SHANGHAIHONG KONG, Nov 20 Reuters Major Chinese fund companies announced a big reduction in fees for a batch of equity exchangetraded funds ETFs on Wednesday, intensifying price competition in the rapidly expanding 400 billion sector of the market.

The move to cut management and custodian fees by as much as 70 came a day after Wu Qing, China39;s chief securities regulator, pledged to encourage index investment and fund industry fee reform.

ETFs funds that typically track an index and trade on an exchange have boomed this year as fund companies compete fiercely to lure investors disillusioned by poorly performing active fund managers. The latest fee cuts are expected to potentially channel new capital into a waning bull market, but will also hurt industry margins.

A lower price point is emerging for ETF fees. This may kindle wider fee compression in the coming quarters, fund consultancy ZBen Advisors said in a note to clients.

Managers must adapt and internalize costs to align with the direction of policy.

China Asset Management Co ChinaAMC, the country39;s top ETF manager, said in a statement it would cut fees in eight ETF products, including the 160 billion yuan 22.10 billion China SSE 50 ETF, to lower investors39; wealth management cost.

The management fee would be slashed by 70 to 0.15 from 0.5, while the custodian fee would be halved to 0.05.

Fund companies including E Fund Management, HuataiPineBridge Fund Management, Harvest Fund Management and HuaAn Fund…