(Yicai Global) July 7 -- Chinese fund management firms are planning to lower their fees, as part of efforts to attract more clients, according to Shanghai Securities News.

The industry is developing products with lower fees, according to sources at fund managers, the report said. New funds have a tiered fee system that waives charges when redeemed shares are not profitable. A management fee would be charged when the profit reaches a certain level, but the fee would be capped.

In April last year, the China Securities Regulatory Commission issued guidance on the development of the public fund industry. One of the key points was to encourage the creation of products that are beneficial for customers.

“These products can align the interests of managers and holders better in the long term, and motivate managers to use their proactive management skills more effectively,” a source said. “This can improve the experience for investors.

“They can also help to promote sensible investment and long-term holdings of fund shares,” the person added.

China’s stock market has softened recently, and investors have a lower risk tolerance, increasing interest in money funds offering lower risk and higher liquidity.

China had 143 mutual fund management firms at the end of May, according to publicly available information. Of them, 47 were backed by foreign businesses and 96 were domestic. The net value of public funds under management was CNY27.8 trillion (USD3.8 trillion).

The net asset value of money funds grew by CNY413.4 billion (USD57.1 billion) to CNY11.9 trillion by the end of May from April’s close, while the net value of bond funds rose by CNY257.9 billion to CNY4.6 trillion. But the size of equity investments such as hybrid funds and equity funds had shrunk.

Editor: Tom Litting