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China Fund News reporter Zhang Yanbei and Sun Xiaohui

Following China Asset Management and Bank of China Fund, another company announced a fee reduction for its retirement-oriented FOF.

Shangyin Fund announced that from July 16, 2024, it will reduce the management fees and custody fees of its Shangyin Hengtai Stable Retirement Target One-Year Holding Period Mixed Initiated FOF.

Another pension FOF starts reducing fees

On July 16, Shangyin Fund issued a fee reduction announcement.

The announcement stated that in order to better meet the needs of investors and reduce investors' financial management costs, in accordance with relevant laws and regulations, after consultation with the fund custodian, China Merchants Bank, Shangyin Fund decided to reduce the management fee rate of the Shangyin Hengtai Stable Retirement Target One-Year Holding Period Mixed Initiated Fund Fund (FOF) from July 16, 2024, and revise the relevant terms of the fund contract and other legal documents accordingly.

Among them, the annual management fee rate of Class A fund shares will be reduced from 0.8% to 0.5%, and the annual custody fee rate will be adjusted from 0.20% to 0.15%; the annual management fee rate of Class Y fund shares will be reduced from 0.4% to 0.25%, and the annual custody fee rate will be adjusted from 0.10% to 0.075%.

After this management fee adjustment, the comprehensive fee rate of the fund's Class A shares, including management fees and custody fees, will be reduced from 1% to 0.65%, and the comprehensive fee rate of Class Y shares will be reduced from 0.5% to 0.325%.

From the perspective of sub-categories, the Shangyin Hengtai Stable Retirement Target One-Year FOF belongs to the debt-biased hybrid FOF. According to Wind data statistics, as of July 16, the average comprehensive rate of Class A shares of the 152 debt-biased hybrid FOFs in the market was 0.78%, and the average comprehensive rate of Class Y shares of the 75 debt-biased hybrid FOFs was 0.39%.

The debt-biased hybrid FOF with the lowest comprehensive fee rate in the industry is Huaxia Conservative Pension Y, with a comprehensive fee rate of 0.2%. Its management fee rate and custody fee rate are 0.15% and 0.05% respectively, which is not only the lowest among debt-biased hybrid FOFs, but also reaches the lower limit of all existing FOFs.

Among the existing pension FOFs, more than 20% of the pension FOFs have management fees less than or equal to 0.3%; the lower limit of the custody fee is 0.05%, and nearly 80% of the products are less than or equal to 0.15%.

According to statistics, the Shangyin Hengtai Steady Retirement Target One-Year FOF is currently the third retirement target fund to reduce its fee rate, and the Y-class fund shares of this fund are also the third individual pension fund to reduce its fee rate. Starting from April 29 this year, the Fuguo Xinwang Steady Retirement FOF reduced its management fee and custody fee, becoming the first retirement target fund in the industry to reduce its fee rate. Starting from June 27, the Bank of China Ankang Balanced Retirement FOF also reduced its management fee.

Nearly half of pension FOFs achieved positive returns this year

Since the beginning of this year, public FOFs, especially pension target funds, have performed relatively stably.

Wind data shows that as of July 15, the average return of the entire market pension FOF (including target date and target risk products) was -0.67% this year, and nearly half of the products achieved positive returns. Among them, the average return of pension target date FOF with a higher equity position was -1.83%, and the performance of pension target risk FOF was relatively good, with an average return of 0.2%.

The performance of individual pension funds was relatively better. As of July 15, the average return of 192 individual pension funds in the market with performance data was -0.37%, and more than half of the products achieved positive returns.

Among the more than 100 individual pension funds that have achieved positive returns, 10 have achieved annual returns of more than 3%. Jianxin Youxiang Progressive Pension Target Five-Year Holding Y has the highest return of 7.81%, while China Europe Foreseeable Balanced Pension Three-Year Holding Y and China Europe Foreseeable Pension Target 2045 Three-Year Holding Y also have annual returns of more than 5%.

Overall, the market characteristics of "weak stocks and strong bonds" are reflected in FOF products. Bond-type FOFs and debt-biased mixed FOFs have outstanding overall performance, while equity-biased mixed FOFs and stock-type FOFs have performed relatively poorly.

At this point in time, Gao Ying, director of pension investment at Ping An Fund, believes that pension FOF has a high allocation value. With the steady recovery of the economy, the current market sentiment and risk appetite are better than at the beginning of the year. From the perspective of index risk premium and valuation, the equity market is in a relatively undervalued area and has a high cost-effectiveness.

Editor: Joey

Reviewer: Chen Siyang

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