Mutual fund companies in China are hoping the government will allow them to open discretionary accounts for institutional investors to help jump-start the stagnating industry, Finance Asia reports. For five years the government has been talking about allowing such accounts, and if it gives the green light now, it couldn’t have come at a better time.
According to Finance Asia, Chinese mutual funds have run out of ideas for products, and without something new, they may not be able to persuade institutional investors to keep their money with them. Discretionary accounts are seen as a life saver, but the government is being cautious before tossing it, as it recalls how securities companies – which already offer discretionary accounts – in the past have attracted customers with guarantees that eventually fell apart. The mutual fund industry is hoping to convince the government that it won’t make the same mistakes – and that it’s better managed and better regulated than securities companies.