To push the entry of medium and long-term funds into the market before the Spring Festival, on January 23, the State Council Information Office held a press conference to further explain the "Implementation Plan for Promoting the Entry of Medium and Long-term Funds into the Market" issued yesterday. In the introduction and Q&A session by responsible persons from the five ministries, clear indicators were given regarding the pace, scale, and future planning of the entry of medium and long-term funds such as insurance funds, national social security funds, basic pension insurance funds, enterprise annuity funds, and public funds into the market. Among them, a specific target set for public funds is "to increase the market value of A-share holdings by at least 10% annually for the next three years." During the meeting, the Chairman of the Securities Regulatory Commission, Wu Qing, also outlined the future direction of public fund reform, focusing on lowering fees, developing equity funds, and providing specific directions for tasks. After the meeting, several fund companies promptly provided their interpretations. Refinement and Upgrade of Multiple Measures In the view of Caitong Fund, the "Implementation Plan for Promoting the Entry of Medium and Long-term Funds into the Market" released at the beginning of 2025 further refines and deepens specific measures based on the 2024 "Guiding Opinions on Promoting the Entry of Medium and Long-term Funds into the Market," strengthens the long-term performance appraisal mechanism, introduces an interest binding mechanism, and tracks the implementation details and KPI changes in the non-banking sector. The policy was issued before the new year, intending to boost market confidence. In comparison, Caitong Fund summarized the advancement and deepening of 6 major policies: Firstly, the implementation plan further refines specific measures, clearly enhancing the A-share investment ratio of commercial insurance funds, promoting the implementation of the second batch of insurance funds' long-term stock investment pilot projects, with a focus on the expected approval of 50 billion before the Spring Festival, which is particularly worth market attention; optimizing the investment management mechanisms of social security funds and basic pension insurance funds. Secondly, the implementation plan specifies a three-year or longer performance appraisal for state-owned insurance companies, refining the long-term performance appraisal mechanisms of social security funds and basic pension insurance funds. The specific appraisal period was not previously specified. Thirdly, in terms of deepening the optimization of the capital market ecosystem, new measures were introduced to guide listed companies to implement a dividend policy multiple times a year, promote the use of share repurchases and shareholder loans tools, and allow various types of medium and long-term funds to participate as strategic investors in private placements. Fourthly, the introduction of an interest binding mechanism. Wu Qing emphasized the establishment of an interest binding mechanism between fund managers, fund managers, and investors to enhance investor satisfaction. Fifth, policy coordination and implementation. This also coincides with the joint issuance of the implementation plan and the departmental arrangements of the press conference, emphasizing multi-department coordination, specifying specific operational paths, such as promoting the implementation of private equity securities investment funds operating rules, and expanding the scale of mutual exchange operations. Lastly, the impact on market expectations. By clarifying the path for incremental funds to enter the market, market expectations are directly increased, injecting more long-term stable funds into the capital market. Yifangda Fund stated that the implementation plan proposed a series of specific measures and made some institutional arrangements adapted to long-term investments from the perspectives of performance appraisal system, investment policies, and market ecosystem construction, such as increasing the A-share investment ratio, extending the appraisal period, guiding listed companies to increase their share repurchases, implementing a dividend policy multiple times a year, etc., will further enhance the ability of medium and long-term funds to allocate their rights and interests, help steadily expand investment scale, optimize market funding supply and investor structure, reduce short-term market fluctuations, enhance the inherent stability of the capital market, promote the formation of a "more long-term funds, longer funds, and better returns" capital market ecosystem, realize the benign cycle of value preservation and appreciation of medium and long-term funds, stable and healthy operation of the capital market, and high-quality development of the real economy. What are the Fund Companies Concerned About? Based on the interpretations of multiple fund companies on the plan and the news conference, clearing bottlenecks and checkpoints, fund companies are more concerned about changes in the assessment period, product guidance direction, and innovation in market entry tools. Focus One: Clarifying the assessment period for more than three years, and introducing an interest binding mechanism. Huatai Bairui stated that the policy focuses on guiding institutions for long-term assessments, mentioning multiple times the content of assessments lasting more than three years, starting directly from the capital end and guiding the funds to focus on long-term factors. Social security funds, enterprise annuities, and other investments have a longer cycle. By increasing the proportion of equity asset investments or the level of market-oriented investment operations, market fluctuations can be alleviated to a certain extent, reducing market volatility caused by irrational factors. Increasing the scale and proportion of equity funds can provide investors with more choices to participate in the capital market, and there is a greater need for an interest binding mechanism between fund managers, fund managers, and investors. Investor satisfaction is the source of attracting investors to continuously enter the market. Focus Two: Guidance on dividends and dividend yield. Wu Qing stated that guiding listed companies to increase their share repurchases and implement a dividend policy multiple times a year. The dividend yield of the CSI 300 reaching 3%, significantly higher than the yield on the 10-year government bond, further highlights the investment value of the equity market. This adjustment also offers opportunities to the market. Huatai Bairui stated that the annual dividend and special dividend policy in the A-share market is relatively mature. The policy of multiple dividends a year can effectively