Is “performance only theory” desirable? If it is compared with following the fund contract, which is more important? Recently, the news of a drift in the style of active equity products has once again attracted the attention of the industry. It is worth mentioning that this product has performed well this year due to drift.
The financial Associated Press reporter learned that this theme fund is CAITONG scientific and technological innovation. Although it is the theme of scientific and technological innovation, in the four seasons report disclosed at the end of last year, there is little “scientific innovation” content in the top ten heavy positions of the fund. The six top ten heavy positions are individual stocks in the agriculture, forestry, animal husbandry and fishery sector, of which the first and second heavy positions are pig breeding enterprises, namely Muyuan Foods Co.Ltd(002714) and Wens Foodstuff Group Co.Ltd(300498) , and their market value accounts for 16.69% of the net value of the fund.
Perhaps it has drifted to the “right” sector. The performance of this fund has been quite bright in a number of deep callback products this year. It can be described as “a touch of red in the green cluster”. Its net value increased by 9.64% during the year, ranking fifth in the performance of active equity products this year.
As the fund manager of the product, Jin Zicai has also been generous in his favor of pork stocks in many interviews this year. He said that this year, industries such as pig breeding in the field of agriculture and aviation hotels in the field of travel chain may slowly get out of difficulties and perform better in stages. In particular, the price of live pigs has bottomed out in stages, and the space to continue downward is relatively limited. The policy of “collection and storage” has also effectively boosted the market confidence of the sector, and the safety margin of investment is relatively high. Under the inflation environment, it is difficult to ensure a good growth every year for hot tracks such as new energy. In this regard, Jin Zicai maintained a cautious attitude.
reproduce “drift”
In the discussion area of an Internet Fund consignment platform, an investor raised his doubts: this fund has a good performance, but why does the science and technology innovation theme fund heavily hold so many pork stocks?
Another holder asked: I don’t know when this fund has become an agricultural theme fund. Isn’t it heavy warehouse chemical stocks?
According to public information, this CAITONG technology innovation, which was established on July 7, 2020 and issued a share of 989 million yuan, was jointly managed by Jin Zicai, a well-known fund manager of CAITONG fund, and Zhang Yin. As of the end of last year, the scale was 563 million yuan.
At first, the product was managed separately by jinzicai. On September 27, 2021, Zhang Yin joined the ranks of management.
According to the contract of CAITONG science and technology innovation fund, the product focuses on investing in science and technology innovation related enterprises, pursues the long-term stable appreciation of fund assets through proactive investment management, and strives to enable fund share holders to share the fruits of the sustainable growth of China’s science and technology innovation enterprises. The proportion of the fund’s portfolio is stipulated as follows: stock investment accounts for 60% – 95% of the fund’s assets, and the proportion of investment in securities related to scientific and technological innovation is no less than 80% of the non cash fund’s assets
The above contract also clearly defines the theme enterprises of scientific and technological innovation, that is, scientific and technological innovation enterprises that meet the national strategy, break through key core technologies and have high market recognition. Such enterprises include enterprises in new generation information technology, high-end equipment, new materials, new energy, energy conservation and environmental protection, biomedicine and other high-tech industries and strategic emerging industries, as well as enterprises that use Internet, big data, cloud computing, artificial intelligence and other technologies to realize the deep integration of manufacturing and service industries.
At the initial stage of its establishment, the operation of the fund also followed the fund contract. Most of its top ten heavy positions were in the sectors of communication electronics, medicine and biology, and then gradually transferred some positions to the pro cyclical fields such as chemical industry and non-ferrous metals.
In the fourth quarter of 2021, the fund made a “subversive” adjustment to the top ten heavy positions.
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CAITONG science and technology innovation top ten heavyweight stocks by the end of 2021
The fair value of the top ten heavyweight stocks accounted for 58.43% of the net value of the fund and 73.96% of the market value of the stocks. Among them, the fair value of six agricultural, forestry, animal husbandry and fishery stocks also accounted for 39.21% of the net value of the fund. The largest and second largest stocks are pig breeding enterprises, namely Muyuan Foods Co.Ltd(002714) and Wens Foodstuff Group Co.Ltd(300498) , whose market value accounts for 16.69% of the net value of the fund.
From this data, the taste of “scientific innovation” of CAITONG scientific and technological innovation has been almost traceless.
However, due to the recent rapid rise of the agriculture, forestry, animal husbandry and fishery sector, especially since March 16 (as of March 24), the sector has increased by 11.80%, and the net value of the fund has also increased. The net value has increased by 9.64% during the year, of which the return since March 11 has been 14.54%.
In the 2021 fourth quarter report, Jin Zicai also admitted that he had made a large-scale adjustment to his position portfolio. Although he was hardly optimistic about the overall market, he had great confidence in the heavily held sectors. In the past four quarters, CAITONG scientific and technological innovation under his management withdrew from the large cycle track adhered to in the previous three quarters, made a large-scale reduction in chemical and other pro cycle industries, significantly increased the allocation of agriculture, forestry, animal husbandry and fishery industries, and slightly increased the allocation of aviation, hotel, food and other industries.
