“High costs aren’t much of a consideration for investors, so long as they get a positive return,” the firm said in a report. “This presents a challenge for foreign passive managers looking to enter the market.”
Onshore mutual fund assets hit another record high in September to RMB 8.83trn ($1.3trn), up 3.6% from a month ago, according to data from the Asset Management Association of China.
However, “fees for all types of fund products have remained relatively stable as AUM has risen”, the report noted.
Generally, fees tend to be reduced as a fund gathers AUM.
The average fees of actively managed equity funds in China have been steady at around 1.5% since 2013, the report said. Overall mutual fund assets have doubled during the period.
“Fees for bond products are notably lower as institutional investors favor fixed income investment,” the firm said.
Money market funds are still charging an average 0.27% as a total expense ratio (TER) as of June this year, 2 basis points lower than a year ago, according to Morningstar data. They are more expensive that short-dated bond funds, which have a 0.21% TER on average.
There is a slight drop in fees among balanced funds and QDII products. The former is mainly due to higher bond allocations over the past 12 months, Z-Ben said.
Some of the QDII funds – onshore funds that invest in overseas markets using designated quota under the Qualified Domestic Institutional Investor scheme – invest in US-listed ETFs, which might lead to lower fees.
