Direct sales channels will become standard for free; the era of "zero fee rate" in public offerings accelerates

The public fund industry fee rate reform is shifting from “on paper” to “on the ground.” Recently, Caitong Securities Asset Management Co., Ltd. announced that all of its public funds will waive subscription (purchase) fees and sales service fees through direct sales channels (including online direct sales and direct sales counters) starting immediately; previously, Xingzheng Global Fund also announced the implementation of the same policy.

This marks the first batch of public fund institutions to fully implement a “zero fee” policy after the “Management Regulations on Sales Expenses of Publicly Offered Securities Investment Funds” (hereinafter referred to as the “Regulations”) take effect on January 1, 2026. It signifies a shift in industry competition from price battles to service capability competition.

According to the “Regulations” issued by the China Securities Regulatory Commission, fund managers are not allowed to charge subscription (purchase) fees and sales service fees through direct sales, with a transition period of 12 months. This also means that all fund companies must complete fee adjustments for direct sales channels within 2026.

Currently, E Fund’s sales subsidiaries have fully implemented “zero subscription fees,” and system upgrades at other leading institutions are also underway. Industry insiders say that free direct sales channels will significantly reduce investor costs, reshape channel competition patterns, and promote a shift from price competition to service competition centered on investment research capabilities, asset allocation, and customer engagement.

“This is not simply about ‘cutting profits’ to offer discounts, but about guiding the industry toward ‘higher returns’ and ‘long-term investing’ through mechanism optimization,” said a person related to public funds. The direct sales platform, as a key channel for directly reaching holders, will continue to deepen its development and improve customer experience through digital tools. For investors, purchasing products via the fund company’s official website or app can now save 0.8%-1.5% in subscription fees compared to agency channels like banks and brokerages.

Alongside fee rate reform, the industry is also increasing its efforts to return more to investors. For example, Xinhua Preferred Dividend A has already distributed dividends seven times within the year. Quantitative products such as Western Lide’s specialized and innovative quantitative stock selection and Huatai Bairui’s dividend quantitative funds have also paid dividends multiple times, indicating that the dividend culture is spreading from traditional dividend strategy funds to a broader range of product types.

From the dividend structure perspective, broad-based ETFs have become the main force. According to Choice data, in 2025, the annual dividend amounts of E Fund’s CSI 300 ETF, Huatai Bairui CSI 300 ETF, Huaxia CSI 300 ETF, and Harvest CSI 300 ETF all exceeded 5 billion yuan.

“The increased enthusiasm for dividends is closely related to regulatory guidance,” said a person in charge of a fund company. In recent years, regulators have repeatedly emphasized the need to improve investor return mechanisms centered on cash dividends, promoting a shift in the industry from “focusing on scale and rankings” to “focusing on long-term returns.”

It is worth noting that fee rate reform and increased dividends are forming a policy synergy. The aforementioned person said that reducing sales fees lowers investors’ transaction costs, while frequent dividends allow investors to tangibly feel the benefits of holding. This “low fee + high dividend” model is especially favored by long-term allocation funds.

However, the reshaping of the industry ecosystem also comes with growing pains. The person admitted that for banks, brokerages, and other distribution channels, the significant reduction in trailing commission income will force them to change their business model of “prioritizing new issues and neglecting ongoing management”; for fund companies, operating costs for direct sales channels need to be amortized through scale effects, putting more pressure on small and medium-sized institutions. In the future, channel competition for public funds will rely more on advisory service capabilities, and a model solely dependent on traffic distribution will be unsustainable.