NCSSF ties fund managers’ fees to performance
18 July 2012
News, Asia, China
China’s National Council for Social Security Fund (NCSSF) has reportedly appointed two unnamed fund managers to trial a floating management fee structure in order to stimulate investment performance, according to Securities Times.
Under current rules, the management fee of delegated fund managers for the NCSSF is set at a fixed level. The pilot scheme suggests that if the NCSSF's annual return exceeds 8%, the fund managers will receive negotiable performance, or else the NCSSF will just pay core management fees, 0.55% for the equity manager and 0.2% for the bond manager.
The measure comes following questions regarding an increase in the NCSSF’s management fee last year that outpaced the fund’s tepid investment performance. Total management fees rose sharply to 1.02 billion yuan (US$162 million) from 724 million yuan in the previous year, despite the NCSSF recording a marginal investment return of 0.84% in 2011.
The NCSSF outsourced 364.7 billion yuan worth of assets, or 41.98% of total AUM, to external fund managers at the end of 2011.
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