SHANGHAI/SINGAPORE (Reuters) -More than a dozen major mutual fund companies in China cut fees in roughly 1,500 fund products on Monday as regulators started reforming fee practices in the $3.7 trillion industry in an effort to reduce costs to investors.

The money managers, including China Asset Management Co and Bank of Communications Schroder Fund Management Co, said in separate statements that management fees in certain equity-focused products would be cut to 1.2% of fund assets, from 1.5% previously. The custodian fee would be reduced to 0.2% of assets from 0.25%.

The cuts, which the fund companies said in identical phrasing were "aimed at reducing investors' costs in managing their wealth", come after China's securities regulator on Saturday vowed to guide mutual fund fees lower.

Chinese mutual funds on average charge investors higher fees than peers in developed markets such as the United States, according to Morningstar.

The China Securities Regulatory Commission (CSRC) said it had drafted reform plans after listening to opinions from market participants, and would optimise mutual funds' fee-charging model and steadily lower the industry's fee rates.

Fund management fees would be capped at 1.2% of assets and custodian fees at 0.2%, state media reported.

"The fee cuts will hit fund companies' earnings in the short-term," with the pain felt the most by those heavily focused on active equity products, said Ivan Shi, head of research at fund consultancy Z-Ben Advisors.

"It's not yet clear if lower fee costs would facilitate fund product sales." The reform comes as regulators also seek to limit executive pay at fund management companies and banks in a so-called "common prosperity" drive designed to reduce wealth gaps. Fund managers are often blamed by retail investors in a sluggish market for pocketing fat fees despite their underperformance. An index tracking the performance of China's actively-managed equity funds tumbled 22.3% last year, more than the 15.1% fall in the benchmark Shanghai Composite Index. Nevertheless, the industry collected 144.1 billion yuan in management fees in 2022, up 1.7% from a year earlier, according to TX Investment Consulting Co.

The industry's total assets under management doubled over the past four years to 26.68 trillion yuan ($3.70 trillion) at the end of March.

FEE CUT

FullGoal Fund Management Co said it would cut fees on 119 products starting Monday, while Harvest Fund Management announced cuts for 113 products.