Money Market Fund Products Trigger "Automatic" Fee Reduction, Xingzheng Asset Management Responds

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This newspaper (chinatimes.net.cn) reporter Zhang Mei Beijing report

Idle funds lying dormant in stock accounts have always been a small annoyance for stock trading users. Recently, Xingzheng Securities Asset Management Co., Ltd. (hereinafter referred to as “Xingzheng Asset Management”) launched a margin financial product targeting these funds, which has attracted market attention due to a fee reduction announcement.

On March 10, Xingzheng Asset Management announced that its Xingzheng Asset Management Golden Phoenix Cash Plus Money Market Fund triggered the provisions of the “Fund Contract” and will reduce the management fee from 0.7% to 0.3% starting March 8.

“Applications of this product have strict restrictions: it cannot be purchased on third-party internet platforms like Alipay. Investors can only trade through the broker’s own app, and each broker typically only offers one such product,” an industry insider who wished to remain anonymous told Huaxia Times. This type of product is essentially a broker’s margin financial product, common in the industry, usually with similar fee adjustment mechanisms. Its core features include extremely high liquidity requirements, with returns comparable to bank savings accounts. In the past, these products mainly served stock traders, allowing them to flexibly use idle funds within their securities accounts; however, according to the latest product rules, investors now need to redeem first before transferring funds out to buy stocks or other financial products.

An official from Xingzheng Asset Management told Huaxia Times: “The adjustment of the management fee is a characteristic of broker margin products, which differ from ordinary money funds. We believe that the core competitiveness of money funds lies in liquidity, and under the guidance of inclusive finance, they provide convenience for investors.”

Idle funds in securities accounts for financial management

Xingzheng Asset Management’s announcement detailed the reasons for the fee adjustment: according to the relevant provisions in the “Fund Contract” and “Offering Memorandum” regarding management fees: “When the estimated seven-day annualized yield calculated at a management fee of 0.70% is less than or equal to twice the deposit rate of a savings account, the fund manager will adjust the management fee to 0.30% to reduce the risk of negative estimated net income per ten thousand units and the associated overdraft risk for sales agencies. This adjustment will remain until the risk is eliminated, after which the fund manager can restore the 0.70% fee. The fund manager shall publish the fee adjustment in accordance with the relevant regulations of the Information Disclosure Measures.” Since the above situation has now been resolved, the management fee rate will be restored to 0.70% on March 11, 2026.

Currently, the deposit interest rate for the six major state-owned banks is 0.05%, which means that once the estimated seven-day annualized yield calculated at the original fee rate falls below 0.1%, this “warning line” will be triggered.

This is not an isolated case. Wind data shows that as of March 13, the arithmetic mean of the seven-day annualized yields of 352 money market funds (main share) with market data is 1.0976%, just one step away from breaking below 1%, with 74 funds already yielding less than 1%.

According to Wind data, since early 2026, 25 money funds under companies like E Fund and China Life Anbao Fund have already adjusted their fee rates.

“Xingzheng Asset Management Golden Phoenix Cash Plus is not an ordinary money fund but a broker margin product. These products were originally designed to provide cash management services for idle funds within stock accounts, emphasizing ease of use and high liquidity. The phased reduction in management fees can better enhance the customer experience after fees, which is a protective measure for holders. This adjustment is not unique to this product; many similar products with public offering licenses from broker asset management companies also have related provisions,” Xingzheng Asset Management responded to Huaxia Times.

Regarding the procedures after the fee rate is lowered, Xingzheng Asset Management stated: “On the investment side, while ensuring sufficient liquidity to meet investors’ daily redemption needs, maintaining good portfolio allocation and maturity structure, better grasping market fluctuations, making strategic allocations, and conducting certain band operations.”

Money fund scale hits new high

On the surface, the decline in yields has driven the fee reductions; however, the root cause of the frequent automatic fee reductions (“automatic” meaning funds automatically trigger fee adjustments based on pre-set dynamic mechanisms in the fund contract under certain market conditions) lies in the fundamental changes in the macro environment that money funds rely on.

“Money fund yields have continued to decline, which is due to a systemic reshaping of the macro environment. First, the interest rate center has moved downward, with the central bank maintaining a moderately loose monetary policy, keeping short-term interest rates low. Second, interbank deposit rates have been included in self-regulation, compressing the core income sources of money funds. Third, the 1-year LPR has fallen to 3.0%, and the overall interest rate environment is becoming more relaxed, making the decline in money fund yields a natural outcome,” said Tian Lihui, a professor of finance at Nankai University, in an interview with Huaxia Times.

Despite the continuous decline in yields and the normalization of fee adjustments, funds have not withdrawn on a large scale as expected. Data from the Asset Management Association of China shows that by the end of January 2026, the total scale of money funds had exceeded 15.27 trillion yuan, reaching a new record high.

It is also important to note that money funds still play an irreplaceable role as a “ballast” in residents’ wealth allocation.

“When equity markets are volatile and deposit interest rates fall, funds seek safe havens. Money funds, with their low volatility, high liquidity, and still relatively attractive yields compared to savings accounts, have become ideal short-term parking places for funds,” Tian Lihui explained.

When asked why people still keep money in money funds despite falling interest rates, post-95 investor Xiao Li told Huaxia Times: “One reason is that I’m used to saving in Yu’ebao and other money funds. Another is that these are all liquid funds, so I can withdraw anytime. If I buy other products, it’s not as flexible.”

Industry insiders believe that the core value of money funds is not asset appreciation but asset preservation and extreme liquidity management. Against the backdrop of falling deposit rates and market volatility, money funds serve as a “superior substitute” for bank savings accounts, highlighting their risk-avoidance and payment functions. “For funds that prioritize instant withdrawal, even if yields break below 1%, money funds remain the first choice for liquidity management,” an industry expert told this newspaper.

Money fund dominance

Amid the surge in money fund scale against the trend, Xingzheng Asset Management happens to be a company with a “money fund monopoly.”

Public information shows that Xingzheng Asset Management is a wholly owned subsidiary of Industrial Securities (601377.SH). Its predecessor was the Industrial Securities Asset Management Department established in 2000, which became independent on June 9, 2014. Its registered capital is 800 million yuan.

Wind data indicates that Xingzheng Asset Management’s total product scale is 8.124 billion yuan, with 12 products. Among these, money market funds constitute the majority, with a single fund reaching 6.822 billion yuan; equity products are relatively weak, with 8 mixed funds totaling only 934 million yuan; bond funds amount to 294 million yuan, and FOF funds are less than 100 million yuan.

More specifically, according to Tiantian Fund, although Xingzheng Asset Management has a number of equity products, their individual sizes are generally small. For example, in the mixed fund category, the company’s average fund size is 934 million yuan, ranking 117th among 162 peers; with 27 funds in total, it ranks 92nd in number; and with 9 fund managers, it ranks 107th in personnel.

Editor: Ma Xiaochao Chief Editor: Xia Shencha

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