"Doubling Funds" and "Loss-Making Accounts" Coexist; The First Batch of New Floating Fee Rate Funds Competition is Coming

Securities Times Reporter Shen Shuhong

By the end of May 2025, the first batch of 26 new floating rate funds were launched simultaneously, officially marking the beginning of a new phase in public fund fee rate reform. Now, less than a year into operation, these products have already shown significant performance differentiation.

On one side are the “Aggressive” funds that actively embrace market trends, heavily investing in hot sectors like AI, with some products doubling in net value and performing outstandingly; on the other side are the “Conservative” funds that stick to traditional sectors such as finance, consumer, and real estate, which have underperformed during phase-specific market conditions, with some still showing losses since inception. The performance gap between the top and bottom products has exceeded 103 percentage points.

According to regulations, such products are assessed primarily based on their performance against a benchmark. Data shows that among the first 26 products, 14 have outperformed the benchmark, while 10 lagged behind by more than 3 percentage points. According to rules, if performance does not meet standards after one year of operation, the manager will apply a discounted fee rate of 0.60%, passing the savings on to investors. With only three months remaining until the first fee review, market attention is focused on whether these products can maintain their standard fee rate through performance or will fall into the discounted fee zone.

The First “Doubling” Floating Rate Fund Emerges

In 2025, the launch of the first batch of new floating rate funds quickly became a showcase for fund companies to demonstrate their investment and research capabilities. However, less than a year into operation, these competing products have already shown notable performance divergence, with the gap between the top and bottom returns widening to 103.71 percentage points.

As of March 6, out of the first 26 products, 23 have achieved positive returns, with 6 exceeding 30%. Notably, the Huashang Zhiyuan Return Fund managed by Zhang Mingxin has achieved a total return of 101.43% since inception, becoming the first in this batch to double its net value, leading the second place by over 27 percentage points.

Meanwhile, the performance of products like the Harvest Growth Co-Prosperity Fund managed by Li Tao of Harvest Fund and the XinAo Advantage Industry Fund managed by Wu Qingyu of Cinda AoYa Fund has also been impressive, with returns of 74.00% and 60.28% respectively since inception. Other products such as E Fund’s Growth Progress managed by Liu Jianwei, Dacheng’s Ultimate Return managed by Du Cong, and ICBC Credit Suisse’s ICBC Hongyu Return managed by Guo Xuesong have also achieved over 30% since inception.

In terms of stock selection style, many of these high-performing floating rate funds heavily overweight AI sectors. For example, Huashang Zhiyuan Return has continuously held core holdings like Zhongji Xuchuang, Xin Yisheng, and Shenghong Technology since the second half of last year. Despite ongoing discussions about the “AI infrastructure bubble,” fund manager Zhang Mingxin believes that the sustainability and predictability of Capex by major overseas tech giants are beginning to differentiate. Therefore, in Q4 last year, he increased allocations to Google’s supply chain-related stocks, as well as niche technologies benefiting from scale-up trends, and participated in the expansion of AI industry prosperity in areas like storage and electric energy storage.

Similarly, products like Harvest Growth Co-Prosperity and XinAo Advantage Industry focus on long-term growth segments such as AI computing power, AI applications, and domestic industrial upgrades. Wu Qingyu, fund manager of XinAo Advantage Industry, stated in last quarter’s report: “The demand for computing power in overseas AI server-related sectors remains high, and related companies are expected to maintain good performance. Meanwhile, domestic computing power, new AI hardware, and downstream applications are also likely to see sustained demand.”

Some Products Still Underperform

While some floating rate funds lead in performance, internal differentiation within this sector is evident. Some products heavily invested in consumer, finance, and real estate sectors have performed relatively poorly, even showing phased losses.

As of March 6, three products—Anxin Value Co-Prosperity, Ping An Value Premium, and Penghua Co-Prosperity Future—are still in loss since inception, with net value growth rates of -2.28%, -1.16%, and -1.03%, respectively. Additionally, five other products such as Southern Rui Xiang, Huaxia Rui Xiang Return, and Manulife Wisdom Leadership have returns since inception below 10%, with relatively modest performance.

The core reason for performance pressure is the mismatch between holdings style and the current market phase. For example, Anxin Value Co-Prosperity’s holdings in Q4 last year included stocks like Stone Technology, China Resources Land, China Property & Casualty, and China Construction Bank, which are in consumer, finance, and real estate sectors, rather than market hotspots. Fund manager Yuan Wei explained in last quarter’s report that the focus was mainly on domestic demand. “Although short-term performance was quite adverse and lagged the market, we remain confident in China’s long-term domestic demand fundamentals and value principles, and believe in the future performance of the portfolio.”

Ping An Value Premium also adheres to a contrarian value style, mainly investing in home appliances, liquor, and internet sectors. The fund manager noted that in an environment of significantly improved liquidity and high market sentiment, sector rotation is active, but this is not their preferred investment approach. Meanwhile, stable, high-dividend companies with steady profits tend to attract less attention due to lack of short-term upward momentum, but their long-term value is increasingly evident.

Beating the Benchmark Is Difficult; Long-term Results Await

Since 2025, despite the overall market recovery and most funds achieving positive returns, consistently outperforming the performance benchmark remains challenging. Wind data shows that among the first 26 floating rate funds, only 14 have outperformed the benchmark since inception, accounting for 53.85%, meaning nearly half have not met the standard.

Specifically, Huashang Zhiyuan Return performed particularly well, outperforming the benchmark by 85.13 percentage points. Other funds like XinAo Advantage Industry, Harvest Growth Co-Prosperity, and ICBC Hongyu Return also outperformed the benchmark by 46.61, 38.24, and 20.02 percentage points, respectively.

Conversely, Ping An Value Premium has underperformed the benchmark by 16.21 percentage points since inception. Funds like Anxin Value Co-Prosperity, Penghua Co-Prosperity Future, Huaxia Rui Xiang Return, and Yinhua Growth Wisdom Selection also lagged by over 10 percentage points. Some of these products have achieved returns exceeding 10% or even 20% since inception but still failed to beat the benchmark.

Public information indicates that these new floating rate funds generally set management fee tiers at 1.2%, 1.5%, and 0.6%. If investors redeem within less than a year, a 1.2% annual fee is charged; if held for over a year with returns exceeding 6 percentage points above the benchmark and positive yields, a 1.5% fee applies; if annualized returns lag the benchmark by 3 percentage points or more, a 0.6% fee is charged; other cases are charged at 1.2%.

Currently, 10 of the first batch of funds have been in operation for over a year but still lag the benchmark by more than 3 percentage points. Under the floating fee mechanism, if these products continue to underperform after a year, the manager will implement a 0.60% annual fee, effectively passing savings to investors.

A market insider from a major North China public fund company advised that since these products have not been operating long, investors should be patient, as the ultimate results depend on their long-term real gains. “The design of floating rate funds aims to motivate fund managers to pursue excess returns, while offering fee discounts during poor performance to protect investors’ interests.”

Some industry experts believe that if floating rate funds consistently underperform the benchmark over the long term, management fee income will significantly decline. The high operational thresholds and research requirements pose real challenges to the overall strength of fund companies.