Public funds ride the storm to lead the value discovery of capital market

category:Finance
 Public funds ride the storm to lead the value discovery of capital market


2020 is the 30th anniversary of the establishment of the capital market, and also the 22nd year of riding the storm of public funds. Since 1998, along with the process of reform and opening up, public funds have grown from scratch, from 0 to 18.31 trillion, giving full play to the advantages of backwardness, combining with local conditions, learning from international development experience, constantly exploring and innovating, and gradually growing into the mainstay of the capital market.

Since its birth, public funds have brought inclusive gene - 1 yuan threshold, behind which is the wealth accumulation of hundreds of millions of families. In the process of public funds entering thousands of households, long-term investment concept has also been popularized to every ordinary investor.

Aunt Liu, a retired teacher in Shanghai, has nearly five years of fund investment experience. She told reporters that she first bought the fund in 2016. At that time, my neighbors and friends were all in the market. They often talked about investment with me. I saw that buying funds could make money, so I bought some of them.

I didnt expect to encounter a big bear market in 2018 only two years later, and Aunt Lius fund also suffered floating losses. Several products lost money as soon as they were bought. The overall decline in 2018 was also relatively large. With the recovery of the market since 2019, the funds held by Aunt Liu have recovered, and some funds have also obtained rich investment returns.

The importance of investing in funds in the middle and long term can be realized vividly. First of all, we should adhere to long-term investment, and dont rush to redeem because of short-term losses. Second, we should not blindly follow suit. We should do our own homework instead of blindly following suit. Aunt Liu said of her investment experience.

According to Hu Tao, managing director and balanced style investment director of Harvest Fund, although the net value of the fund will encounter short-term fluctuations, the long-term profit-making effect of public funds is the basis for the fund industry to win the recognition of investors in the past 22 years. He cited data from a group of fund industry associations: as of the end of the second quarter of 2019, from the perspective of fund management companies, companies with more than 15 years of establishment (accounting for about 25%) have an average scale weighted cumulative rate of return of about 6 times for active equity funds, and about 4 times for companies with more than 7 years of establishment (accounting for about 50%) Wealth accumulation effect. From the product level, the average annualized yield of stock funds was 14.08%, which was 8.01 percentage points higher than the average increase of Shanghai Composite Index in the same period; the average annualized yield of bond funds was 6.93%, which was 4.18 percentage points higher than the three-year fixed deposit interest rate of emerging banks, and achieved good investment returns as a whole.

To give another example, in June 2015, A-shares reached the peak of the previous bull market. Five years on, the Shanghai Composite Index has fallen 43% in the past five years. However, public funds have made solid investments. 95% of the funds have outperformed the Shanghai Stock Exchange Index, and 11 active equity funds have a period yield of more than 100%. Hu Tao said.

Fund practitioners have the responsibility and obligation to do their best to manage the funds entrusted by investors and return investors with good long-term yield. The value created by public funds for investors can lock in the income for investors by means of dividends, or encourage investors to hold for a long time through net value growth. Guangfa fund strategy investment department fund manager Miao Yu said.

Ma Jun believes that the so-called leapfrog development does not mean how large the scale is, but only the result. Behind the scale is that public funds have won customers trust with perfect internal control system and stable performance, which is the foundation of long-term and stable development of public funds.

Huitianfu said that in the process of the evolution of the capital market and the development of the public fund industry, the image of professional investment institutions of public funds has gradually gained the trust of the people. Especially after the promulgation of the new regulations, the unreasonable and non-standard products in the field of asset management gradually declined, and the institutional advantages and professional abilities of public offering were further established.

Support the construction of three pillars for the elderly

Become the main force of pension investment management

The fund industry has a long history of participating in pension investment management. At present, the pension assets that have been invested and operated in the market include the national social security fund, enterprise annuity and some basic pensions, of which about 60% are invested and managed by fund companies. The public fund has always been one of the most important investment managers of pension. Over the past 20 years, the public fund industry has cultivated a large number of professional investment management talents and teams.

From the perspective of performance, from 2001 to 2019, public funds helped social security funds to achieve an annualized 8.15% return on investment. Compared with other countries, Chinas pension market has great potential. According to the data of Huaxia Fund, by the end of 2019, the scale of Chinas market-oriented investment and operation pension was about 5.7 trillion yuan, accounting for only 5.8% of GDP, while the scale of the second and third pillar pension of the United States was 1.2 times of its GDP, and the scale of the second and third pillar market-based operation of the members of the organization for economic cooperation and development also reached 50.7% of GDP.

