This means that the majority of the country's public fund managers are more concerned with creating safe bets that will attract capital rather than taking risky gambles for the sake of maximizing returns.
At the same time, there are still only around 80 firms which have received the government's stamp of approval to operate public fund businesses in China, giving each firm a wide berth in the country's swelling capital market.
On the flip side though, China's privately offered funds can hardly rely on drawing in large pools of investors to stay afloat. Nearly all of these funds compete by taking aggressive and risky positions which have the potential to generate big profits for investors. When these investment moves pay off, the managers of these funds take a cut for themselves.
Despite their volatility and their run-ins with trading violations, even during the bearish market conditions seen in 2008, some privately offered funds were able to provide investors 10 or even 20 percent returns.
Once the Standing Committee's rules go into effect in the coming June, investors may begin taking a more critical look at these funds and decide they are worth the risk now that the regulators are keeping a closer watch, a scenario which would invariably take money away from the country's public funds unless they can strengthen their performances.
Beijing style: Duck, opera, fog and cough...
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