TREE NEWS update: China’s draft revision to the rules governing public securities investment funds would remove the hard clause forcing sponsored funds to liquidate if they fail to reach 200 million yuan within three years, putting their exit threshold on par with ordinary funds. More than 100 sponsored funds launched in 2023 could survive their three-year test if the rule takes effect. Funds that shrink to “mini” size and opt to keep running must have all fixed operating costs borne by the fund manager.
China Proposes Scrapping 3-Year, 200M Yuan Delisting Rule for Sponsored Funds
This is a meaningful shift in how China regulates fund viability: removing the hard three-year, 200 million yuan liquidation trigger for sponsored funds lowers the structural risk of forced exits and aligns their treatment with ordinary funds, which matters most for the managers and investors in the more than 100 sponsored funds launched in 2023. The cost-bearing condition for mini funds also shifts the economics of keeping small products alive onto the manager rather than the fund. The open question is whether the draft survives in this form and whether managers use the flexibility to preserve products or wind them down voluntarily.
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