Bosera Fund Wu Wei: The pursuit of absolute returns, grasp the trend of the times, deeply cultivate fundamental investment

China Securities Network News (reporter Zhang Huanyun) A shares in the past many years the style of rotation is unpredictable, public equity funds to compete for relative rankings has been the norm, can always adhere to the pursuit of absolute returns in the bull and bear repeated investors are valuable. Wu Wei, deputy director of investment of bosera fund equity investment theme group, is such an excellent fund manager. Based on the fundamental stock selection in line with the trend of the times, grasping the prosperity of the industry and enterprises, and always adhering to the concept of absolute returns, decisively reducing positions to avoid control drawdowns when the market is facing drastic adjustments, together constitute the investment framework that Wuwei has polished in the past 13 years.

The historical performance also truly proves Wu Wei's investment methodology. Wind data shows that as of December 4, Wu Wei's annualized return since taking office in pipe products has been above 25%. The representative work of Boshi Huizhi returned 138.76%, compared with only 43.78% of the CSI 300 in the same period, and the annualized appointment was about 26.93%.

Looking forward to the future market, Wu Wei believes that in 2021, A-shares may continue to show a structural market, the profit center will move upwards, and the style will spread to equilibrium. Among them, the opportunities for tax exemption, medical beauty, wind power, and adult vaccines are worth paying attention to.

It is worth mentioning that the One-Year Holding Period Hybrid Fund of Boshi Huixing Returns, which is proposed by Wu Wei as the fund manager, will be officially issued from January 11, 2021.

Wu Wei, Deputy Investment Director of the Equity Investment Theme Group of Bosera Fund

Fundamental research to grasp the trend of the times

Looking back at Wu Wei's investment research resume, after graduating with a master's degree in 2007, he joined the buyer's investment institution as a researcher and began to formally manage public offering products in 2013. In the practical polishing of buyer investment research for many years, Wu Wei has gradually built up its own investment system.

"Overall, I'm going to do stock picking through a combination of top-down and bottom-up." Wu Wei said.

Wu Wei explained: First of all, at the top-down level, he will dilute the macro economy, mainly judging the valuation level through liquidity and interest rate levels. Unlike many investors who have long pursued low valuations, Wu Wei prefers to invest in the context of relatively stable market operation and no systemic risk, and strive to earn money for valuation expansion.

At the same time, in terms of bottom-up, Wu Wei will conduct in-depth research on the fundamentals of the industry and enterprises, focusing on the sustainability and stability of corporate profitability. "Take ROE as the threshold for stock selection, take net profit growth as the benchmark, judge the upper limit of sustainable growth through ROE, and judge the degree of growth through net profit growth."

Wu Wei pointed out that the focus of equity market investment is to consider and balance the returns and risks. The source of income is nothing more than performance and valuation, and everyone hopes to find a company with both performance and valuation. Therefore, individual stocks with heavy portfolios must have a deep understanding of one of these variables, either to have more confidence in the valuation than others, or to be more optimistic about the performance outlook than others.

"Either way, I must have a deeper understanding of this company than the market before I am willing to buy." If my understanding only reaches the market average, then I will definitely not hold a heavy position. In Wu Wei's view, in-depth fundamental research is indeed very important, and after the judgment is mature, it is even more decisive to dare to re-position.

Wu Wei said that on the whole, he is still biased to grasp the growth of corporate performance, and at the same time, in the balance between performance and valuation, find a high-prosperity company and earn money for performance growth. On the other hand, stock selection also needs to avoid valuation killing as much as possible. For enterprises whose performance does not meet expectations, as well as those that cannot keep up with the development of the times at all and the direction that the policy does not encourage, Wu Wei will try to avoid it.

Wu Wei recalled that in the era when he first entered the capital market, the best A-share performance from 2006 to 2009 was heavy industry-related enterprises, which was highly related to the background of the era of domestic urbanization at that time. Since 2015, A-share consumer goods have performed well, which is also related to the consumption upgrade after the sharp increase in the average domestic GDP. "I'm not going to allow myself to be too biased towards an industry, even though the industry may have performed well historically, but if it's out of step with the times, there may be no future."

"We must be in awe of the power of the times' megatrends, and it is easier to select high-quality tracks that conform to the trend of the times." Wu Wei pointed out that we should not be too dogmatic and only look at one or two industries, and many industries with outstanding performance have a strong background of the times.

From the analysis of revenue sources, Wu Wei believes that most of the excess returns of his portfolio come from the alpha of heavy stocks, and other incomes come from the beta of the market and the times. "I will try to choose companies that have both fundamentals and valuations, which are often in line with the trend of the times." Wu Wei said.

In terms of investment, Wu Wei hopes to re-position bull stocks, and in terms of financial management, he will also fill his position. Wu Wei said, "All my personal funds are basically invested in the public fund products I manage. "A good fund manager should always put customer recognition first, practice fiduciary responsibility, and share the interests of holders."

Strictly control the drawdown under the pursuit of absolute returns

"Absolute return is the most simple value in my investment, and it is also the goal I always pursue." Wu Wei pointed out that the real root cause of long-term compound interest is actually not in the bull market to compete with who earns more, but in the bear market can fall less.

In Wu Wei's view, the difference between absolute return and relative return is simply that the latter is more of a choice between stocks and stocks, while the former is more of a choice between stocks and cash. "Holding cash, not necessarily buying at the bottom of the market, but having cash in hand will certainly not be eliminated by the market, so that there is a chance to enter a new stage of the market."

The premise of obtaining absolute returns is to select high-quality companies based on the trend of the times, but at the same time, Wu Wei also stressed that "we must strictly control the drawdown through investment discipline." ”

Wu Wei frankly said that he has a keen sense of the big retracement, and every time the market has a huge decline, it may be the result of the era or market style transformation. "Investment has no rearview mirror", the difference between permanent net worth loss and phased drawdown is often only seen more clearly when reviewing after the fact.

