Yang Huan's special preference for the computer and national defense industries can be traced back to his previous tenure at China Post Fund. His obsession is so deep that even after Sangfor (300454) experienced a decline of nearly 80%, he is still determined to reposition this information innovation stock. Fund managers' firm belief that good industries and good companies can go through the cycle is just as the people once firmly believed that excellent fund companies and fund managers can also go through bulls and bears. At the end of the day, people can't easily get rid of path dependencies, especially those that have proven success. Reflected at the business level, although Harvest Fund has worked hard to divide the three styles of "value, balance and growth", its investment directors are still unable to resist the temptation of "growth", and finally pay a loss of three or four percent for style drift.
The old and new owners are judged to be two
On January 10, 2024, Harvest Ingenuity Carefully Selected Hybrid A/C (019392/019393) will be open for subscription. The application period is from January 10 to January 30, 2024. The performance benchmark set by this partial equity hybrid fund is "CSI 800 Index Yield * 80% + Hang Seng Index Yield * 5% + China Bond Composite Wealth Index Yield * 15%", and its proposed fund manager is Yang Huan.
Prior to Harvest's meticulous selection of blends, Yang Huan, who joined Harvest Fund Management Co., Ltd. (hereinafter referred to as "Harvest Fund") in 2022, also managed 4 equity or partial stock funds (all types of shares are calculated together). According to the data of Tiantian Fund Network, as of December 22, 2023, the longest tenure is Harvest Connect Select Stocks (006803), with a tenure from July 6, 2022 to the present, followed by Harvest Innovation Growth Mix (001760), with a tenure from July 14, 2022 to the present. The Harvest Competitive Preferred Blend is co-managed by Yang Huan and Harvest Fund Balanced Investment Director Hong Liu, with a term beginning on August 24, 2023. Harvest Innovative Power Hybrid Initiation is a new fund established in December 2023.
If you want to summarize Yang Huan's previous experience in the public fund industry in one sentence, it is "excellent luck". Prior to joining Harvest Fund, Yang Huan was a star fund manager at China Post Venture Fund Management Co., Ltd. (hereinafter referred to as "China Post Fund"). The China Post Future New Blue Chip Mix (002620), which he managed, once achieved a return of 189.6% during its three-year and 210-day tenure, ranking in the top 3% of its quartile. During this experience, from August 2017 to August 2018, Yang Huan co-managed the new blue-chip blend with another fund manager, and from September 2018 to March 2021, Yang Huan managed it alone, which coincided with the last round of structural bull market in growth stocks. It can be said that Yang Huan began to manage the fund alone at the initial stage of the bull market, and then left and withdrew at the highest point of the bull market, and completely ate all the dividends of the bull market by accurately stepping on the points.
However, Yang Huan's good fortune did not last to Harvest Fund. According to the data of Tiantian Fund Network, as of December 22, 2023, Harvest Interconnect Select Stock has achieved a return of -27.6% in a 1-year and 169-day tenure, with a quantile ranking of 1925/2681, Harvest Innovation Growth Mixed has achieved a return of -20.37% in a 1-year and 161-day term, with a quantile ranking of 3775/6431, and Harvest Competitive Preferred Mixed A has achieved a return of -14.39% in a 120-day tenure, with a quantile ranking of 7324/7584. Both the absolute and relative returns of the above-mentioned funds are far inferior to the new blue-chip blend of China Post Future.
Excellent industries dragged down net worth
The reason is that Yang Huan has been influenced by both market style and his own strategy. In terms of style, China Post's future new blue-chip mix showed a significant large-market growth style during Yang Huan's sole management. According to the data of Choice terminal, from August 22, 2018 to February 10, 2021, China Post Future New Blue Chip Mixed recorded an increase of 171.09%, and the market growth (399372) recorded an increase of 151.79% in the same period, the amplitude of China Post Future New Blue Chip Mixed was 198.73%, and the growth amplitude of the market was 168.44%, the maximum drawdown of China Post Future New Blue Chip Mixed was 16.2%, and the maximum drawdown of the market growth was 17.5%; China Post Future New Blue Chip Hybrid rose by 228.66%, and the market growth rose by 196.64%. There is a high degree of convergence between the two.
A similar situation also occurred between Yang Huan's masterpiece Harvest Connect Select Stocks and the growth of the broader market after Yang Huan joined Harvest Fund. According to the data of Choice terminal, in the past year, Harvest Shanghai Stock Connect Select Stocks recorded a decline of 21.81%, and the market growth recorded a decline of 22.13%, Harvest Connect Select Stock Amplitude of 34.24%, and the market growth amplitude of 39.27%, Harvest Connect Select Stock Maximum Drawdown of 30.55%, Market Growth Maximum Drawdown of 32.42%, Harvest Connect Select Stock Maximum Rise of 13.73%, and Market Growth of Harvest Stock of Harvest Connect of 13.93%. From the perspective of the trend of the two, the net value of Harvest Shanghai Stock Connect Select stocks has always fluctuated around the large-cap growth index.
In terms of strategy, Yang Huan is difficult to get rid of the past successful path, so he has a special preference and overallocation for the two industries of computer and national defense and military industry. From the fourth quarter of 2018 to the third quarter of 2019, computers were the industry with the largest new blue-chip mixed allocation in the future, with an allocation range of 24.64% to 42.63%, and from the third quarter of 2020 to the first quarter of 2021, when Yang Huan left office, the national defense and military industry was the industry with the largest new blue-chip mixed allocation in the future. After arriving at Harvest Fund and managing Harvest Interoperability Select Stocks, in the third quarter of 2022, Yang Huan significantly increased the allocation of national defense and military industry and power equipment while maintaining the proportion of computer allocation, and in the next four quarterly reports, national defense and military industry and computers have always been Yang Huan's "favorite", except for the second quarter of 2023, the allocation of medicine and biology exceeded that of computers, and the two industries with the most allocation of Harvest Interchange Select Stocks are national defense and military industry and computers.