According to Hu Bing, managing director of Huaxia Fund and director of pension business, public funds have distinct characteristics and advantages in Pension Investment: firstly, pension is a long-term fund, equity investment is the core source of investment income, and public fund has obvious advantages in equity investment; secondly, in social security fund, basic pension and annuity business, Public funds have the earliest participation time, the largest number of participating institutions and the widest coverage, and are the main force of pension investment management. In addition, in the future pension investment management, the importance of fine and diversified asset allocation will become more and more prominent. Banks and financial subsidiaries have natural advantages in non-standard assets, and fund companies can strengthen the management ability of equity funds Or focus on the development of actively managed bond funds, as well as ETF and fof products, and at the same time provide the underlying allocation tools for banks Pension Asset Management. Of course, banks, insurance and funds have their own advantages. There are both competition and cooperation in the future development, so as to jointly establish an endowment financial ecosystem.

In the view of Ma Jun, executive vice president of e fund, public funds have achieved a long-term stable income of 6% - 9% annually in the management of social security, enterprise annuity and occupational pension, which reflects its professional investment ability. However, he also pointed out that there is still room for improvement in pension investment in matching assets with liabilities. The so-called matching of asset and liability duration means that long-term funds should be appropriately allocated with highly volatile assets to obtain higher average returns.

Shi Bo, deputy general manager and chief investment officer (equity) of China Southern Fund, said that public funds also played an important role in maintaining and increasing the value of Chinas pension. Public funds have been involved in social security management since 2003, enterprise annuity management in 2007, and occupational pension management in 2019. In 2018, fof products supporting individual commercial pension were launched to actively serve the development needs of the three pillars of pension. Adhering to the concept of long-term investment and value investment, public funds have created long-term and stable returns for pension investors and built a moderately prosperous society in an all-round way For strong support.

The proportion of institutions increased

Evolution of CO authored value investment

Public funds were born in 1998, social security funds were admitted to the market in 2001, followed by the launch of QFII business in 2002. In 2004, insurance funds were allowed to enter the market directly. The voice of value investment in the A-share market is growing day by day. In particular, the market of five Golden Flowers in 2003 was defined as the first brilliant performance of value investment in China. In the past five years, the proportion of institutional investors has been increasing, and the bull market of performance stocks has continued in the past two years. Institutional investors, represented by public funds, prefer to define value investment from the perspective of corporate performance and return.

The market discourse power of public funds has been significantly improved, and the proportion of circulating market value of a shares held by public funds has returned to more than 6% after seven years. According to the statistics of China Galaxy Securities Fund Research Center, as of the end of the third quarter of 2020, the market value of a shares held by public funds totaled 3.87 trillion, accounting for 6.75% of the total circulating market value of the two cities.

Public funds have always been the largest institutional investors in a shares. The investment research ability and professionalism of fund companies are much higher than that of individual investors, which can better balance the relationship between returns and risks Investors related to Boshi Fund said that the increasing shareholding ratio of public funds can guide the market to pay more attention to the quality of listed companies. The value of long-term investment and in-depth research is leading the market to gradually mature and healthy development mode.

Hu Tao, managing director and balanced style investment director of Harvest Fund, said: on the one hand, the core function of public funds in the capital market is value discovery, which is also a link and bridge between fund holders and enterprises. Fund holders become shareholders of listed companies or creditors of enterprises. Enterprises get financial support from fund holders, and fund holders can also share On the other hand, as a professional institutional investor, public funds always adhere to the concept of long-term investment and value investment, and play the role of capital market stabilizer.

Helping the real economy

Promoting corporate governance

As professional institutional investors, public funds are not only stabilizers of capital market, but also inject stable funds into the development of real economy.

In particular, many products of public funds directly support the strength economy.

For example, the structural adjustment ETF of central enterprises and the reform of state-owned enterprises (SOEs) have helped the central and state-owned enterprises change from asset management to capital management, enhance the liquidity of state-owned capital, promote the value maintenance and appreciation of state-owned capital, promote the capital market to play the functions of value discovery and resource allocation in the reform of state-owned enterprises, and let investors share the dividend of policy and SOE reform F. Industrial ETFs, such as AI ETF and new energy vehicle ETF, strongly support the development of hard technology enterprises, help to guide social resources to gather in national strategic science and technology innovation industries, and create an ecological chain of benign interaction between real economy and finance; commodity futures ETFs such as soybean meal ETF improve the investor structure of commodity futures market, expand the market depth and reduce market speculation It is helpful to improve the efficiency of price discovery and hedging in commodity futures market. In addition, as a new product of financial services to the real economy, public raised REITs are not only an important starting point to expand domestic demand and develop the double cycle pattern, but also the innovation of opening up the investment and financing mechanism.

