The capital market is not only a "arena" of money, but also a "magnifying glass" of human nature. Investors who dare to show their fists and feet here are rarely lucky enough to "debut is the peak", and more are "steelmakers" who have experienced ups and downs and ups and downs. Li Jin of Invesco Great Wall Fund, when he first made an investment, encountered "the biggest psychological pressure since he was engaged".
In an exclusive interview with a reporter from China Securities News, Li Jin bluntly said that at that time, he "only looked down and walked" until he reflected on himself in frustration and learned to "look up at the sky". He believes that capturing the excess returns of individual stocks to improve the investment winning rate should not only polish and expand the circle of personal ability, but also focus on the medium- and long-term industrial development trend. The former is the road under the feet, to walk steadily and calmly; the latter is the sky overhead, illuminating the future with the bright lights of the stars.
Jin Li, Master of Finance, Wuhan University. From July 2007 to February 2010, he worked at agricultural bank of China Shenzhen Branch, from March 2010 to August 2013 at Huatai United Securities Research Institute, from August 2013 to May 2021 at Baoying Fund, in May 2021 he joined Invesco Great Wall Fund as deputy director of equity investment department, and since August 31, he has been the manager of Invesco Great Wall Science and Technology Innovation Hybrid Fund.
"Not long-term enough at the beginning"
Before entering the investment circle, Li Jin had a period of bank credit work experience. At that time, as a credit approver, he needed to conduct research on the credit qualifications of loan customers. Visit companies on the ground, talk to management, get to know upstream and downstream suppliers, etc. It was also this experience that laid the foundation for his future in-depth research.
In 2010, Li Jin joined Huatai Securities as a researcher and officially began his investment research career. In 2013, Li Jin joined Baoying Fund, continued to engage in industry research, and officially served as a fund manager in October 2016, managing a number of funds in the past 5 years. According to Galaxy Securities data, as of May 14, 2021, he has managed the longest representative fund, and his performance in the past four years has ranked at the forefront of similar flexible allocation funds.
In May 2021, Li Jin joined Invesco Great Wall Fund. The cutting-edge fund manager joined the head equity investment public offering, which soon attracted the attention of the market. More precisely, the market eagerly expects Li Jin to "go further" on the new platform.
But in fact, Li Jin does not belong to the lucky ones such as "debut is the peak". Behind the beautiful performance, he has had a little-known hard work. In 2017, when he began to manage his portfolio, Li Jin, who transitioned from a researcher to a fund manager, faced two core problems of finding a trading strategy and a circle of competence. Li Jin admitted that the time when he first started as a fund manager was the time when he was most psychologically stressed since he started. "At that time, the trading strategy was not mature, the vision was not long-term enough, investment decisions were easily disturbed by short-term factors and market sentiment, a lot of time was invested but the results were small, and the investment performance in the first year barely outperformed the CSI 300 Index, and the net value volatility was relatively large."
For the cognition of the circle of ability, Li Jin believes that he only earns money from his circle of ability. Since 2017, li jin has never seen a liquor stock in the heavy stock of the fund. "At that time, the liquor market was the mainstream market, and most of the peers around them bought liquor stocks, and the topic of eating and chatting was the consumption of liquor. It embarrassed me because I was the only one who didn't buy it. Li Jin said bluntly, looking at the good liquor stock market, he did have the idea of "trying it" in his heart at that time. But after all, the circle of personal ability does not belong to that field, and finally resisted the temptation.
"Looking back, I don't regret it." Li Jin said that he is a graduate of manufacturing research, and the initial investment is mainly concentrated in the manufacturing field. After 2017, he began to review his investment behavior, and based on the research ideas of industry trends, he expanded his circle of competence to industries such as TMT and pharmaceuticals. Since 2018, it has successively bought pharmaceutical stocks and began to contribute excess returns to the portfolio.
"Investment can not only look down and walk, but also look up at the sky." If you can see the direction of the stars, the way forward will not be confused. Li Jin believes that the key to expanding the circle of ability is to learn to shield short-term interference factors and focus on medium- and long-term industrial development trends. No matter what era, big bull stocks are born from the industrial development trend of a specific period. Therefore, in order to improve the winning rate of investment, we cannot deviate from the "day" of the development trend of the times.
Dare to re-position the sole stock
In 2018, Li Jin achieved good results through a decisive defensive strategy and began to come into the spotlight.
In 2018, "deleveraging" is the most important feature of the macro economy, and A shares have also opened a round of adjustment market, and the Shanghai index has adjusted from nearly 3600 points at the beginning of the year to more than 2400 points at the end of the year. In the face of such a market, Li Jin decisively chose to reduce his position, reducing the fund's position from more than 80% at the end of the first quarter to less than 70% at the end of the second quarter. He recalled that at that time, there were two main considerations for reducing positions: one was that the overall valuation of the market was relatively expensive, and the other was that market liquidity and external environmental factors did not support the market to go higher, so a phased defense strategy was made.
