China’s securities regulator is hoping the mutual funds industry can play a bigger role in retirement planning, publishing on Friday guidelines for a new type of product that seeks to adopt western-style, lifelong investment strategies.
Mutual funds are a popular investment vehicle for individuals in western countries to park their retirement savings, such as via the 401(k) scheme in the United States. But in China, individuals often buy and sell funds frequently, much the same way they trade stocks.
The China Securities Regulatory Commission (CSRC) told a news conference in Beijing the new retirement funds, unlike other mutual funds in China, will only be open to investors at certain intervals or require a minimum holding period, to avoid frequent outflows or inflows.
The funds will also be required to adopt mature asset allocation strategies widely used in overseas markets, in a bid to achieve long-term and stable returns, CSRC spokeswoman Gao Li said.
In addition, the proportion of the funds’ equity holdings would be tied to the products’ lock-up periods, or investors’ holding period, Gao said.
Separately, CSRC said regulators will support quality, overseas-listed Chinese companies to participate in mergers and acquisitions in China’s domestic stock market.