Hu Tao said that by the end of the second quarter of 2019, public funds had invested 2.09 trillion yuan in stocks and 6.72 trillion yuan in bonds. Through giving full play to the buyers advantages, the public funds can tap and support high-quality enterprises, gather and guide the public capital to flow into the entity enterprises with core technology, industry leading and good development prospects; through more efficient direct financing, it can promote the differentiated development of projects and enterprises with high technology content, high added value and market potential, and promote the optimization, adjustment and upgrading of industrial structure To help the supply side structural reform; to invest in the science and technology innovation board, to become the main channel for social funds to support scientific and technological innovation enterprises, and to effectively help the development and growth of scientific and technological innovation enterprises; to create an ecological chain of benign interaction between the real economy and finance by issuing ETF with the reform of state-owned enterprises and central enterprises as the theme, support the state-owned enterprises to revitalize the stock assets, improve the capital operation efficiency and stimulate the reform of state-owned enterprises Innovation momentum.

Moreover, institutional investors represented by public funds have done a lot of work in the governance of listed companies. In 2012, Penghua Fund, together with Yale University Foundation, successfully recommended the director candidates to Gree. This is not only the first time that public funds participate in the selection of directors of Listed Companies in A-share market, but also a positive attempt made by public funds in improving the governance structure of listed companies. In recent years, many financial institutions have put forward useful development suggestions to the management of listed companies to help them develop with high quality.

Research on long term deep ploughing Fundamentals

Ushering in historic development opportunities

Chinas capital market is in its prime. As an important institutional force in the capital market, public funds will move forward steadily with the capital market in the future.

Shi Bo, deputy general manager and chief investment officer (equity) of China Southern Fund, said that Chinas capital market is in a rare period of strategic opportunity development, and there are three major changes to be expected: first, with the continuous improvement of the regulatory system and basic system, Chinas capital market will speed up to move closer to the overseas developed market with effective circulation of Finance and entities, and individuals and society will benefit from long-term development Second, the public fund industry has officially entered a new era of domestic and foreign institutions competing on the same platform, which is conducive to the formation of a diversified competition pattern. At the same time, in a more sufficient market-oriented competition environment, it is conducive to the healthy and high-quality development of domestic asset management industry; third, the integration of wealth management and digital transformation will be clearer, In the future, head financial institutions will cover customer positioning ability, wealth management ability and asset management ability at the same time. Learning from overseas experience, they will gradually improve the comprehensive service ability of asset allocation in the whole life cycle through mergers and acquisitions, investment, cooperative development and other ways. Therefore, all asset management institutions will strengthen big data, cloud computing, blockchain, artificial intelligence, etc Biometrics and other key technologies have been continuously innovated and widely used in the financial field.

In the medium and long term, firstly, the wealth growth of Chinese residents is bound to generate a rapidly growing demand for wealth management; secondly, under the new asset management regulations, the proportion of non-standard assets drops, the net value transformation of asset management products, bank financing, insurance asset management, trust and so on have produced a large number of standardized and net value type public fund product allocation needs; thirdly, with the aging of the population, Chinese residents demand for wealth management is increasing Fourth, in the global environment of low interest rates or even negative interest rates, the demand for foreign investment in Chinas asset allocation has increased significantly, bringing new business opportunities for public funds; finally, the wealth of residents gradually flows from real estate to the equity market, and the reform of capital market improves the vitality and toughness, and further enhances the allocation price of equity assets These are rare opportunities for the development of public funds with long-term fundamental investment and research and institutional, talent, experience and cultural advantages in the field of equity investment. In the view of Huaxia Fund, there are four important changes to be expected in the future: first, the great development of equity funds and the outbreak of ETF; second, public funds play an important role in pension investment; third, the great development of fund investment consultants to solve the investment pain points of customers; Fourth, actively embrace financial technology to realize the improvement of quality and efficiency of wealth management. Source: Ren Hui, editor in charge of Securities Times_ NBJ9607

In the medium and long term, firstly, the wealth growth of Chinese residents is bound to generate a rapidly growing demand for wealth management; secondly, under the new asset management regulations, the proportion of non-standard assets drops, the net value transformation of asset management products, bank financing, insurance asset management, trust and so on have produced a large number of standardized and net value type public fund product allocation needs; thirdly, with the aging of the population, Chinese residents demand for wealth management is increasing Fourth, in the global environment of low interest rates or even negative interest rates, the demand for foreign investment in Chinas asset allocation has increased significantly, bringing new business opportunities for public funds; finally, the wealth of residents gradually flows from real estate to the equity market, and the reform of capital market improves the vitality and toughness, and further enhances the allocation price of equity assets These are rare opportunities for the development of public funds with long-term fundamental investment and research and institutional, talent, experience and cultural advantages in the field of equity investment.

In the view of Huaxia Fund, there are four important changes to be expected in the future: first, the great development of equity funds and the outbreak of ETF; second, public funds play an important role in pension investment; third, the great development of fund investment consultants to solve the investment pain points of customers; Fourth, actively embrace financial technology to realize the improvement of quality and efficiency of wealth management.