In the next one to two years, the economy will rise and consumption will rise. We may pay more attention to consumer stocks next year than this year.
Next year, the difference between the returns of large market capitalization stocks and small market capitalization stocks will not be as large as this year. For large-scale fund managers, the living environment is also much better.
Growth stock investment is the most beneficial direction of investment change. It is not a barrier, but a process of barrier formation.
Choosing a stock is like choosing a partner. The more heavily I hold a stock, the more I will look at its shortcomings first. I will choose to hold it only after I can accept all its shortcomings. It’s like looking for a partner. If you think clearly of all his shortcomings and want to be with him, you will be with him.
Each fund manager’s portfolio ultimately reflects his perception of the world, regardless of whether it is right or wrong. Where you perceive it, you earn the money from this perception—— Xiao Xing Li
In 2021, when the market is extremely divided, the “big white horse” is silent one after another, and small and medium-sized innovations are emerging. Top fund managers who must look for opportunities in large market capitalization stocks have had the most difficult year.
Li Xiaoxing, with a management scale of more than 50 billion yuan, has managed the fund with an average rate of return of more than 10% this year, and Yinhua Xinyi has a rate of return of more than 40%. “Although the performance is not brilliant, I think the overall investment is still qualified. We have not made big mistakes in the operation of large market capitalization stocks.” He confessed.
From billions to 10 billion to 50 billion, scale growth brings pressure to Li Xiaoxing, but it is more the driving force for moving forward. The morning meeting is held at 7:30 every morning. He conducts research outside for two to three weeks every month. Working overtime on weekends has become a common thing. Diligence has long been a deep brand on him and the team.
“What I’m looking for now is to make more money for the holder.” After a year, when the reporter interviewed Li Xiaoxing again, his team grew stronger and his investment methods became more and more mature. What remained unchanged was his humor, self-confidence and firm original heart when he entered the industry.
there was no big mistake in the operation of large market capitalization stocks
China Securities News: it is difficult to operate the market this year. Which year in history do you think is closer to this year’s market?
Li Xiaoxing: the market this year is very similar to that in 2015. First of all, there is great macroeconomic pressure this year, mainly from the following aspects: first, real estate pressure, second, infrastructure investment is less than expected, and third, the epidemic situation is repeated. In this context, liquidity is more relaxed than last year. The combination of macroeconomic downturn and loose liquidity is naturally more suitable for small market value stocks. In addition, small market value stocks have the blessing of “specialization and innovation”. This is just like 2015, with the help of “mass entrepreneurship and innovation”, small market value stocks increased greatly due to loose liquidity.
As in 2015, the market of technology stocks is easier to do this year. The valuation of science and technology stocks is flexible and the pattern is not very stable, but people pay more attention to the short-term prosperity and have weak correlation with the macro economy. However, consumer stocks are closely related to residents’ income and macro policies, so they face more challenges.
China Securities News: in such an extremely differentiated market, the performance of many top flow fund managers is relatively general, and your management scale is more than 50 billion, but many products have still achieved good returns. How do you deal with such a market?
Li Xiaoxing: the market environment in which large market capitalization stocks generally perform worse than small market capitalization stocks is naturally unfavorable to large-scale fund managers and very friendly to moderate and small-scale fund managers.
Our performance this year can’t be said to be particularly brilliant, but on the whole, I think we have passed. In terms of our scale, we must seize the investment opportunities of large stocks. We can’t make mistakes in stocks with a market value of more than 100 billion. No matter how many small stocks rise, they make little contribution to the net value due to transaction costs.
In terms of large market capitalization stocks, we have not made particularly big mistakes in our operation this year. From the overall operation, from the end of the first quarter to the second quarter, we believe that there will be some problems in the consumption boom. Therefore, we have reduced the position of consumer stocks and improved the allocation of technology stocks. In terms of allocation, we allocated our main positions to new energy, and basically bought all the large market capitalization stocks of new energy. Although the positions of consumer stocks have been reduced a lot, our funds biased towards consumption have also achieved good returns.
next year, more attention will be paid to consumer stocks
China Securities News: at the end of last year, you made some judgments on this year’s market. For example, this year will be a pattern of low before high, focusing on two tracks with comparative advantages in technology and consumption to avoid the risk of real estate rhinoceros. This year’s market trend basically confirms your judgment. What do you think of the market in 2022?
Li Xiaoxing : looking forward to next year, “2015” has happened, and “2016” and “2017” will not be far away.
From the perspective of 1-2 years, I think two things are sure to happen. First, macroeconomic upward will certainly happen. The “six stabilities” and “six guarantees” have been re mentioned in the policy, some adjustments have been made to the real estate policy, and the means to promote consumption are also being implemented one after another; In addition, to achieve common prosperity, the economy must develop and grow steadily in order to achieve the prosperity of most people. Therefore, we are very optimistic about the macro economy in the next 1-2 years.
