Major Changes in the Fund Industry: Fund Managers Become 'Partners' with Mandatory 40% Salary Investment, Is Our Investment More Stable?

What's changing

It has been reported that China's fund industry is moving toward a partner-style compensation model in which fund managers will be treated as "partners" and required to invest a fixed portion of their salary—reportedly 40%—into the funds they manage, according to TMTPost. The change is pitched as a way to better align managers' interests with those of retail and institutional investors by forcing personal capital at risk alongside fund capital. Details remain sparse and it is unclear how broadly or how quickly the requirement will be implemented across different types of asset managers.

What it means for investors

In theory, managers with skin in the game can curb short-termism and reduce incentive to chase hot trades. But personal investment does not eliminate market risk, liquidity mismatches or structural problems in product design. Will mandatory co-investment meaningfully protect small investors from losses? Not necessarily. It may increase confidence in fund governance, yet stability depends on portfolio quality, leverage levels and enforcement of transparency and risk controls—factors that money parked in a manager’s own account cannot fix alone.

Industry and geopolitical context

This move fits a broader Chinese regulatory trend toward tighter governance and de-risking of the financial sector that has accelerated since Beijing’s post-2020 clampdowns on parts of the private economy. Regulators are signalling preference for stability and alignment over rapid growth. The change could reshape pay packages, talent flows and fundraising practices at domestic asset managers, and it will be watched by foreign investors assessing governance improvements amid capital controls and geopolitical frictions. Ultimately, mandatory co-investment is a governance tweak — useful, perhaps, but hardly a panacea for the many systemic risks that still face China's fund industry.