In fact, the national defense industry, computers, and a new energy (power equipment) have almost covered the main position direction of Harvest Interchange Select Stocks in the past year or so. There are two layers of interpretation for the above preferences. The first layer is that he believes that "energy transformation and autonomous security are long-term industrial trends", so it is also "the long-term allocation direction of our portfolio", and the second layer is that these industries "have higher demand certainty, relatively clear industrial trends, and relatively clear competition patterns", so they are "worthy of priority allocation". At the same time, fund managers also believe that there is no need to care about short-term disturbances - "although the industry is subject to periodic disruptions in the short term, it will not change its upward trend in the long term" - in other words, good companies and good industries can cross the bull and bear.
An important lesson that the end of the bull market in growth stocks in 2021 has taught the people is that such good industries and good companies that have achieved significant results and huge gains in the early stage cannot escape the sharp correction in stock prices and the long valuation digestion. For Sangfor (300454), which has appeared in the top 10 blue-chip mixed stocks of China Post Future for 7 consecutive quarters and is still the largest heavy stock of Harvest Connect Select Stocks, this stock has fallen by nearly 8% after reaching a peak of 332.82 yuan in March 2021. Among the six stocks with the most failures and losses in the selection of heavy stocks of Harvest Hutong, Agile and CATL belong to new energy (power equipment), Entrepreneurship Wellcome and Thunderstar belong to computers, and Ziguang Guowei and Philip Hua belong to the national defense and military industry. It can be said that these industries that Yang Huan is optimistic about have greatly dragged down the net value of the fund.
Fund managers are unable to get rid of the past success path, and replicate the direction of past holdings in newly managed funds, which often leads to a sharp decline in relative performance, forming a "performance curse". The allocation of Harvest Interchange selected stocks can't help but remind people of Zhao Yi, the former "quadruple champion" Quanguo Fund. Similar to Yang Huan's experience, Zhao Yi's great success in the field of new energy has enabled him to continue to maintain a high proportion of power equipment stock allocation after switching to the new company, Quanguo Fund, and the three-year holding period hybrid A of Quanguo Xuyuan managed by him has also fallen by 30% during his tenure of 1 year and 66 days, and the quantile ranking is in the bottom tenth of the same category.
Balanced style single hanging growth
In fact, not only Yang Huan can't get rid of the past success path, but other star fund managers of Harvest Fund have not been able to get out of the "sequelae" of the last round of growth stock bull market.
In 2020, Harvest Fund announced the "New Decade Investment Research Strategy Upgrade", and at the same time established 12 "investment teams" led by "fund managers with long-term outstanding performance". Among them, Yao Zhipeng and Gui Kai are "Growth Style Investment Directors", Zhang Jintao is "Value Style Investment Director", and Hu Tao and Hong Liu are "Balanced Style Investment Directors". From the perspective of style setting, the original intention of Harvest Fund is to upgrade on the basis of the original "all-weather strategy" to ensure that no matter what style the market is, the company has fund managers who can step on the "outlet" of plate rotation.
It took three years after the end of the growth bull market for growth stocks for the long-term performance of these "directors" to gradually become apparent. Among them, as of December 22, 2023, Guikai's representative work Harvest Taihe Mixed has a rise and fall of -38.07% in the past three years, with a quantile ranking of 1682/1878, Yao Zhipeng's representative work Harvest Smart Car stock has a change of -38.99% in the past three years, with a quantile ranking of 422/500, and Zhang Jintao's representative Harvest Mövenpick Regular Mix has a change of -27.19% in the past three years, with a quantile ranking of 1395/ 1878;Hu Tao's masterpiece Harvest Quality Enterprise Mixed in the past three years rose and fell by -50.5%, ranking 1437/1475, and Torrent's representative Harvest Ruihong Three-year regular mixed change was -46.56%, ranking 1383/1475.
In the past three years, the market as a whole has been dominated by value and growth by relatively weak, while by small market capitalization and by large capitalization. Therefore, Zhang Jintao, as the "value style investment director", fell relatively little under the blessing of the market style, while Gui Kai and Yao Zhipeng, as the "growth style investment director", fell greater. However, Hu Tao and Hongliu, the "balanced style investment directors" whose performance should be between the "value style" and the "growth style" in theory, recorded a decline of about 50%, which is really surprising.
The reason for this is that the shareholding styles of these two fund managers are not balanced. According to Choice terminal data, 93% of Hu Tao's Harvest high-quality corporate mixed heavy stocks in the third quarter of 2023 are growth large-cap stocks, and the remaining 7% are mixed mid-cap stocks. In the third quarter of 2023, 26% of the growth large-cap stocks, 26% of the mixed large-cap stocks, 9% of the value large-cap stocks, and 11% of the value mid-cap stocks.
It has been more than three years since the end of the growth stock bull market, but its impact on the positioning of fund managers under Harvest Fund has gone far beyond the cycle itself.
In response to the above situation, the author calls Harvest Fund as an investor. At the same time, Harvest Fund also said that "balanced style investment director" does not mean a balanced distribution of positions, and Hu Tao is personally "better at growth stocks"; fund companies tend to evaluate a fund manager from a longer cycle, such as 5-7 years, and the performance of the Harvest high-quality enterprise mix managed by him is still "relatively good" in the long cycle. (This article was first published in Titanium Media APP, author|Chen Qile)