Consumer stocks will have greater opportunities next year. An upward macro-economy will increase residents’ income, common prosperity will turn the K-shaped structure into an olive structure, and the consumption of the whole society will increase. Therefore, in terms of consumption, next year will be more optimistic than this year.
Generally speaking, I think the economy will rise and consumption will rise in the next 1 to 2 years. Next year, the difference between the returns of large market capitalization stocks and small market capitalization stocks will not be as large as this year. For large-scale fund managers, the living environment is also much better. Combined with our prosperity investment method, we will still focus on consumption and technology. We may pay more attention to consumer stocks next year than this year.
China Securities News: just mentioned that next year will still focus on technology and consumption. What areas will you focus on?
Li Xiaoxing: growth stock investment is the investment change, and the investment change is the most beneficial direction. It is not a barrier, but the process of barrier formation. From the perspective of the overall macro economy, three major changes are taking place.
The biggest change is the change of energy structure. In this change, the power generation end (including photovoltaic and wind power) and the power consumption end (related to new energy vehicles) are the two directions with the most drastic changes. From the perspective of power generation end, many policies have been issued this year, but the policies are cyclical. Whether there is any change in the expectations of new energy power generation end next year needs further observation; From the perspective of power consumption, the change of automobile consumption structure is the acceleration of new energy automobile consumption. We think there is no problem in this direction.
The second change is geopolitical. In the future, including chip, military industry and other industries, we should get our own hands, which is a change in hard technology.
The third change is that in the context of antitrust, new changes will take place in the Internet industry.
In terms of science and technology, new energy and semiconductor are still the main investment directions next year. We also recognize the investment logic of military stocks, but the premise of buying is that we can study the company clearly.
Zhang Ping: if the investment in science and technology is change, what consumption provides us is certainty and stability. On the whole, next year’s consumer investment is a market that needs to be switched between different varieties, rather than a market that the same variety can win from the beginning of the year to the end of the year.
Consumption is also divided into many fine sectors, including Baijiu, popular goods and cycle agriculture, and new consumption. From the point of investment rhythm, we will judge that the Baijiu market will be better in the first half of next year. By the second half of the year, popular products will be better. Breeding is an opportunity, but we should judge whether there is an inflection point in this industry in June and July next year. Emerging consumption is still in the process of digesting valuation, and there will be differentiation of different tracks. It is necessary to tap individual stock opportunities from bottom to top.
From the Baijiu industry, Baijiu still has strong performance in the whole consumption, and the boom has been maintained relatively well. Next year, first of all, policy risks may be alleviated; Second, the price of high-end Baijiu and the planning for next year will make the growth clearer. Third, companies will put the money back in the next year, and the Baijiu enterprises should have a brightest quarterly report. In addition, Baijiu also has room for valuation switching. Therefore, the investment of Baijiu is relatively smooth in the first half of next year.
the industry boom is only a quarterly problem
we’ll carry it
China Securities News: from the end of the first quarter to the second quarter, you think there are some problems in the prosperity of the consumer industry. What indicators have you come to the conclusion that the prosperity has declined?
Zhang Ping: mainly judged by the month on month trend of valuation and performance. At the end of last year, the valuation of the whole consumer industry was relatively high. In terms of performance, the overall base of industry performance last year was “low before high”, and this year’s performance must be “high before low”. The performance trend is downward month on month, coupled with the valuation of more than 90th percentile, it is difficult to earn excess returns compared with other industries.
China Securities News: when to go in and when to come out is the key for prosperity trend investment. How do you judge the inflection point?
Li Xiaoxing: from the perspective of industry commonness, if the performance of the industry is upward month on month in each quarter, we judge that it is an upward boom; When you think there is a problem with the prosperity of the industry, it will come out, and it is not a short-term factor. Once we form the judgment of “no recovery” in the medium term, we will have operation; But if it’s just a quarterly problem, we’ll carry it.
Zhang Ping: in fact, the prosperity indicators of each industry are different. For example, the price rise of consumer goods may be an obvious catalyst; Whether the new products launched by emerging consumers can impress consumers and generate explosion; The breeding industry has obvious leading indicators, including the sales data of feed and the stock of breeding sows; Baijiu and fixed assets investment related, the real estate industry’s performance is the leading indicator. Each industry is constantly changing, and our observation points are constantly changing. The judgments made at each stage should also be adjusted according to the changes of data. Many times, we will have a premise to see if it meets this premise. Make adjustments after changes. Therefore, our prosperity investment is constantly verified layer by layer, and finally proves the high prosperity of the industry.
