China's Asset Management Association has issued a revised directive concerning fund managers who also oversee private asset management plans. The updated guidelines stipulate that fund management companies must implement a long-term assessment mechanism for these dual-role investment professionals, with evaluation periods extending beyond five years.

The China Securities Investment Fund Association (CIFA) released the revised "Guidelines for Fund Managers Concurrently Serving as Investment Managers for Private Asset Management Plans" on June 12. A key provision requires fund managers to strengthen the long-term assessment of these individuals, mandating performance reviews over cycles longer than five years.

Assessment Criteria and Restrictions

The evaluation and incentive metrics must cover the long-term performance of all portfolios managed by the individual, their compliance record, and the execution of fair trading practices. Crucially, these incentives must not be directly linked to the variable management fees or excess performance fees of the private asset management plans they oversee. Furthermore, the investment managers and their immediate family members are prohibited from investing in the private asset management plans they manage.

Core Objectives of the Revision

The revision aims to implement the "Action Plan for Promoting High-Quality Development of Public Funds," further standardize the concurrent management by public and private fund investment personnel, enhance risk isolation requirements between public and private business operations, and continuously improve industry compliance standards. The guidelines have been filed with the China Securities Regulatory Commission and will take effect on June 12, 2026.

Key Provisions for Fund Management Companies

Fund management companies are required to strengthen risk isolation, strictly implement internal controls, fair trading, information segregation, and disclosure regulations. They must prudently assess potential conflicts of interest and improve related internal management systems. Effective measures must be taken to ensure separation between public fund management and private asset management businesses in terms of premises, personnel, accounts, capital, and information.

Qualifications for Concurrent Role Investment Managers

Individuals serving in these dual roles must meet specific conditions, including a clean professional record with no criminal penalties, administrative punishments, or disciplinary actions in the past five years. They must possess clear and stable investment styles and have at least five years of investment management experience in equity-oriented public funds, equity-oriented private asset management plans, or annuity/social security fund portfolios.

Management and Monitoring Requirements

Fund companies must prudently evaluate factors such as investor needs and the manager's capabilities before allowing such concurrent roles. In principle, a single investment manager should not manage more than 10 public funds and private asset management plans combined, excluding index-tracking products. Companies must enhance management and monitoring of trading activities across multiple portfolios to prevent unfair trading, including strengthening investment order management and post-trade analysis.

Disclosure and Registration Obligations

Fund management companies must fully disclose a fund manager's concurrent role situation in periodic fund reports, including the number, type, and size of products managed. When appointing an investment manager to a dual role, companies must register the individual with the association and submit additional materials, including a feasibility analysis report and a compliance review report.

Transition and Implementation

Fund management companies and individuals that do not comply with the new guidelines when they take effect must complete rectifications or adjustments within 12 months. Existing asset management plans that do not comply with the rule prohibiting investment by the manager and their immediate family must not increase the net participation size of these individuals until the contract expires, after which the plan cannot be renewed.