enhance the market satisfaction of small and medium shareholders, stabilize market investor expectations, and attract long-term funds. Through more frequent dividends, investors can more intuitively understand the profit status and cash flow level of listed companies and focus on shareholder returns rather than capital gains fluctuations. Along with market adjustments, the dividend yield of the CSI 300 index has returned to 3% since the beginning of the year. As of January 22, the dividend yield of the CSI 300 index over the past year was 3.36%, reaching a new high since the market in 924. At the same time, with the decline in the yield of the ten-year government bond, the stock-bond yield spread of the CSI 300 index (FED premium) has reached 6.48, higher than 95% of the time in the past ten years, indicating significant allocation value. Focus Three: Expansion of tools such as swap facilities is conducive to enhancing market depth and breadth. Huatai Bairui pointed out that looking ahead, the policy space for securities and fund companies to swap convenience will be further improved, injecting more incremental funds into the capital market. This tool can provide liquidity support in extreme situations in the stock market and to some extent alleviate extreme risks; on the other hand, the central bank can also influence the liquidity of the stock market through this tool, making the channel more regular and direct. Promoting the further development of swap convenience services between insurance companies and securities fund companies helps to enhance the depth and breadth of the market. Focus Four: Strengthening regulatory classification evaluation guidance. Wu QingWhen it comes to the reform of public funds, it is stated that increasing the proportion of equity funds and long-term performance indicators in the regulatory classification evaluation, guiding fund companies to self-purchase a certain percentage of their equity funds with annual profits. In the view of China-Europe Fund, regulatory agencies evaluate the long-term investment capabilities of fund managers by optimizing the performance indicators of various types of products, emphasizing the stable performance of funds in different market environments, reflecting a comprehensive assessment of the capabilities of fund managers by regulatory agencies, aiming to promote the healthy development of the fund industry and the long-term interests of investors. "Guiding fund companies to self-purchase a certain percentage of their equity funds with annual profits" can better align the interests of fund companies with their shareholders, and promote the long-term development of the industry.Domestic and foreign public funds spoke out: A shares' undervalued high-quality companies will have huge investment value. At the current time point, with the introduction of medium and long-term funds into the market, how do institutions view it? Du Meng, Deputy General Manager and Chief Investment Officer of Morgan Asset Management China, believes that at the current time point, among all asset classes, we should be confident in the Chinese stock market. Chinese stocks are undoubtedly an extremely attractive long-term investment choice. In the A-share market, there are many globally competitive companies that, even at the bottom of the industry cycle, can maintain good growth momentum. However, the market assigns very low valuations to these companies at the bottom of the industry cycle. Assuming the market returns to a normal level with profitability or economic improvement, then these undervalued high-quality companies may have huge investment value. In the long run, they have very large investment opportunities. Li Zhan, Chief Economist of the Research Department of China Merchants Fund, pointed out that the entry of medium and long-term funds into the market is a key measure to deepen the reform of the capital market, aiming to optimize the market structure by introducing stable and long-term funds. This is beneficial for enhancing market stability, optimizing investor structure, optimizing market ecology, and achieving a win-win situation between the capital market and the real economy. Several institutions also emphasize that insurance funds are the most certain incremental funds. Zhang Junxiao, head of the Total Cycle Department of Penghua Fund's Research Department, pointed out that the long-term stock investment pilot will also add hundreds of billions in new increments, with a large proportion being invested in dividend assets. At the same time, it is worth noting that insurance companies face regulatory pressures such as solvency, which is another key factor restricting insurance companies from increasing their equity positions. Follow-up policies need to be further observed. Dividend assets may benefit first Policies clearly require public funds and insurance funds to increase their investments in A shares, especially as 30% of new insurance premiums each year will be used for A-share investment, and before the Spring Festival, the initial 50 billion insurance funds will be used as a pilot for investment in securities funds. In the view of institutions, this will bring tens of billions of long-term funds to the market, and dividend assets, due to their high dividend yield and low volatility characteristics, will become an important direction for the allocation of these funds. Wanjia Fund pointed out that in the short term, the release of policy dividends will drive funds towards dividend assets; in the medium to long term, the stable income attributes, inflation resistance, and market structure optimization trends of dividend assets make them a preferred target for investor allocation. Overall, under the multiple favorable factors of policy support, capital inflow, and improving market environment, the investment value of dividend assets will continue to be highlighted, providing investors with steady returns and becoming an important support for the high-quality development of the capital market. Fangzheng Fubon Fund believes that insurance funds are currently the incremental funds with higher certainty in the equity market. Based on the growth in scale and every 1 percentage point increase in market entry ratio, it can bring in billions of funds. The growth in premium income drives the increase in the use of funds balance, which can provide long-term stable incremental funds to the market, and increasing the allocation to equities in a low-interest-rate environment also helps alleviate the pressure of asset shortage. It is optimistic that insurance funds and insurance companies are expected to achieve better returns as the bottlenecks in the entry of medium and long-term funds into the market are continuously cleared. This article is reprinted from "Cai Lianshe", edited by GMTEight: Jiang Yuanhua.