China Securities News: how many years do you usually look at the prosperity of an industry?
Li Xiaoxing: if the judgment changes in two to three years, it will be adjusted immediately. I hope we can see it for a long time. I hope it will remain unchanged for 10 or 20 years. However, although we judge things for 3 to 5 years, it is essentially self deception. We don’t even know what we will look like in 3 to 5 years, let alone judge a company and an industry.
The most typical feature of A-Shares is “looking at the long and doing the short”. I think you have no problem for 3-5 years. Hold it for one quarter first. I think you have a problem for 3-5 years, so I’ll sell it. To sum up: long-term logic should be smooth, and short-term performance should be better.
China Securities News: how do you balance the weight of prosperity, valuation and the company itself?
Li Xiaoxing: prosperity is the highest priority, ranking first, the second is performance growth, the third is company texture, and the fourth is valuation, one is greater than one.
China Securities News: prosperity investment requires to be highly sensitive to market and industry changes. How can you ensure that you can keep up with the pace of changes at all times?
Li Xiaoxing: since 2017, we have adopted the team expert system. With the expansion of the scale, we have invested more resources in the expanded team. At present, there are 7 people in the team. There are mature industry experts in science and technology, consumption, medicine, cycle and other sectors, in addition to the industry experts in the team and the support of the company’s research department.
no stock is perfect
China Securities News: looking at your position, in fact, it changes relatively quickly. You will not hold many stocks for more than one year. However, some companies have been holding for 8 or 9 consecutive quarters. What is the reason why these companies allow you to hold for a long time? What do they have in common?
Li Xiaoxing: there are two factors. First, the prosperity has continued, the fundamentals are particularly strong, and the performance can continue to exceed expectations; Two, the market did not stir up a big bubble. Large bubbles will also be adjusted, and companies will replace them when there are more cost-effective companies.
China Securities News: a lithium battery faucet is a stock you have held for a long time with multiple funds. Is this stock the perfect stock in your mind?
Li Xiaoxing: is there a perfect person? Choosing stocks is like choosing partners. Rationally speaking, you choose the best one in the range of options. Generally, the more heavily I hold a stock, I often look at its shortcomings first. I will choose to hold it only after I can accept all its shortcomings. It’s like looking for a partner. If you think clearly of all his shortcomings and want to be with him, you will be with him.
China Securities Journal: for some big white horse stocks, the market has been studied thoroughly. Does this mean that you need a deeper understanding of these stocks than others to obtain excess returns?
Li Xiaoxing: when the scale is large enough, fund managers must have their own independent thinking. Each fund manager’s portfolio ultimately reflects his perception of the world, regardless of whether it is right or wrong. Where you perceive it, you earn the money from this perception.
diligence is the most important quality of landscape investment
China Securities News: with the growth of scale, what is the iterative process of your investment method?
Li Xiaoxing: with the growth of scale, fund managers generally go through three stages. The first stage is extraordinary. At this stage, you buy gray horse stocks and dark horse stocks. These stocks are turned over by you. You discover and study them before others, and you can make money recognized by the market, with a high rate of return.
The second stage is to earn money from white horse stocks. When the scale exceeds 15 billion yuan, it will enter this stage. Everyone will study white horse stocks. You need to have a deeper understanding than others to earn excess returns.
The third stage is to carry out industry configuration. The yield of the fund in the past few years is the average yield of the top three industries. Therefore, industry configuration is very important. It is necessary to select 8 to 10 best sub industries among more than 200 sub industries.
China Securities News: can you use three words to evaluate your personality characteristics? What impact does this have on your fund management?
Li Xiaoxing: diligence. What our group emphasizes most is diligence, which is also the most important quality of landscape investment. Objective. Our portfolio has a concept of cost performance and will not have excessive feelings for a company. We may be wrong, but when there is a change, we will choose some companies with better cost performance. In addition, we should objectively summarize our mistakes. absorbed. Focus on good performance. A person has limited energy and pays too much attention to things, which may not be done well.
China Securities News: the management scale has exceeded 50 billion. What new goals will you have next?
Li Xiaoxing: now we don’t pursue the sharpness of the product. We pursue to make more money for the holders and improve the profit experience of the holders.
Li Xiaoxing, CFA, master of engineering, University of Cambridge, UK, 9.5 years of securities experience. At present, he is the investment director, managing director, member of the company’s Investment Committee, deputy director of the active equity investment committee, fund manager and social security / basic pension portfolio investment manager of Yinhua Fund Investment Management Department and stock comprehensive strategy investment department.
Zhang Ping, master of finance, 10.5 years of securities experience. At present, he is the fund manager and executive general manager of Yinhua Fund Investment Management Department and stock comprehensive strategy investment department.
(China Securities Journal)
