From high commissions to fixed prices, is high-end financial management charging moving to the next phase?

Open the exquisite wooden door to the VIP room, step onto the thick carpet, and you’ll find that the investment process and targets of high-end financial management are not the typical models that ordinary investors are used to.

They often face high-threshold private placement products, which may carry glamorous terms like “global allocation,” “steady growth,” and “top-tier risk control,” along with the distinction of being “exclusive.” To some extent, these products support the counters and sales volumes of many high-end financial institutions in China.

But can every product be fully understood by investors? Faced with increasingly complex investment schemes that frequently break through traditional geographic and asset boundaries, high-net-worth clients with over 1 million yuan in assets—do they also experience confusion and uncertainty?

All financial products inevitably come with complicated terms. These serve as mutual protection of interests for investors and managers but also build a “professional high wall” of understanding. In this process, non-professional investors often face greater challenges.

When a high-end financial product does not adopt the usual performance-based fee structure and explicitly states “no performance fee,” does such a product become more popular, or does it evoke more “incredible” exclamations?

Everything depends on careful scrutiny of details and cautious review of the product plan······

“Unusual” Private Placement High-End Products

Recently, in the private placement market, a leading securities firm launched a financial product that attracted considerable attention.

According to relevant announcements, this product attracted subscriptions from at least 38 institutional investors and 55 individual investors—typical high-net-worth fundraising in the private sector, and it drew significant attention.

Why did it attract so much professional interest?

Top Channel + Global Institutional Sub-Strategies

This type of product is commonly called QDII-FOF.

Specifically, it is managed by a top-tier high-end wealth management institution (usually a well-known securities firm), which acts as the FOF manager, channeling client funds into QDII public or private funds through the FOF.

Taking the previously mentioned China International Capital XX Smart Selection No.1 QDII-FOF collective asset management plan (hereinafter referred to as “QDII-FOF”) as an example, the institution plans to invest client funds across a diversified range of products, including even renowned overseas asset management firms’ products.

This includes: a global index giant’s market-neutral product, a top hedge fund’s long-short equity strategy, an alternative arbitrage strategy from a well-known investment firm, or a “all-weather” investment strategy from a large overseas investment institution, among others.

More “Complex” Thresholds and Fee Rates

Additionally, these products have the following features:

1. They are private placement products aimed at high-net-worth clients, with a minimum purchase threshold of 1 million yuan, which is currently among the highest for private products.
2. They are positioned as absolute return-oriented products, striving to provide investors with diversified, low-correlation sources of returns.
3. The fees for these products are particularly “favorable”: it is explicitly stated that this QDII-FOF does not charge performance fees or exit fees.

Such features are quite rare within the high-end financial product system.

“Dissecting” the Investment Scope

Careful examination reveals that the product prospectus is quite sophisticated.

Using the previously mentioned QDII-FOF as an example, its investment scope is very broad, giving the FOF manager considerable flexibility in “adjusting” the portfolio:

According to the contractual terms, it at least includes:

Domestic assets: bank demand deposits, government bonds, central bank bills, financial bonds issued by the government, local government bonds, money market funds

Overseas assets: transferable certificates of deposit, government bonds, money market funds; publicly offered funds registered with securities regulators of countries or regions that have signed bilateral regulatory cooperation memoranda with the China Securities Regulatory Commission (including open-end funds and exchange-traded funds ETF)

If laws, regulations, or regulatory authorities later permit collective plans to invest in other asset classes, the manager can include them in the investment scope after proper procedures

From the wording, this appears to be a typical conservative global asset allocation list. However, note that it not only opens up to money and fixed income instruments but also mentions overseas public funds (with conditions), money market funds, and a “bottom-line” scope—

At least from the description, this product mainly achieves overseas investment through the subscription of overseas public funds.

“Bridging” to Overseas Investment

Typically, high-quality private fund managers often achieve global allocation by directly investing in overseas stocks, bonds, and other assets, seizing global market opportunities directly.

