Guotai Haitong: Institutional optimization and improvement drive public mutual funds to shift from scale expansion to quality enhancement.

Guotai Haitong released a research report stating that on October 9, 2026, the China Securities Regulatory Commission revised the Measures for the Administration of the Operation of Publicly Offered Securities Investment Funds and supporting rules, forming the Measures for the Administration of the Operation of Publicly Offered Securities Investment Funds (Draft for Comment) and supporting rules. The firm summarized the core changes into five dimensions. This revision runs through the entire chain of the product life cycle, investment operation processes, and governance accountability, all pointing to the same goal: against the backdrop of an industry whose size has already expanded several times over, to drive public mutual funds from scale expansion toward quality enhancement. Guotai Haitong's main views are as follows: Change One: Establishment thresholds lowered by category, exit more smooth. On the issuance side, establishment thresholds are lowered to reduce the startup costs of new products, and countercyclical layout requirements are used to curb disorderly expansion; on the exit side, the continuation thresholds for some products are raised, operating costs are internalized, and exit procedures are simplified, making the exit channel truly unobstructed. In the short term, the pace of liquidation for some products may accordingly accelerate; in the long term, fund managers' product layouts will become more focused on products with a foundation for sustained operation and the potential to grow in scale. This shift is in effect directing the product capabilities accumulated by the industry in the past toward a more precise direction. This is not about restricting supply, but about making supply more efficient. Change Two: More diverse product types, relaxed constraints on investment tools. This revision advances simultaneously along two dimensions: on the product type side, it addsexpanding fund categories, refining operation methods, and relaxing constraints on income distribution and fee rates; on the investment tool side, it subtractsexempting passive investments from shareholding restrictions, raising the upper limit on the proportion of a fund's holdings in other funds, and broadening the scope of qualified liquid assets. The former enriches product supply, while the latter improves portfolio management efficiency. Change Three: Improve the investment operation arrangements for equity funds, strengthen contractual constraints, and return investment behavior to its origins. The operation of equity funds is standardized from three aspects: first, strengthen contractual constraints and full-process management for funds whose names indicate investment directions; second, strengthen diversification requirements for funds whose names do not indicate a specific industry or theme; third, elevate the performance benchmark from a general contract clause to an institutional arrangement bound by a full-process management mechanism. The firm believes that with strengthened contractual constraints, active management will return to its origins, relying on stock selection and portfolio management to create sustainable excess returns. Change Four: Put investor protection into practice. This round of revision adds a principled statement in the general provisions to "adhere to the priority of investors' interests and uphold fiduciary duties." Its implementation mainly unfolds along two dimensions: first, strengthen liability-side management, add new requirements for holder structure management, and set corresponding constraints targeting three phenomenainstitutional customized arrangements, arbitrage during dividend-sensitive periods, and differentiated redemptionsto ensure the smooth operation of funds; second, optimize the allocation of management resources, clarifying that fund managers, under the premise of complying with regulations, may arrange for investment management personnel to concurrently manage public mutual funds, pension investment portfolios, and private asset management plans, enabling more investors to share high-quality investment research resources. Change Five: Participation in governance and accountability are strengthened simultaneously, making the industry ecosystem healthier. This round of revision explicitly requires managers to play the role of active shareholders. The firm believes that participating in the governance of listed companies and actively playing the role of shareholders is both a due responsibility and where the professional advantages of public mutual funds lie. Investment research and governance are expected to form a positive cycle, thereby promoting the industry ecosystem to develop in a healthier direction. Summary: This revision runs through the entire chain of the product life cycle, investment operation processes, and governance accountability, all pointing to the same goal: against the backdrop of an industry whose size has already expanded several times over, to drive public mutual funds from scale expansion toward quality enhancement. Supply is more efficient, operations are more standardized, investor interests are better protected, and governance forms a positive cycle. With all four ends working in coordination, the ability to serve the real economy and residents' wealth management needs is simultaneously enhanced. Risk warning: This report is an objective analysis and interpretation of the Measures for the Administration of the Operation of Publicly Offered Securities Investment Funds (Draft for Comment) and does not constitute investment advice.