“It can be seen that such position adjustment action is relatively large, and several additional industries represent our promising industries in 2022.” Jin Zicai said. At that time, he judged that in 2022, from the demand side, industries with greater probability than expected will be in the service industry and mandatory consumption. “If the industry still has price elasticity or roe elasticity, it will be our main direction.”
In many interviews this year, Jin Zicai is also generous in his favor of pork stocks. He said that this year, industries such as pig breeding in the field of agriculture and aviation hotels in the field of travel chain may slowly get out of difficulties and perform better in stages.
With regard to the opportunities of pig breeding sector, he believes that pig prices may bottomed out in stages, and the space to continue downward is relatively limited. At the same time, the policy of “collection and storage” has also effectively boosted market confidence, and the safety margin of investment is relatively high. “In this round of pig cycle, the speed of de production is relatively fast, and the pig price is now or at the bottom. The future space depends on the economic recovery, because pork is a must consumption and will follow the overall demand. The rise of pig price corresponds to a large space for stock price.
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Under the inflation environment, it is difficult to ensure a good growth every year for hot tracks such as new energy. In this regard, Jin Zicai maintained a cautious attitude.
fund manager’s performance of five products broke into the top ten, with heavy positions highly overlapping
Interestingly, among the top 10 active equity funds since 2022, the five products managed by jinzicai reached the top 10, including CAITONG scientific and technological innovation. The fund achieved the fifth performance of active equity products this year with a return of 9.64%.
Followed by CAITONG smart growth managed by Jin Zicai and Zhong Jun, CAITONG Multi Strategy growth optimization managed by Jin Zicai, and CAITONG science and innovation theme jointly managed by Jin Zicai and Zhang Yin. As of March 24, the annual performance of these four products had reached 9.56%, 8.88%, 8.59% and 7.59% respectively, ranking sixth, eighth, ninth and tenth in the performance list of active equity products respectively.
From the top ten heavyweight stocks at the end of 2021, the heavyweight stocks of the above five products are highly overlapped, all heavily loaded in the agriculture, forestry, animal husbandry and fishery sector, and the first and second heavyweight stocks are Muyuan Foods Co.Ltd(002714) and Wens Foodstuff Group Co.Ltd(300498) .
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In the three-year closed operation contract of CAITONG Kechuang theme, it is also stipulated that the proportion of the fund investing in the relevant securities of Kechuang theme shall not be less than 80% of the assets of non cash fund. However, from the current situation, although the product has earned positive income for the holder, it has failed to comply with the fund contract as agreed.
regulators have investigated the default fund caused by style drift
Is “performance only theory” desirable? If it is compared with following the fund contract, which is more important?
As early as 2021, many fund managers did “right” and efficient things, and flocked to buy new energy, photovoltaic and other stocks. However, when buying, the style will drift, which correspondingly violates the contractual spirit of the fund contract.
It is often the case that the supervision style of the fund starts to drift, which leads to repeated breach of contract. In mid September last year, the reporter of the financial associated press asked a number of fund companies for confirmation and learned that the supervision is indeed investigating the products that violate the fund contract due to style drift, requiring the fund companies to conduct self-examination and explain the situation, and some will require the products to adjust their positions to match the investment scope agreed in the fund contract.
“The supervision has been concerned for a long time, and some companies are also required to conduct self-examination and explain the situation, but the focus is still on contract breach.” A large public offering source disclosed.
Generally speaking, there are three types of funds with drift style in the market: small and medium-sized funds buying large cap stocks, quantitative funds “pseudo” quantification and theme funds not worthy of the name. At that time, famous funds such as ICBC Credit Suisse sports industry managed by Yuan Fang, the star fund manager, and Liu Changchang’s Hua’an sports and health theme were “deeply involved”.
In order to “confront” the regulatory level and the internal compliance requirements of the company, many funds played a “word game” on the fund contract and were ambiguous in the scope of investment, resulting in confusion among investors.
From the actual situation, the fund companies are not unaware of the drift of the theme fund style, which has been controversial in the market. In the third quarter of 2021, existing fund companies successively submitted product transformation applications to the regulator, or held a general meeting of holders to modify the fund contract to expand the scope of investment.
A large public offering person in North China pointed out that the company strictly controlled the problem of style drift. He analyzed that many fund companies tolerate the style drift of some fund managers because everyone wants to “win”, while the style drift of fund managers is more due to factors such as short-term performance ranking pressure. But his company hopes to provide investors with a “fund product supermarket”. Jimin can buy whatever products he wants to buy in the company. “Once a theme fund style drifts, the corresponding product layout will be missing. Encouraging style drift is to encourage fund managers to pursue hot spots, which is not allowed by the company.”
A head public offering person in South China said frankly that although some drifting funds have made money for investors, they have also infringed on the interests of investors to some extent.
“In the final analysis, fund companies should exercise restraint and do not arbitrarily rub the heat and develop new theme funds. They should not arbitrarily layout in pursuit of scale and ignore long-term interests and long-term investment value. Even if they realize that the style needs to be changed, they should do a good job in fund transformation according to the process, or change the investment scope through the general meeting of holders.” The public offering person said.
