Summary of this issue:
Net capital inflow and asset appreciation promoted the rapid growth of mutual funds in the United States in the 1980s and 1990s. The growth of mutual funds in the past 20 years was mainly driven by the rise of net worth. The development stage and institutionalization process of China’s capital market are similar to those of the United States in the 1980s and 1990s. At that time, the successful experience of American mutual funds can be used as a reference for the scale development of China’s asset management institutions, and can give us enlightenment in terms of valuation. The change of mutual fund size in the United States is mainly driven by two factors: on the one hand, it comes from the self appreciation of securities in the portfolio; On the other hand, the net inflow of funds from investors (incremental funds brought by new development funds and investors’ net subscription). By reviewing the development history of mutual funds in the United States, we can roughly divide it into three periods. The first period is the period from 1980 to 2000, when the U.S. economy prospered and developed, the expansion of both asset side and capital side, and the growth of mutual fund scale came from the joint effect of substantial capital inflow and asset appreciation. It is also the golden period for the great development of American pensions; The second stage is a ten-year shock period. From 2001 to 2002, US stocks and technology stocks collapsed. Although funds still flowed in, the scale of mutual funds rarely shrunk. From 2003 to 2007, the stock market recovery returned to normal. In 2008, the financial crisis sharply reduced the size of mutual funds by $2.5 trillion to $1.01 billion. The third paragraph is that after 2009, the economy recovered and the market developed stably. The scale of mutual funds reached US $23.9 trillion by the end of 2020. After 2000, the number of mutual funds remained stable, and the scale growth was mainly driven by net worth.
The successful experience of actively managed funds represented by Puxin and DFA and passive funds represented by vanguard is worth learning from by China asset management companies. Puxin adheres to active investment and can still maintain net capital inflow under the wave of passive management, mainly because the company adheres to the investment concept with the long-term interests of customers as the core, which has been recognized by investors, and the brand effect is becoming more and more significant; Puxin investment research has strong strength, experienced investment management team, established a long-term incentive mechanism, maintained the leading level of the industry for a long time, driven the stable growth of scale and outstanding profitability. DFA’s investment strategy is based on the efficient market theory, guided by the research of the college, and through the construction of personalized factors to compensate for the market risk factors not reflected in the beta in camp, so as to obtain excess returns. In addition, low-cost management and decentralized investment philosophy endow DFA with long-term leading performance, and obtain the long-term company of customers through cooperation with investment advisers with the same investment philosophy. After 2008, DFA continued to obtain net capital inflow. Vanguard complies with the wave of passive indexed funds, takes the interests of holders first, and has the absolute advantage of low rates. In addition, vanguard has refined its product line according to customer needs and won the trust of customers based on service. We believe that the success of excellent asset management institutions in the United States is mainly due to 1) research leading, long-term stability of the investment and research team, 2) putting the trust responsibility to investors above scale expansion, matching the sales concept and investment concept, 3) low-cost operation, giving investors greater benefits, 4) demand-oriented design of products and diversification of product lines, 5) Pay attention to the long-term performance appraisal and incentive mechanism.
China’s public funds have developed rapidly, and the head fund companies have shown their magic powers to become bigger and stronger. Over the past five years, with the development of the capital market, the net asset value of China’s public funds has increased rapidly. Although the head fund companies are relatively stable as a whole, there are many emerging companies due to their different strategies and development priorities. E fund has diversified styles and strong stocks and bonds. Each track has good players and allows multiple styles to coexist. This is the distinctive feature of e fund, which has continuously created rich returns for investors. China Europe Fund aims to build an “active investment boutique focusing on long-term performance” and the brand concept of “speaking with long-term performance” goes deep into the hearts of investors. The investment and research structure of the company is very unique. The fund manager finds his own field according to his own specialty and character and makes continuous improvement. Only then can the company slowly walk out of a Multi Strategy boutique road – from “cattle base camp” to “golden team”.
Excellent active asset management companies should enjoy the valuation premium. The market generally adopts P / E valuation for asset management companies. Puxin has maintained at about 16 times in the past ten years, and BlackRock’s PE center has been about 17 times in the past ten years. We believe that due to the asset management industry. From the business model of the asset management industry, taking Puxin as an example, the company’s income mainly comes from the investment consulting income brought by AUM (equivalent to China’s management fee income), accounting for more than 90%. P / AUM can better reflect the value of the asset management company. From the perspective of P / AUM, in recent ten years, the P / AUM of Puxin finance has always been higher than that of passive BlackRock. By the end of 2021, the P / AUM valuation of Puxin finance focusing on active investment is 0.0262 times, which is 0.0139 times higher than that of passive BlackRock. Since its listing in 1984, Puxin’s share price has increased 287 times, far exceeding the 24.09 times increase of the S & P 500 in the same period. The asset appreciation driven by the transformation of era dividend and investment ability has increased the scale, which is directly reflected in the considerable excess return on the share price.
Investment rating: China’s capital market is in the bonus period of incremental capital entering the market brought by long-term funds such as asset side expansion, resident deposit relocation and pension. Institutions still have capital and information advantages. Active equity funds outperform the Shanghai and Shenzhen 300 index, accounting for more than 50%. AUM of China’s public funds increased by 26.93% year-on-year in 2021, Higher than 22% of the compound annual growth rate of AUM of us mutual funds from 1980 to 2000, we have reason to believe that China’s public funds will accelerate their expansion and have a large increase in market value under the background of wealth management. In the context of the wealth relocation of Chinese residents and the rapid expansion of pensions, we should pay attention to the market value contribution of high-quality public funds to securities companies. It is suggested to actively distribute the “shadow shares” of public funds: Gf Securities Co.Ltd(000776) , China Greatwall Securities Co.Ltd(002939) , China Industrial Securities Co.Ltd(601377) , Orient Securities Company Limited(600958) .
Risk factors: repeated epidemics, deterioration of China US relations, less than expected national economic growth, decline in per capita disposable income, etc; The stock market fluctuates sharply; Intensified market competition; The institutional construction of the asset management industry was less than expected, and the strength of financial supervision was higher than expected.
