2024-07-26
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Interface News reporter | Du Meng
Jiemian News Editor | Song Yejun
Last week, the "King of Retail"China Merchants BankIt announced that it would implement a minimum 10% discount on the subscription fee for more than 12,000 fund products it distributes, a move that has pushed the competition for fund distribution channels into a white-hot stage.
While China Merchants Bank is making big moves to reduce fees, the Internet distribution giant "Ant" is also constantly expanding its territory. Behind actions such as "Global Investment" and the upgraded version of Golden Selection 4.0 is its ambition to expand the sales scope of fund products.
In the cold winter of fund sales, the three pillars of banks, securities companies, and Internet sales platforms are all trying to break through in their respective areas of expertise. At the same time, as the product supply side, can public fund managers return to the product itself and get rid of the dependence on sales traffic?
On July 18, China Merchants Bank announced that it has sold more than 12,000 public funds, of which more than 10,000 products will have zero subscription fees or 10% of the subscription fees, accounting for more than 90%, covering active equity funds, index funds, bond funds, FOF funds, QDII and other categories. The scope of agency sales products will continue to expand in the future.
Data from the China Securities Investment Fund Association shows that as of the end of 2023, the holdings of equity and hybrid public funds of China Merchants Bank were 502.8 billion yuan, and the holdings of non-cash public funds were 773.5 billion yuan, ranking first and second in the industry respectively.
Not only did China Merchants Bank take big steps, but Ant,JD.comInternet channels such as QQ and QQ are also making frequent efforts.
Recently, JD Finance APP launched the "Steady Loss Must Be Refunded" activity, selecting some pure bond funds with a holding period. If investors lose money in the first holding period after buying, they can apply for a refund of sales service fees. During the "618" period, JD Finance also held a high-profile "0 yuan purchase of index funds", with no application fee/subscription fee for index funds and redemption fees as low as 0% off.
Behind the frequent moves is the desire of JD Finance APP to retain funds. As a wholly-owned subsidiary of JD Technology, JD Kenreit Fund was established in 2015.Jingdong MallAlthough JD Kenreit has a huge number of users, its fund holdings have been lukewarm for 9 years since its establishment.
Data from the China Securities Investment Fund Association shows that as of the end of the fourth quarter of last year, JD.com's stock and mixed holdings were 22 billion yuan, and its non-cash holdings were 198.6 billion yuan, ranking 47th in the industry.
Ant Fund, which relies on Alipay, has a stock and mixed holding scale of 459.2 billion yuan and a non-cash holding scale of 1.2723 trillion yuan, ranking second and first in the industry.
In addition to JD Kenreit's low-fee recruitment of customers, Ant Fund has also made new moves. Alipay recently launched a new section "Global Investment" on the "Wealth Management" homepage. The "Global Investment" section mainly displays QDII fund products that invest in multiple overseas markets and multiple assets, covering multiple markets such as the United States, Japan, Europe, and Southeast Asia.
Since the end of last year, Ant Fund has also launched the 4.0 upgrade of "Ant Financial Golden Selection", and while improving the bond and equity fund sectors, it has also added the Golden Selection Index Fund sector.
In addition to the competition among licensed sales agencies, social platforms with large traffic such as Douyin and Xiaohongshu have also been targeted by public funds. Recently, E Fund officially entered Xiaohongshu and quickly gained 14,000 fans. The company's account mainly focuses on investment education.
In July last year, there were media reports that Douyin was planning to apply for a fund sales license and had conducted relevant tests on fund sales in cooperation with some leading fund companies. One year later, the news has not been implemented. "There is no new development at present. They have only three people in charge of the fund team. Now they are mainly reviewing relevant content and contacting the financial institutions that have settled in." The head of the marketing department of a public fund e-commerce company in Beijing told Jiemian News reporters.
But fund companies also dare not miss the opportunity behind Douyin's huge traffic. As of July 25, more than 80 fund companies have opened accounts on Douyin, including not only official accounts of fund companies, but also Douyin investment education accounts and wealth accounts specially set up by fund companies.
After 2021, the China Securities Investment Fund Association will publish a list of the top 100 fund agency holdings every quarter. Prior to this, the holdings data of each agency had always been a secret.
"The size of holdings is a key data to measure an institution's sales ability and is its 'hard power'. If the size of holdings is large, you can negotiate for customization and exclusive distribution of some key products. The association used to announce changes in the size of holdings once every quarter, which really lifted the veil of mystery surrounding the industry's holdings and turned this fiercely competitive market into an open book," said a person from the marketing department of a leading public offering in Beijing.
However, careful investors have found that since the beginning of this year, there has been no movement in the first quarter's top 100 fund sales list. "The list for the third quarter of last year was released on November 7, and the list for the fourth quarter was also released in early February this year. Now it is July, but there is still no movement in the first quarter's list." said a fund commentator.
Why has it not been disclosed yet? Jiemian News reporters have verified from multiple sources that it may be related to two reasons. First, the net redemption volume of equity funds has been large since the beginning of this year. In the first and second quarters of this year, the market suffered a continuous decline, and many active equity funds suffered a large drawdown.
"Colleagues in the Internet finance department reported that the company's net subscription volume on a certain Internet platform was only a few million per day, which was very bleak. The fund holdings data for the first and second quarters has not been disclosed yet, perhaps because the data of some institutions is too ugly." A person from the marketing department of a leading public fund said that with the rapid development of index funds such as ETFs, the brokerage channel has achieved a leapfrog upgrade in the scale of holdings by virtue of its own advantages. However, the bank channel, which mainly focuses on equity products, has encountered a large net redemption.
