China’s $4.4tn mutual fund industry has become the latest target of President Xi Jinping’s crackdown on finance, with new laws limiting fees and funds now subject to tougher and more frequent inspections.
Under rules that took effect last month, mutual fund houses have to reduce fees for both passive and active products. Fund managers are also barred from purchasing third-party services such as external expert consultancy.
Funds face on-site audit checks, with the National Audit Office starting a two-month inspection of the accounting books of more than 10 leading mutual fund houses in June. Since late last year, securities regulators have closely monitored the trading activities of top mutual fund managers by size, requiring daily trade reports if net sales occur.