Decrypting the number one foreign private equity "player" in A shares: 4,000 high-net-worth customers support, the all-weather strategy has been "localized"

The rapid growth of foreign private equity has become unstoppable.

The latest management scale of Qiaoshui (China) Investment Management Co., Ltd. (hereinafter referred to as "Qiaoshui China") has exceeded 10 billion yuan.

This is the first time that a foreign securities private equity institution with a scale of more than 10 billion yuan has appeared in the information released by the association.

The buy-side agency is a wholly owned subsidiary of Bridgewater, the "head" of the U.S. hedge fund, which is known for its "risk parity" and "all-weather" funds.

It is reported that Qiaoshui China has obtained an incremental scale of at least 8 billion yuan through the latest fundraising, how big is the customer base behind this?

More importantly, Bridgewater China is clearly making rapid progress in the "localization" strategy, what kind of test will this process be?

According to the filing information of the China Foundation Association, the management scale of Bridgewater China was updated to "more than 10 billion yuan". A week ago, the filing information was still in the range of 2 billion to 5 billion yuan.

This change in scale also means that foreign securities private equity institutions have broken through the "ceiling" of tens of billions of scale.

This breakthrough in Bridgewater China may be related to its latest round of fundraising.

It is reported that Qiaoshui has recently raised funds in key channels such as CITIC Securities, China CITIC Bank, and Ping An Bank, and the new scale may reach 8 billion yuan.

This fund issuance is also the most powerful channel sales activity since Qiaoshui entered China.

Previously, Qiaoshui China had only two onshore private equity products in China, focusing on an all-weather enhanced strategy, and the management scale belonged to the middle and upper reaches of the foreign private placement.

In fact, the recent growth of the scale of foreign private placements has accelerated.

Since 2017, China officially opened up the private placement manager filing system to foreign investors, and more than 30 foreign-funded institutions have begun to operate locally in China, and the accelerated growth means that foreign investors have begun to pass the period of strategic adaptation.

Previously, the top management scale in foreign private placements was Yuansheng Investment (the parent company is CTA giant Yuansheng Investment, 5 billion to 10 billion yuan scale range), UBS Asset Management (2 billion yuan - 5 billion yuan range), Deshao Investment (the parent company is the UNITED States quantitative DE.SHAW, 2 billion yuan - 5 billion yuan scale range).

Through this fundraising, Qiaoshui China achieved overtaking in curves and took the lead in promoting the 10 billion private equity camp.

According to the official filing information, Qiaoshui China has added 30 new product information, and the product name is China Resources Trust - Creative Excellence XX Collective Fund Trust Plan.

According to the people in the consignment channel, when this fund was issued, the minimum purchase threshold for each customer was 2 million yuan, and the trust plan of each sub-number was up to 200 customers.

With this estimate:

The total scale of 30 new sub-products issued by Qiaoshui is 8 billion yuan, which means that the average fundraising scale of each sub-product is 270 million yuan. According to the subscription of 2 million yuan per customer, then there are an average of 135 investors per sub-number. According to the above model estimates, there may be about 4,000 high-net-worth individuals/institutions in this fundraising.

Of course, usually in the issuance, there will be institutional/individual customers who spend hundreds of millions of dollars to buy, so it may also end up with less than 4,000 new customers.

Industry insiders have reported that the explosive issuance of Bridgewater China's onshore products is related to the market shock environment this year, and customers have begun to look for strategies that can resist market fluctuations.

As shown in the chart above: Taking the first product in operation in October 2018 as an example, as of October 2021, Bridgewater China's annualized revenue from products reached 18.7%.

The biggest highlight is that the historical maximum drawdown is 4.4%, and the net value drawdown is better controlled at multiple oscillations.

It is reported that Qiaoshui's all-weather enhanced strategy in China is a multi-asset hybrid strategy, which invests in Chinese stocks, Chinese government bonds, and commodities and derivatives traded in China.

It is worth noting that Bridgewater China's equity asset holdings do not involve individual stocks and industry ETFs. The transaction executes a basket of stock indexes, and the CSI 300, CSI 500 and China Stock Index form a certain proportion of the stock asset position.

Qiaoshui China Roadshow once pointed out that Qiaoshui does not regard itself as a quantitative fund, and the difference between Alpha and most domestic managers is not captured at the level of stock selection or industry, but more is looking for the inflection point of the market. When the stock market is not performing well, there is also an opportunity to create good returns.

As for whether Chinese products are short assets, the agency said that all-weather is a long strategy, alpha will allocate more or less assets on the basis of all-weather positions, but the combination of the two all-weather enhanced strategies as a whole generally does not really short.

Bridgewater China also has the following explanation for the upper limit of strategic capacity: It does not believe that the capacity limit is a big problem for the bridgewater strategy, because it only trades large-scale and liquid markets. Especially for stocks, because it is not a stock selection strategy, it is not very involved in the issue of individual stock capacity.

The industry view is that It is gratifying that Qiaoshui China has taken the lead in breaking through the scale of 10 billion, but there are still many "adaptability" problems to be solved.

The first is how to adapt to the ecological needs of domestic customers and channels. After the first breakthrough of 10 billion, the number of customers in Qiaoshui China has increased significantly, and the demand for customer service in the future has also increased significantly, and how to efficiently serve the consignment channel is very critical. In particular, in the face of fluctuations in net value and changes in the equity and bond market, how to deal with holders is worth observing The second is to adapt to the information communication needs of the Chinese market. It is reported that perhaps inheriting overseas traditions, Qiaoshui China's monthly report has no specific position changes and asset allocation details in addition to net value submissions, which cannot meet the requirements of partners and holders for information disclosure. Again, there is the communication problem of strategy. The market conditions under which Bridgewater China's strategy outperformed the market were not disclosed in detail, which directly involved the risks borne by investors.

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