Guidelines for Pension Target Securities Investment Funds (for Trial Implementation)

 2018-08-09  3


· Document Number:Announcement No. 2 [2018] of the China Securities Regulatory Commission

· Area of Law: Securities Civil Law

· Level of Authority: Departmental Regulatory Documents

· Date issued:02-11-2018

· Effective Date:02-11-2018

· Issuing Authority: China Securities Regulatory Commission

· Status: Effective

 

Announcement of the China Securities Regulatory Commission
(No. 2 [2018])
The Guidelines for Pension Target Securities Investment Funds (for Trial Implementation) are hereby issued and shall come into force on the date of issuance.
China Securities Regulatory Commission
February 11, 2018
Guidelines for Pension Target Securities Investment Funds (for Trial Implementation)
Article 1 To meet the needs of the financial management of pension funds, regulate the operation of pension target securities investment funds (hereinafter referred to as “pension target funds”), and protect investors' lawful rights and interests, these Guidelines are developed in accordance with the Securities Investment Fund Law, the Measures for the Administration of the Operation of Publicly Offered Securities Investment Funds and other relevant provisions.
Article 2 “Pension target funds” means the publicly offered securities investment funds that are established for the purpose of pursuing the long-term steady appreciation of pension assets, whose investors are encouraged to hold them on a long-term basis, that adopt mature asset allocation strategies, and that reasonably control the investment portfolio fluctuation risks.
Article 3 Pension target funds shall be operated in the form of fund of funds (“FOF”) or other forms recognized by the China Securities Regulatory Commission (“CSRC”).
Article 4 Pension target funds shall adopt mature and steady asset allocation strategies, control the downside risks of funds, and pursue long-term steady appreciation of funds. Investment strategies shall include target date strategies, target risk strategies and other strategies recognized by the CSRC.
The funds adopting the target date strategies shall, as the preset target dates approach, gradually reduce the allocation ratios of equity assets, and increase the allocation ratios of non-equity assets. The equity assets shall include stocks, stock funds and hybrid funds.
Funds adopting target risk strategies shall, according to specific risk preferences, set the benchmark allocation ratios of equity assets and non-equity assets, or use widely accepted methods to define the portfolio risks [such as fluctuation ratio], and take effective measures to control the fund portfolio risks. Funds adopting target risk strategies shall specify risk levels and their meanings, and indicate them in the prospectuses.
Article 5 Pension target funds shall be operated in an open-end manner on a periodical basis or set the shortest holding period by an investor, which shall match with the investment strategy of the fund. The closed operation period for the periodical opening of a pension target fund or the shortest holding period by an investor shall be not less than one year.
Where the closed operation period for the periodical opening of a pension target fund or the shortest holding period by an investor is not less than one year, three years or five years, the proportions of investments of the fund in stocks, stock funds, hybrid funds, commodity funds (including commodity futures funds and Gold ETF) and other varieties shall, in principle, not exceed 30%, 60%, and 80%.
Article 6 The fund management institutions of pension target funds shall develop the selection criteria and systems for sub-funds (including Recognized Hong Kong Funds), with the focus of investigation put on style characteristic stability, risk control and compliance operations, and evaluate the medium and long-term returns, performance fluctuation and withdrawal according to the performance benchmarks. An invested sub-fund shall meet the following conditions:
(1) The operation period of a sub-fund shall not be less than two years and the average end-season net fund assets in the most recent two years shall not be lower than 200 million yuan; and where the sub-fund is an index fund, ETF or commodity futures fund and other varieties, the operation period shall be not less than one year, and the end-season net fund assets disclosed in the most recent periodic report shall be not less than 100 million yuan.
(2) A sub-fund is operated in compliance with regulations, and has clear style, good medium and long-term profits and relatively low performance fluctuation.
(3) The sub-fund management institution and the fund manager of the sub-fund have no serious violation of laws or regulations in the most recent two years.
(4) Other conditions as prescribed by the CSRC.
Article 7 A fund management institution meeting the following conditions shall be encouraged to apply for raising pension target funds:
(1) The company has been formed for two years or more.
(2) The corporate governance is sound and stable.
(3) The company has relatively strong asset management capability, funds with clear style and stable performance, and publicly offered funds (excluding monetary market funds) whose average management scale in the most recent three years exceeds 20 billion yuan or FOF under management whose performance fluctuation is relatively low and scale is relatively large.
(4) The company has relatively strong investment and research capacity, and its investment and research team shall have not less than 20 employees, at least three of whom are qualified as fund managers of pension target funds.
(5) The company is stably operated in compliance with the law and has no serious violation of laws or regulations since its formation or in the most recent three years.
(6) Other conditions as prescribed by the CSRC.
Article 8 A fund management institution shall give priority to selecting investment researchers meeting the following conditions as fund managers of pension target funds:
(1) He or she has five or more years of experience in securities investment, securities research and analysis and securities investment funds research evaluation or analysis in the financial industry, including at least two years of experience in securities investment; or more than five years of experience in pension or insurance asset funds allocation.
(2) He or she has stable and sound historical investment performance and has no major management misconduct.
(3) He or she has no serious violation of laws or regulations in the most recent three years.
(4) Other conditions as prescribed by the CSRC.
Article 9 Pension target funds may set preferential fund rates, and, through differentiated rate arrangements, encourage investors to hold pension target funds on a long-term basis.
Article 10 To recommend pension target funds to investors, fund management institutions and fund sales agencies shall follow the following principles:
(1) They shall recommend to investors suitable pension target funds according to investors' ages, retirement dates and income levels, and direct investors to make long-term pension investment.
(2) The target date funds recommended to investors shall match with their expected investment terms.
(3) Other requirements as prescribed by the CSRC.
Article 11 Pension target funds shall include the words “pension target” and reflect investment strategies in fund names. A fund that adopts the target risk strategy shall also specify the product risk level in the fund name. Other publicly offered funds shall not include the word “pension.”
The publicity and recommendation materials for pension target funds shall clarify that the name containing “pension” does not mean income guarantee or income commitments in other forms, and indicate at conspicuous places and in eye-catching ways that the products are non-breakeven, and losses may occur. Fund managers shall develop special risk disclosure statements for pension target funds, and require investors to confirm in written or electronic forms that they understand product features. The risk disclosure statement for a pension target fund shall include but not limited to fund investment strategy, allocation proportion of equity assets, fund risk characteristics and fund management fees, custodian fees and sales expenses, among others.
Article 12 Where, after these Guidelines come into force, a publicly offered fund whose name has included the word “pension” fails to meet the requirements of these Guidelines, the fund management institution shall undergo the procedures of modifying the fund name within three months, except that the fund is a “pension” industrial investment-themed fund.
Article 13 These Guidelines shall come into force on the date of issuance.