Reduce the cost of fund investment, and the index license fee will be borne by the fund manager

On March 17, the reporter learned that the payment method of index license royalties will usher in new changes. A number of fund companies are planning to change the index license royalties of existing index products in the near future, which will be paid from the fund property to the fund manager. The main purpose of this move is to reduce the investment cost of index funds. Industry insiders said that the current index license royalties are charged according to the principle of "dividing the old from the new". According to the "Guidelines for the Operation of Publicly Offered Securities Investment Funds No. 3 - Guidelines for Index Funds" that will come into effect on February 1, 2021, index funds should clearly stipulate in legal documents such as fund contracts that the license royalties of the underlying index shall be borne by the fund manager and shall not be paid from the fund property. However, for index funds that have been approved or registered before the implementation of the guidelines, the collection of index license fees can be implemented with reference to the requirements of the preceding paragraph. In January this year, the "Action Plan for Promoting the High-Quality Development of Indexed Investment in Capital Markets" issued by the Securities Supervision Commission proposed to reduce the investment cost of index funds, including promoting the reduction or reduction of ETF market making, registration and settlement, index use and other fees, and continuously reducing the operating costs of index funds. The index license fees of existing index funds will be paid from the fund property and will be borne by the fund manager instead.