based on Policy Logic)

• Short-term pressure on revenue structure: If the maximum sales service fee rate is lowered and “sales service fees are waived for holdings of more than one year”, the platform’s recurring revenue (trailing commissions) may face a structural change of “rising first and then falling”. In the early stage, when the new scale is high, the fee base can still support it, but as the one-year free rule is implemented, the scale of continuous fee collection may gradually decline. At the same time, if the maximum subscription/purchase fee is lowered (e.g., equity funds from 1.2% to 0.8%), front-end revenue will also narrow marginally.
• Adjustment of customer acquisition and product strategies: Platforms may increase the promotion of “high-stickiness, long-holding” products (such as ETFs and index funds), improve AUM accumulation and fee base stability, and strengthen retention through investment advisory companionship, investor education, and operational services to partially offset the impact of fee rate reductions.
• Business model evolution towards value-added services: Against the background of long-term declining fee rates and intensified competition, platforms are more likely to shift to an integrated value model of “investment advisory + investor education + tools + value-added services”, enhance investor experience and differentiation, and maintain ecological stickiness and monetizable space.

3. Impact on Fund Companies (Qualitative Deduction Based on Policy Logic)

• Increased bargaining pressure from retail channels: Channels may seek better profit sharing or marketing support from fund companies to cope with their own fee contraction. Fund companies may face pressure in channel negotiations, resource investment, and fee concessions.
• Adjustment of revenue structure and balance of scale quality: The constraint of maximum fee rates and “service fee waiver for one-year holdings” will prompt fund companies to pay more attention to long-term compound interest and sustained performance (real investor returns) rather than just pursuing “one-time scale expansion”. In terms of product strategy, passive/index products with low-fee strategies may be more likely to form scale effects.
• Intensified industry integration and differentiation: Companies with product, investment research, and brand advantages are more likely to stand out in the new ecosystem of low fees and long-term orientation; some institutions relying on the “volume rush-redemption” model may face pressure.

4. Impact on Investors’ Long-Term Holding Behavior (Qualitative Deduction Based on Policy Logic)

• Improvement of holding cost structure: With the “sales service fee waiver for one-year holdings” and the reduction of maximum fee rates, the cost of short-term high-frequency trading relatively increases while the cost of long-term holding relatively decreases, which mechanistically encourages long-term allocation.
• Possible “short-term pain period” requires investor education guidance: If platforms focus more on front-end/conversion rhythm during the adaptation process, the phenomenon of “push first then redeem” may still occur in the short term. To truly transform the mechanism into “long-term holding” behavior, it is necessary to strengthen investment advisory and investor education to help investors understand the trade-off between holding costs and compound returns.
• Improved fee transparency helps decision-making: Reducing recurring sales service fees and clarifying the free clause for holding periods helps investors evaluate net returns more clearly and make more rational holding period decisions.

5. Overall Reshaping of the Fund Sales Ecosystem (Mechanism-Level Judgment, Not Quantitative Conclusion)

• Channel value shifts from “selling more” to “retaining longer”: Platforms and fund companies emphasize more on AUM quality, long-term retention, and compound interest effects rather than short-term sales rankings.
• Fee competition and value-added service competition go hand in hand: The downward trend of fees is inevitable, but differentiated competitiveness will be more reflected in long-term investments in areas such as investment advisory capabilities, investor education content, data, and tools.
• Industry survival of the fittest may accelerate: Entities with product and investment research advantages, channel cooperation efficiency, and investor service capabilities are more resilient; institutions relying on short-term volume rush and high commissions for scale expansion face increased pressure.

6. Data Limitations and Notes

• The current tool search did not return quantitative data on the specific revenue, market share, or fee rate reduction of China’s third-party platforms, nor did it find authoritative statistics on the average holding period of China’s public funds; the above-mentioned related impacts are qualitative deductions based on policy clauses and mechanistic logic, and should not be regarded as quantitative facts.
• Cross-market references (such as U.S. 12b-1 fees) are only comparable references for cost erosion of long-term returns, and do not constitute a direct comparison with domestic fee levels [4].

7. References and Sources

• [1] Reuters, “China to cut fees on $4.9 trln mutual fund industry to promote investment,” 2025-09-06：https://www.reuters.com/sustainability/boards-policy-regulation/china-cut-fees-49-trln-mutual-fund-industry-promote-investment-2025-09-06/
• [4] Investopedia, “Understanding 12b-1 Fees: What They Are and How They Impact …”：https://www.investopedia.com/terms/1/12b-1fees.asp

Note: The above analysis is based on public tool search results and policy mechanism logic deduction. If you need further quantitative evaluation (such as the impact on the revenue of specific platforms/companies or changes in holder behavior), it is recommended to conduct detailed calculations through public financial reports, industry reports, or authoritative statistical data under the compliance framework.