The second reason is that many financial institutions have been facing audits this year, and the shortage of staff has led to the delay in reporting data.
Data from the Asset Management Association of China shows that there are currently 417 sales institutions in the public offering industry. Judging from the approval time, the pace of the China Securities Regulatory Commission approving public offering sales licenses has slowed down since 2020, with only UBS Fund Sales (Shenzhen) Co., Ltd. and Bosera Wealth Fund Sales Co., Ltd. being approved.
At the same time, licensed sales agencies are accelerating their liquidation, and some sales agencies with small holdings and high sales fees have been "broken up" by public offerings. Wind data shows that since 2024 alone, more than 30 fund companies have announced the termination of cooperation with some sales agencies.
For example, Baoying Fund announced that it would terminate its cooperation with Beijing Zhongqi Times Fund Sales Co., Ltd. from May 31, and Bank of Communications Schroder also terminated the relevant sales business of its funds handled by Shanghai Jupai Yumao Fund Sales Co., Ltd. from May 23. Yinhua Fund terminated Puling Fund Sales Co., Ltd. from handling the subscription and application of its funds. In addition, CITIC Prudential terminated the fund sales business handled by Wuhan Bojia Fund Sales Co., Ltd., and Fuji Fund will terminate the agency sales of all public funds under Caitong Fund.
There are many reasons for fund companies and fund sales agencies to "break up". One is that due to adjustments in fund sales business, they actively choose to withdraw from the fund sales market; the second is that the sales agency's sales performance is poor and conflicts arise between the two parties; the third is that the sales agency has violated regulations, etc.
On October 1, 2020, the "Regulations on the Supervision and Administration of Public Offering of Securities Investment Fund Sales Institutions" came into effect, and the fund sales industry bid farewell to the previous stage of wild growth, and fund sales behavior tended to develop in a more standardized manner. In addition, the fund sales market showed a serious Matthew effect, and the fund holding scale was restricted. At present, some weaker sales institutions have voluntarily chosen to withdraw, and the entire industry ecology has become healthier.
"The more fund distribution channels, the better." A senior fund channel person said that in most cases, the termination of cooperation with a distribution agency is due to the fund company's poor fund sales and holdings in this distribution agency. At the same time, the fund company has to invest time and energy to maintain the channel, which is less cost-effective for the fund company.
In addition, some agency sales agencies have compliance risks and high agency sales fees, which have also become important reasons for fund companies to terminate cooperation with them. In addition to products and services, fund companies will consider multiple angles and all aspects when selecting fund sales agencies, and their selections are more cautious than before.
"Currently, when a company introduces a sales agency, it will consider many aspects, including the sales strength, holdings, compliance and integrity record, financial status, equity structure, and operational management capabilities of the sales agency. This is to protect the interests of fund shareholders." A person from a fund mutual finance channel in South China said.
"In fact, whether it is Tencent, JD.com, Douyin, or Xiaohongshu, the technical barriers for these platforms to engage in fund agency sales are not high. After obtaining the agency sales license, the services that the platform can provide are nothing more than increasing the fund's holdings. On the C-end of investors, improve transaction efficiency and reduce transaction fees. Going further, provide investors with good investment advisory services and companionship, etc." said the above-mentioned Internet finance person.
Behind the major changes in the fund distribution ecosystem is the self-awakening of public funds under the requirements of high-quality development.
Since June 3, Manulife New Start has launched a redemption rate discount campaign in direct sales channels. Taking Class A shares as an example, when the holding period is 30-89 days, the original redemption rate is 0.5%, but the redemption rate during the promotion period is only 0.375%; when the holding period is 90-179 days, the original redemption rate is 0.5%, and the redemption rate during the promotion period is only 0.25%; when the holding period is 180-365 days, the original redemption rate is 0.1%, and it is only 0.025% during the promotion period.
Why is the rate discount offered in the direct sales channel? The reporter learned that this is a means for the marketing department to attract customers, encouraging investors to subscribe and redeem through the company's official website, counters and other direct sales channels. Public information shows that Manulife New Start was established on May 14, 2015, and is managed by Ning Xiao and Liu Xiaochen, with a total management scale of 43 million yuan.
It is not easy to develop direct sales. In recent years, in order to save costs, there have been many cases where public funds have removed their APPs. Since 2023, Nord, Xinhua Fund, Jiutai Fund, Great Wall Fund, Jinxin Fund, Everbright Pramerica, etc. have announced the closure of online direct sales platforms or related businesses.
Some new players have also said that they "will not conduct direct sales." Take the foreign public fund Neuberger Berman as an example. The company has not yet launched direct sales business, and has only carried out agency sales through channels such as banks and Tiantian Fund. "Long-tail customers such as individual investors must belong to the Internet, and individual customers rely more on investment advisory institutions to invest in funds." Industry insiders told reporters.
In April 2022, the China Securities Regulatory Commission issued the "Opinions on Accelerating the High-Quality Development of the Public Fund Industry", which mentioned that efforts should be made to create a good development ecology for the industry and to improve investors' sense of gain. Fund investment advisory business should be developed in an orderly manner, and the tendency of "focusing on investment and neglecting advisory" should be gradually reversed.
Since the public offering fund industry fee reform was officially launched in July 2023, it has been steadily promoted in three stages according to the path of "manager-securities company-sales agency".
It is understood that after the formal implementation of the commission and fee reduction, the third phase of charging and other supporting reform measures in the fund sales process is being steadily promoted and is expected to be fully launched before the end of this year. It is believed that this will have a significant impact on the entire fund sales process, and all institutions in the industry chain will be faced with a storm.
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