The Shanghai Composite Index recently fell from more than 5,100 points to near 3,600 points, down nearly 30 percent in three weeks, the biggest three-week drop since 1992. On Thursday (July 9), with the landing of various policies, there was a Jedi counterattack in A shares, and the market stabilized with obvious signs. In the past year and a half, the Shanghai Composite Index has climbed from around 2000 points to 5100 points, and then quickly plummeted to around 3600 points. At the same time, the wealth management industry has also experienced a shift from fixed income trust products to floating income private placement products. Always adapting to changes, adhering to the bottom line, and adhering to the interests of customers as the center is the foundation for the healthy development of the wealth management industry.
First, the wealth management industry around 2000 points first mentioned the "layout of the capital market"
At the end of 2013, at an annual work conference, we established the working policy of "relying on trusts, selecting asset management, and laying out capital markets". At that time, the Shanghai Composite Index had been hovering around 2,000 points, and pessimism was pervasive. However, we judge that the release of the "Nine Articles of the New Country" marks the arrival of a new era, and the capital market is about to usher in a new round of magnificent bull market.
Second, on the eve of the bull market, establish the selection of private placement standards
Convinced that a bull market was coming, we quickly discussed the criteria for the exquisite selection of private equity funds: "a scientific background, a decade in the industry, a bull-bear conversion, a top-notch, and never left." That is, fund managers are required to have more than ten years of investment and research experience in securities companies and public funds, have experienced two to three rounds of bull-bear conversion, have historical performance can be checked and ranked among the best, and have been active in the field of secondary market investment. This standard has become the basic basis for product line design.
At the same time, we also set up a mechanism of "100 dividends and bags for safety" with private equity institutions, that is, the net value of each fund reaches more than 1.10, which can start dividends, effectively realize the early arrival of customer returns, and also reduce the position for investors in the process of continuous rise, supplementing the liquidity required by investors every day.
Taking Yingtai Wealth Cloud under my guidance as an example, the Zixin Yingtai series, Capstone Yingtai series and Junze Yingtai series issued by it have all achieved dividends since its inception, a total of 16 times, and in the case of the retracement of the Shanghai Index of more than 30%, the average drawdown is around 20%, and all products have obtained positive returns, which is better to give back to investors on the whole.
Third, the current round of sharp rise and fall is caused by the so-called "market value management", and the half-year "money shortage" time point is not appropriate to reduce leverage and fall
The initiator of the market surge and plunge is the speculation of institutions with the help of so-called "market value management", and the price-earnings ratio of the ChiNext board once exceeded 150 times, overdrawing the future value. In the process of rising, investors overuse leverage, accelerate the upward process, and accumulate a lot of risk.
In mid-June, regulators saw the risks posed by leverage and notified the liquidation of the over-the-counter capital allocation business, starting the process of deleveraging. However, what has been overlooked by regulators is that every June is the time when the market is "short of money", and in June 2012 and June 2013, the stock market fell due to liquidity problems. The clean-up of leverage eventually triggered a plunge in the stock market.
Fourth, under the big shock, the wealth management industry needs to adhere to integrity and integrity
After this round of sharp rise and fall, we still firmly believe that the logic of this bull market has not changed, and the logic of the transformation of residents' large-scale asset allocation has not changed. Because with the landing of China's new round of reform and opening up policies, China's capital market will certainly be able to come out of a round of magnificent and healthy bull market, the specific reasons are as follows: the trend of the continued release of the reform and opening up dividend has not changed; the momentum of macroeconomic stabilization has not changed; the fundamentals of the overall abundance of market liquidity have not changed; the pattern of residents' allocation of large-scale assets has not changed; and the process of continuous reform and opening up of the capital market has not changed. The Jedi counterattack on Thursday (July 9) with a thousand shares up and down confirmed this basic judgment.
This round of plunge, falling out of nearly 1500 points of space, is an excellent layout opportunity for wealth management institutions that adhere to value and do not participate in speculation. At present, several funds I personally selected have shown professional value, Jiangsu Zixin continues to adhere to the low-value blue-chip plate; Shanghai Capstone has sent a team of researchers to various listed companies to conduct intensive research and strive to excavate the excellent stocks that have been wrongly killed; Guangdong Junxin Yingtai has also reduced its position to less than 30%, aimed at some high-quality targets, and made an offensive posture. In the midst of this sharp rise and fall and the Jedi counterattack on Thursday (July 9), the strong professionalism and professional ethics of the managers were demonstrated.
In the past year and a half, the ups and downs of the wealth management market, has quickly completed the "rigid payment" of fixed income products to floating income products, in the process of this evolution, some wealth management institutions that only rely on channel sales have basically disappeared; the plunge in the past three weeks, some blindly follow the trend, regardless of risk wealth management institutions have also made customers lose significantly. In the whole process, we should always adhere to the bottom line, adhere to integrity and integrity, from the choice of managers to product design always adhere to the maximization of customer interests as the starting point, and ultimately create a stable income for investors and cooperative institutions.
Fifth, do a good job in asset allocation to meet the advent of the equity era
Regarding asset allocation, we continue to firmly judge the transition from traditional debt products to equity products. It is recommended that high-net-worth customers can allocate less than 50% of their total assets to the real estate sector, and 5% to 10% retain highly liquid assets such as cash and bonds. The remaining part focuses on the allocation of equity assets: 10% enter the primary market products mainly based on PE and mergers and acquisitions, 20% allocate secondary market private equity funds, and 10% allocate stable income products based on quantitative hedging and structured bonds.
In the future, the wealth management industry will continue to move forward. As a veteran of the wealth management industry, I am willing to rely on my professional knowledge and understanding of the market to warn everyone to remain calm when the market is impetuous, to deliver value in a timely, serious and principled manner when the market is turbulent, and to work with many wealth management institutions to jointly create a wealth management ecosystem worthy of the trust of high-net-worth customers.
Founder of Hengtian Wealth Liang Yue
July 9, 2015