However, due to the separation from public QDII products, such products usually invest in overseas private funds through certain channels.

In fact, overseas public funds, because of their high liquidity and broad accessibility, can also be part of some investors’ investment tools. But in the private sales field, ultimately turning to public funds for overseas investment seems somewhat “a compromise.”

This design raises questions: why would a private product, which should seek breakthroughs in flexibility and high returns, ultimately choose to invest overseas via traditional “stable tools” like public funds?

Fees in “Disguise”?

When a leading securities firm acts both as the manager and the seller, product design decisions are often very delicate.

In conventional private asset management products, performance fees are the core mechanism for managers to share excess returns, usually taking 20% of the outperformance over a benchmark.

This arrangement incentivizes investment ability and is an important benchmark for investors to evaluate the product’s value.

The key point of the aforementioned QDII-FOF is that it completely eliminates the performance fee clause, with the contract explicitly stating: “This plan does not charge performance fees.”

Thus, the fees involved are only: a subscription fee of 1%, an annual management fee of 1.5%, and custody fees, with no exit fees charged to investors.

This may be related to its ultimate investment in public funds, since both overseas and domestic public funds rarely charge performance fees.

“Culinary” Complex Fee Structure

However, behind this design lies a more complex fee structure worth further analysis.

The contract clearly states: “This plan does not charge performance fees.” This phrase can be easily interpreted as the product itself not having performance fees, but the subject is “this plan,” meaning at the “outermost” asset management plan level, no performance fee is charged.

But a section of the product contract is often overlooked: “As a holder of offshore fund units, this fund also bears relevant offshore fund expenses.”

Behind this statement lies critical information.

Let’s make an assumption: when a securities firm’s QDII-FOF invests in a U.S. active public fund with management fees of 1.2% and a subscription fee of 0.5%, the total 1.7% fee does not appear in the China International Capital QDII-FOF fee list but is directly deducted from the fund’s net asset value, ultimately borne by the investor.

In other words, the “performance fee” in traditional private funds disappears, but both the outer and underlying products will each charge their own management fees.

This kind of “implicit fee” often appears in such “nested” structures.

Additionally, the contract mentions: “During the operation of the collective plan, handling fees, certificate management fees, transfer fees, stamp duties, subscription/redemption fees, commissions, and other related taxes and fees incurred shall be directly deducted based on actual amounts.”

This wording should not be overlooked: because sometimes, transaction fees in certain markets and platforms are not cheap.

The Broker as “Trader”

As the operator of this product, the relevant securities firm undoubtedly plays a key role.

Not only is it the manager of the product, but it is also one of the sales channels. This integrated structure allows it to maintain greater flexibility and stability in fund flow and management.

In other words, China International Capital is responsible for investment decisions, fundraising, and client services.

Against the backdrop of securities firms actively transforming into “buy-side investment advisors,” such products become a crucial tool in competing for high-net-worth clients.

Transparency in Fees Is the Trend

From the above analysis, we see that although the aforementioned QDII-FOF appears to have no performance fee on the surface, in reality, through a series of complex investment strategies, investors still inevitably pay some fees. These fees, due to the complex structure, are easily overlooked beforehand and difficult to verify afterward.

This design makes fees less transparent. Investors seeing “no performance fee” often mistakenly believe that the total costs are low, ignoring the multiple hidden fees that may exist within the underlying funds.

If such products target overseas hedge funds, investors might unknowingly pay performance fees to overseas fund managers.

Because nested sub-products’ fees do not disappear; they are embedded within the structure and manifest through their impact on net asset value.

Therefore, when evaluating this product, investors need to pay attention not only to its investment directions and fee structures but also to how these “hidden charges” subtly influence their long-term returns.

Risk Warning and Disclaimer

Market risks are inherent; investment should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions herein are suitable for their particular circumstances. Invest at your own risk.