CSRC Proposes Allowing FOFs to Invest in ETF Feeder Funds, Raising Non-FOF Fund-of-Funds Investment Cap to 30%

Deep News
Oct 09

The China Securities Regulatory Commission today released the "Measures for the Operation and Management of Publicly Offered Securities Investment Funds (Draft for Comment)."

Several measures support the development of equity funds and optimize product supply. In addition to lowering the requirements for fund of funds (FOF) from 200 million yuan in scale and 200 million units in shares to 50 million yuan and 50 million units, the draft for comment on the "Operating Measures" also mentions allowing FOFs to invest in ETF feeder funds to better leverage the asset allocation function of FOFs; in addition, the upper limit on the proportion of non-FOF funds investing in other funds will be raised from 10% to 30%, supporting "fixed income plus" and other equity-containing low- and medium-volatility products to achieve value appreciation more through funds such as stock ETFs; it also clarifies that fund investment in REITs will be managed as securities investment.

In the view of industry insiders, these arrangements help broaden the investment tools and strategic space of public funds, enhance the asset allocation capabilities of products, and better meet the diversified needs of pensions, insurance funds, and residents' long-term wealth management.

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