In general, the traditional portfolio management approach is to build several sets of non-related assets and circumvent drawdowns by spreading correlation. However, in Wu Wei's view, even if A shares are stocks in different industries, the overall volatility is actually relatively consistent, but there will be differences in the fluctuations in the short cycle. When real systemic risks come, it's only a matter of time before asset prices fall.

"The upper limit of a fund manager is the rate of return, and the lower limit is the ability to control the drawdown, and controlling the drawdown well can at least ensure that the lower limit is relatively high." Wu Wei said frankly. Relevant statistics show that from the perspective of historical performance, the Kalmar ratio (annualized return/maximum drawdown) of the products managed by Wu Wei is ranked first with a maximum drawdown of only 15% among the products with an annualized rate of more than 25% of the same kind in the same period.

When it comes to ways to control drawdowns, Wu Wei said that it is important to strictly follow investment discipline.

The A-share market is considered to be "bull short bear long". From a professional investor's perspective, this could be the "best of times". Because although the performance of the index so far in 2015 is relatively average, 2017, 2019 and 2020 have been relatively good structural bull markets so far. Therefore, for fund managers, if they can avoid the market decline in 2016 and 2018, the compound yield will have a better performance. Wu Wei's requirements for himself are to try to avoid the bear market, although this drastic adjustment may only occur once in 10 years, but once avoided, the long-term compound interest return will be much more ideal.

Wu Wei pointed out for example, in the second half of 2018, based on Davis's double-kill theory, market liquidity and corporate earnings began to deteriorate, and the market could not find so many stocks with suitable winning rates and odds, at this time, according to the idea of absolute returns, his investment discipline told him that the drawdown to a certain extent was necessary to reduce losses through position control.

As a result, Wu Wei decisively reduced the position to a low point at that time, so that he also obtained positive returns in the year when the average drawdown of the whole market was larger, and the product net value curve was more stable in the long run.

Wu Wei is in charge of the fund, and during his tenure, the annual return has achieved positive returns. Since 2017, 2018, 2019 and 2020, Boshi Huizhi returns have been positive for 4 consecutive years, especially in 2018, when the CSI 300 Index fell by more than 25%, and the whole market stock mixed fund exceeded 88% as negative, while Boshi Huizhi Return ranked in the top 6% (19/346) of the same category with annual positive returns, showing a strong absolute profitability.

Next year, the A-share earnings center will move up looking for leaders in advantageous industries

Speaking of the market in 2021, when judging the macro environment, Wu Wei pointed out that the global economic cycle may have a greater impact on A-share investment next year.

Looking back at 2020, after the outbreak of the epidemic, developed countries such as Europe, the United States and Japan carried out large-scale monetary and credit expansion, with the easing of the epidemic and the release of vaccines, credit expansion and the release of suppressed consumer investment demand will promote the global economy to enter an upward cycle in 2021, and may also bring about a rapid upward trend in inflation. At the same time, the global economic recovery, the acceleration of 5G construction on a global scale, the acceleration of the trend of new energy vehicles, and the renewal of consumer electronics have made technology enter an upward cycle.

Wu Wei analyzed that the recovery of the global economy will keep China's export growth rate high, and the increase in the price level will promote the profitability of Chinese enterprises into an upward cycle until the second quarter of next year. In the first half of next year, inflation and improved earnings and marginal tightening of monetary policy are likely to keep interest rates rising.

Specific to the stock market, Wu Wei believes that next year as a whole is a "post-epidemic era", and the market's expected yield for next year is currently low, but he also pointed out that next year is unlikely to be a bear market. Bear markets are characterized by a sharp tightening of liquidity, a sharp decline in corporate earnings or a sharp decline in growth, but these two points are relatively unlikely to occur at present. Therefore, there is a high probability that the structural market will be maintained next year. "From a structural point of view, compared with the current pattern of overall structural rise in the market, there will be no major changes in the next few years, and the trend of the strong and the strong will continue."

Wu Wei expects that A-shares will be in a typical recovery period from the fourth quarter of 2020 to the first half of 2021, which will reflect the characteristics of fundamentals, and the profit drive in the first half of next year will drive three main lines, namely "export chain, inflation chain, and travel chain" worthy of layout.

In terms of style, Wu Wei said that in 2021, it will tend to be balanced, and the yield difference between the value index and the small and mid-cap style index relative to the consumer technology and pharmaceutical leaders will be significantly narrowed. Due to the improvement of the economy, corporate profits have accelerated upwards, and the number of industries and sectors with improved performance has increased significantly.

Speaking of future market opportunities, Wu Wei suggested laying out around three main lines: first, the "14th Five-Year Plan" and the policy dividend of the double cycle; second, the strategic emerging industries planned new areas and areas with strong certainty; third, the new consumption trend in the context of consumption upgrading.

At the level of specific sectors and industries, Wu Wei said that at present, it is more inclined to choose growth leading companies in industries with comparative advantages in China. For example, the Internet and consumer industries based on the demographic dividend, and the manufacturing companies with cost-side advantages as the basis. Specifically, taking the manufacturing industry as an example, the domestic development from the simple low-end labor cost advantage in the past to the current comprehensive cost advantage, which includes factors such as engineer dividends, developed logistics, and rich industrial supporting clusters. In addition, the tax-free industry, medical aesthetic industry, adult vaccines, military sector, and wind power-related sectors deserve continuous attention.

It is worth mentioning that from January 11, 2021, the One-Year Holding Period Hybrid Fund of Boshi Huixing Return, which is proposed by Wu Wei as the fund manager, will be officially issued.