It was reported on November 11 that pensioners in mainland China will have a way to invest in the asset allocation and holding period requirements of a new mutual fund serving retirees as the securities regulator releases an outline of requirements.
A new channel for China’s US$7.7 trillion stock market.
According to reports on November 6, a guideline issued by the China Securities Regulatory Commission to solicit public opinions on its official website stated that such funds should adopt a "stable asset allocation" strategy and pursue "long-term appreciation of assets."
According to this guideline, these new customized funds can invest in "fund of funds" products. The investment limit for balanced funds is determined to be 80% of the asset amount, and the investment limit for pure stock funds is determined to be 60% of the asset amount.
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The guidelines state that direct investment in stocks should not exceed 30% of assets.
The report said that at a time when major mainland cities such as Shanghai are struggling to cope with the financial burden of an aging society, the introduction of this new fund product may alleviate the pressure on the government to pay pensions to a certain extent.
It will also help add stability to mainland China's stock market by playing the role of a long-term holder of stocks.
According to the report, although about 80% of stock trading is still conducted by retail investors, the ranks of institutional investors are growing.
The size of China's private equity fund industry exceeded 10 trillion yuan ($1.51 trillion) for the first time this year.
Fund managers have beaten hedge funds this year by betting on large-cap stocks that are at the top of their industries.
Fund managers must have more than 5 years of experience as a fund manager before being qualified to manage funds targeting pensioners.
According to this new guideline from the China Securities Regulatory Commission, relevant fund companies must also have a research team of at least 20 people.
The guidelines state that subscribers to these funds will be locked in a holding period of at least one year after subscription.