China strengthens long-term performance disclosure for mutual funds

Mutual fund management companies in China will be required to disclose long-term investment performance in periodic reports, rather than short-term returns, from May, as part of regulatory efforts to encourage value investing and strengthen investor protection.

On Friday, the China Securities Regulatory Commission released revised rules on the content and format of periodic disclosure for publicly offered funds, effective from May 1. The Asset Management Association of China also issued new reporting templates, known as the XBRL templates, to implement the country's action plan for promoting the high-quality development of the mutual fund industry.

Under the new templates, fund managers will disclose products' seven- and 10-year performance in annual, semiannual and quarterly reports, while one-month performance will no longer be reported, guiding the industry to focus more on long-term and value-oriented investment.

Fund managers will also be required to disclose in annual and semiannual reports the proportion of profitable investors over the past year for actively managed equity and hybrid funds, aiming to place greater emphasis on investors' actual returns.

In addition, annual reports should include stock turnover ratios, encouraging portfolio managers to adopt more prudent and rational investment strategies.

The securities regulator also streamlined disclosure items repeated across periodic reports in the revised rules while introducing more tailored requirements based on the functions of annual, semiannual and quarterly reports, drawing on practices in mature overseas markets.