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


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.

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.

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.

In addition to significant long-term returns, mutual funds also bring tangible returns to investors. According to the data, by the end of the first half of 2020, since the birth of the first public fund company in 1998, the accumulated dividends of public funds reached 3072.503 billion yuan.

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.

The professional investment ability of public funds in the past 20 years has been more and more recognized by investors. The equity fund index has outperformed the CSI 300 index as a whole. Some funds with outstanding performance can achieve an annualized return of about 20%. The return after risk adjustment is relatively high, bringing investors a long-term and stable investment return. Ma Jun, executive vice president of e fund, said that in terms of professional investment management, public funds have also set up an example of investment strategy to match the duration of assets and liabilities.

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

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.

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.

In the overseas pension portfolio, equity assets account for 40%, equity assets account for 10%, adding up to about 50%. In addition, bond assets account for 35%, trust assets account for 10% and some cash assets, which means that equity assets and fixed income assets account for almost half of their portfolio. In the future, as the domestic asset market gradually matures and volatility declines, pension investment should also appropriately increase the proportion of equity assets, he said

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.

Evolution of CO authored value investment

In the 1990s, the trend of speculation was once popular, but in the early part of this century, this trend gradually declined, and the institutional strength began to rise.

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.

It also brings about a profound change in the share of institutional investors. According to the data, the top 1% of a shares in 2018 and 2019 accounted for 15% and 13% of the total market volume respectively, which was at the high level in nearly 10 years; the A shares with the last 30% of the trading volume in 2018 and 2019 accounted for about 6% of the total market volume, which was the lowest in nearly 10 years. Second, the turnover rate of the market shows a downward trend. The data shows that the average turnover rate of the whole market in 2018 is at a low level since 2014, and the turnover rate center in 2019 is significantly lower than that in 2016 and 2017.

Compared with overseas markets, it is an inevitable trend that the proportion of institutions in A-share market will gradually increase. Ma Jun, executive vice president of e fund, said that this is not only related to the opening of domestic capital market to the outside world, but also related to institutional investors proving that they have long-term sustainable investment ability. In fact, not only public funds, but also various types of institutional investors, including insurance institutions and pension funds, are on the rise.

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.

Finance is the blood of the real economy. Serving the real economy is the bounden duty and purpose of Finance and the fundamental measure to prevent financial risks. According to a person related to Huaxia Fund, over the past 22 years, public funds have served the real economy with professionalism, found enterprises with competitive advantages, provided continuous living water for the capital market, guided rational investment and value investment in the market, optimized the allocation of market resources, continued to promote the transformation and upgrading of the real industry, and helped supply side structural reform.

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

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

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.

People related to Boshi Fund said that in the historical period of Chinas economic transformation and development mode, optimization of economic structure and transformation of growth momentum, the capital market plays a key role. In recent years, the capital market has adopted a series of measures, such as the reform of the registration system for issuing new shares, the establishment of the science and technology innovation board, the growth enterprise market and the new third board, the introduction of long-term funds and the expansion of opening-up, strengthening the supervision of information disclosure, and increasing the punishment for illegal acts. The market activity has been continuously increasing and the operation has been more standardized and orderly. Under the current circumstances of the break-up of rigid exchange rate, net value transformation and low interest rate market, the strong reform signals released by the capital market make the attraction of social funds continue to increase, and the capital market has ushered in a historic development opportunity.

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.