"I have two investment goals, one is to hope that the annual performance ranking can enter the top 50% of the market, and the other is to bring sustained excess returns to the people. In years like 2018, it's hard to earn absolute returns. Under the trend, it is necessary to save the strength by reducing the position, and then choose to attack when the risk has passed. In hindsight, it was the reduction in 2018 that laid the foundation for subsequent investment returns. Li Jin said.
In 2019, the market situation improved, opening a new round of structural market. Li Jin's early layout of the pharmaceutical, manufacturing and other tracks, has successively stepped out of a number of bull stocks. Li Jin said bluntly that compared with other industries, the industrial space of the pharmaceutical industry is relatively large, and the number of stocks is also relatively large, in addition, the market value space of the pharmaceutical sector is large, which is a good stage for investment competition.
Li Jin revealed that half of his time in this year was invested in company research, and the number of business trips throughout the year exceeded 100 days. "The company's research has two major focuses: one is to have an objective understanding of the company's fundamentals through personal visits; the other is to feel the company's soft power through visits, such as company culture and management strategic vision. This information can play a key role in investment decisions, although it is difficult to quantify into investment models. ”
In-depth research on the front line allowed Li Jin to find a heavy position of single stocks. Li Jin said that after a long period of research and tracking, he re-positioned a stock in the second quarter of 2019. However, at that time, the market was rumored to have falsified financial data, making the company's stock price remain at a low level. To this end, Li Jin conducted a comprehensive survey of the company's fundamentals, competitors, upstream and downstream of the industrial chain, etc. He concluded that the company's fundamentals were excellent and its stock price was grossly undervalued, and decided to buy aggressively. During the 8 quarters following the buy-in, the stock price doubled, contributing significant excess returns to Li Jin's fund portfolio.
After this battle, Li Jin gradually polished a systematic fundamental research framework. He said that the purpose of the research is to find a high-performing company with sustained growth in performance, and to judge the sustainability of performance growth through continuous tracking, and to accompany the company to grow together in the process to obtain the incremental value brought by the company's development.
Specific to the stock selection dimension, Li Jin said that in the company's fundamental research, he will focus on the following aspects: one is the company's product pricing ability and industrial structure (that is, the "moat"),second, asset quality (balance sheet health) and profit quality (cash flow); third, corporate governance structure, incentive mechanism and management quality characteristics.
Li Jin believes that excellent management can save the company's development a lot of unnecessary trouble. Companies with better profitability (such as gross margins of more than 30% or ROE of more than 10%) can form a strong ability to resist market risks, and may eventually become one of the few scarce core assets that cross bulls and bears.
Good price layout "thick snow long slope" track
Fundamentally, the core of investing is to deal with a pair of major contradictions. One end of the contradiction is "good company" and the other end is "good price".
Li Jin believes that valuation is essentially a "price comparison" process, although the investment period and the quality of the company are the core factors in the valuation process, but it will be closely related to the value preferences of fund managers. In his opinion, taking the right path will go a long way, he wants to be a long-termist, to accompany the growth of good companies, but he does not want to buy a stock at an excessively high price. He further said that in portfolio management, some of the targets are strategic holdings (such as the top ten stocks), which will give a higher valuation tolerance to such companies; but some companies are tactical layouts, the holding period is relatively short and the expected rate of return is not high, and the valuation tolerance for such companies will be reduced.
"Overall, I will first set an expected price and valuation range for the target company, if the company develops more than expected during the holding process and quickly reaches the target price, I will choose to cash in the income at a high level; if the fundamentals deteriorate due to external factors, resulting in the initial buying logic being destroyed, I will sell halfway." Li Jin said.
In addition, in order to maximize the overall return of the portfolio, Li Jin also said that in addition to considering the fundamental factors of the individual stocks themselves, the stock selection should also consider the correlation between the individual stocks. He pointed out that some individual stocks will have a correlation relationship due to industry linkage, thus canceling out the portfolio income, which is also a risk point that needs to be guarded against in the construction of the portfolio. "Portfolio management is especially like a battle, every fund manager is a general, and the stocks bought are soldiers. I want my combination to be a whole, a more balanced combination. Therefore, I will think about my combination from a holistic perspective and strive to make the combination have a better money-making effect. ”
On August 31 this year, Li Jin officially became the fund manager of Invesco Great Wall Science and Technology Innovation Hybrid Fund, starting a new investment journey. Li Jin believes that there are still structural opportunities in the market in the fourth quarter, and then optimistic about investment opportunities in manufacturing-related fields, and will focus on the investment layout of new energy, military, semiconductor and other directions.
Li Jin pointed out that the key to the next investment lies in choosing excellent companies that subdivide the boom industry, enjoy the dividends brought by the development of the times, and thus earn the return on investment within the circle of ability. He stressed that excess returns come from forward-looking in-depth research, in the next investment layout, optimistic about manufacturing-related fields, "in the future for a long time, China's manufacturing investment opportunities should be relatively large, follow-up will focus on new energy, military, semiconductor and other directions for investment layout."
