As early as 2019, UBS asset management (Shanghai), a wholly foreign-owned enterprise of UBS asset management in China, officially launched the first fof, marking the formal ice breaking of foreign private equity fof. Now, the issuance of related products has been accelerated. In addition, the new QFII rules introduced in September this year also allow QFII to directly invest in private equity funds. What we can expect in the future is that QFII will increase the distribution of fof products issued by foreign investors in China.
Xia Kun, the fund manager of UBS asset management (Shanghai), said in an exclusive interview with the first finance and economics reporter a few days ago that from a strategic perspective, fof products mainly create a stable all-weather investment portfolio by dispersing risk and income, and strive to achieve a full balance between various investment strategies and income drivers. The underlying funds of the products mainly include the private placement products of fundamental stocks, quantitative relative value and systematic commodity trading advisor (CTA), which are dynamically adjusted with the changes of market risks.
At present, global funds are looking for returns, but the quality of returns and the level of returns itself deserve attention, such as the control of volatility and the grasp of the relevance of major assets. Xia Kun introduced that there are three main ways to obtain absolute return: the first is hedging (excluding systemic risks); the second is decentralization, which means putting together low related income sources. These two are the current focus of fofs diversified investment strategy; the third is to lengthen the investment time (such as stocks), which is mainly the homework customers need to do well.
If we can achieve reasonable diversification, then the correlation between active returns can be very low, which also means that in different cycles or market conditions, portfolio volatility will be smaller. Xia Kun said, for example, if the original individual strategy or asset market has more than 10 points of withdrawal, but if the portfolio is sufficiently dispersed and different income sources are put together, other fund positions can still contribute to the return, and the withdrawal may be further narrowed to a smaller size.
Relevant data shows that the average yield of private fof funds in the first three quarters of this year is the highest since 2016. The number of public raised fofs has also increased from 6 in 2017 to more than 130, and the scale has also increased from 22 billion yuan to more than 74 billion yuan.
With the deepening of Chinas net worth transformation and the acceleration of financial opening, the fof products of foreign private equity institutions may usher in two opportunities.
According to the first financial reporter, in the fixed income + products of bank financial management, equity has increasingly become an important source of increased income. However, in order to control the volatility, equity allocation of about 5% is common. Compared with direct investment, outsourcing mom / fof is still the main form of investment. In the context of increasing volatility in the stock market, financial managers also increasingly favor quantitative strategies. It is true that more and more wealth management subsidiaries are showing interest in fof strategy. Xia Kun said.
In addition, the new QFII rules issued on September 25 orderly expanded the scope of QFII investment, and added new QFII to participate in margin trading, refinancing and lending, private investment funds, financial futures, commodity futures, etc. From this point of view, foreign private placement of exhibition industry in China is expected to obtain QFII funds from overseas parent companies (mostly seed funds), while other third-party QFII are more likely to obtain Chinas market exposure by investing in foreign private placements in China that are more familiar with foreign culture. Fof strategy is expected to become the focus of attention.
In Xia Kuns view, under the current policy, stock index futures have strict fund hedging requirements, and need to match the futures with cash, which is also true for QFII. In the future, if the speculative account can be moderately relaxed, the application of quantitative strategy will be more flexible. Meanwhile, it is expected to ease the deeper discount of the CSI 500 contract and reduce the hedging cost.