(Yicai Global) July 11 -- Many Chinese fund management firms slashed their management fees by around 20 percent this week, as part of efforts to attract more clients. But the move will not allay investors’ concerns over poor returns, market insiders told Yicai Global.

Many fund managers, including E Fund Management and China Asset Management, annouced to lower their fees on July 8, after the country’s securities watchdog said that it will guide public fund managers as well as other institutions within the sector to trim the fees they charge to manage funds by a reasonable amount.

As a result, from yesterday, the rates for management fees of over 1,500 funds were trimmed to 1.2 percent from 1.5 percent and custodial fees to 0.2 percent from 0.25 percent.

Before this, some 3,550 active equity funds out of over 4,200 charged management fees of 1.2 percent or higher. This round of fee cuts will target around 30 percent of these funds, and it is likely that half of them will have their rates slashed by the end of the year, according to financial data provider Choice.

Although reducing fees can improve the sales and issuance of funds, it does not change investors’ expectations of return on investment, market insiders told Yicai Global. Fund managers still need to improve their abilities and quality of services, they added.

Funds are not performing well at the moment, an industry analyst said. During a downturn in issuing funds, fee cuts will help to some degree.

But simply cutting fees will not alter the whole picture, if yields cannot be improved, said an insider at a fund manager based in eastern China.

“To fundamentally resolve the problem of ‘funds making money, but investors not’ calls for joint efforts from the entire sector and all industrial chains,” said Zhuang Yuanfang, vice chairwoman and general manager of Xingzheng Global Fund Management.

Only 43 percent of 4,074 active funds, not including new ones set up this year, made money in the first half, according to Choice. The others all suffered a loss.

Editors: Shi Yi, Kim Taylor