China will move faster to approve qualified foreign institutional investors that want to put money into Chinese investment funds, said a senior official with the China Securities Regulatory Commission.
"Funds open to public investment look for value and long-term investments and have been the most important institutional investors in the capital market," said Wang Lin, head of the commission's fund supervision department.
"We place a big priority on cultivating institutional investors and will continuously improve the investment environment for foreign ones."
Wang said 69 Chinese fund-management companies were operating by the end of 2011. The value of the separate accounts they managed came to 122.4 billion yuan ($19.35 billion) and the value of the social-security funds they managed came to 301.7 billion yuan.
Wang said 24 of the funds had been around for more than 10 years by the end of 2011. Although the Chinese capital market has been volatile recently, especially in 2011, the funds' average rate of return over a decade was 235.39 percent, and the annualized rate of return was 12.86 percent.
Dai Xianglong, chairman of the National Council for Social Security Fund, said on Saturday that China should gradually increase the amount of investment it allows to be made by qualified foreign institutional investors and eventually get rid of the limit it places on such investment.
Dai said similar funds in the United States and in European countries have invested in stock markets, with some funds having invested about 50 percent of their assets in stocks.
In China, such companies usually invest about 30 percent of their assets in that manner. The country's laws prohibit them from investing more than 40 percent in stocks.
Wang also said fund management companies should chose investment strategies that take advantage of their strengths and mitigate their weaknesses.
They can study clients' requirements and study markets to find products that yield steady returns and come with little risk.
"Fund-management companies all regard an increase in scale to be an important goal and seek to offer a full range of financial products," said Dou Yuming, CEO of Fullgoal Fund Management Co Ltd.
"Besides, they excessively depend on banks to sell those types of products. And the final result can be that fund companies compete with each other by sharing more revenues with banks rather than innovating to promote their products to the public."
"Homogeneous competition is not good for the fund industry or for investors because it cannot create value," Dou said.
Dou urged regulators to relax approvals for fund products so that companies can have more choices and avenues for differentiation.