Ruiyuan Fund's 2024 first quarter report is released!
On April 17, the four funds of Ruiyuan Fund, Ruiyuan Growth Value, Ruiyuan Balanced Value for three years, Ruiyuan Stable Allocation for two years, and Ruiyuan Stable Benefit Enhancement for 30 days, all disclosed their quarterly reports.
As of the end of last year, the largest heavy stocks in the equity positions of the above four funds were all Hong Kong stocks China Mobile, and as of the end of the first quarter of this year, this is still the case. Since the first quarter of this year, the share price of Hong Kong stock China Mobile has been relatively stable, rising 3.234% in the first quarter. Regarding the reasons for the heavy position of telecom operators, Fu Pengbo previously said in the quarterly report that its stable cash flow and dividend policy, business resilience in the context of macro pressure, and increased attention to the capital market have made it the "ballast stone" of the portfolio.
In terms of position changes in the first quarter, the list of three-year heavy stocks of the two equity funds Ruiyuan Growth Value and Ruiyuan Balanced Value has not changed much as a whole, among them, Tencent Holdings has entered the top 10 heavy stocks of Ruiyuan Growth Value, and Meituan-W and China Property Insurance have entered the top 10 heavy stocks of Ruiyuan Balanced Value in the past three years.
Zhao Feng's view on the economy and the market in the first quarter has tended to be positive, in his view, the valuations of many companies have been very attractive, investor expectations have basically bottomed out, with the support of macro policies and the recovery of demand, the economy and company fundamentals may pick up in the future.
Looking ahead to the second quarter, Fu Pengbo and Zhu Ling expect that there will be some structural opportunities in the A-share market, and the valuation level of the sector index is still below the historical average. With the disclosure of the annual reports and first quarterly reports of listed companies, the improvement of fundamentals and economic changes in the second quarter may have a stronger and clearer guiding effect on the investment of the whole year.
In addition, it should be noted that all four funds were net redeemed in the first quarter. Ruiyuan Growth Value, Ruiyuan Balanced Value for three years, Ruiyuan Stable Allocation for two years, and Ruiyuan Stable Benefit Enhancement 30 days held for the first quarter had an outflow of 415 million shares, 436 million shares, 933 million shares and 334 million shares respectively, of which the net redemption rate of Ruiyuan Stable Benefit Enhancement 30 days in the first quarter reached 45%.
Fu Pengbo: Increase the allocation of companies that benefit from the growth of the export chain and the replacement and renewal of equipment
As the star product of Ruiyuan Fund, Ruiyuan Growth Value, jointly managed by Fu Pengbo and Zhu Lan, as of the end of the first quarter, the fund scale was 18.813 billion yuan, down 9.5% from 20.796 billion yuan at the end of 2023.
In terms of position changes, compared with the end of 2023, Tencent Holdings has re-entered the top ten heavy stocks of the fund, and San'an Optoelectronics has been transferred out. Lixun Precision, Guanghui Energy, Maiwei Shares, and Sino Biotechnology were increased, and China Mobile, CATL, Tongwei Shares, Wanhua Chemical, and Dongfang Yuhong were reduced. As of the end of the first quarter, the fund's top 10 heavy stocks were China Mobile, CATL, Luxshare Precision, Tencent Holdings, Tongwei, Guanghui Energy, Myway, Wanhua Chemical, Sinocare Biotech and Oriental Yuhong.
Regarding the idea of adjusting positions, Fu Pengbo and Zhu Ling said in the first quarterly report of Ruiyuan Growth Value, "We have made certain adjustments to our positions, mainly to reduce some of the top 20 companies with net worth, and from the bottom up to increase some companies that benefit from the growth of the export chain and the replacement of equipment to replace updates, and at the same time increase the allocation of Hong Kong stocks. ”
Looking ahead to the second quarter, the two fund managers said that there are still some structural opportunities in the A-share market, and the valuation level of the sector index is still below the historical average. With the disclosure of the annual reports and first quarterly reports of listed companies, the improvement of fundamentals and economic changes in the second quarter may have a stronger and clearer guiding effect on the investment of the whole year. "We will continue to dynamically adjust our portfolio, explore new investment targets, and select companies with reasonable valuations, high growth certainty, and endogenous stable growth that continue to generate cash flow. ”
Zhao Feng: Listed companies will be more rational about expansion and will pay more attention to profitability and shareholder returns
In the first quarter, the three-year net value of Ruiyuan Equilibrium Value managed by Zhao Feng increased by 0.91%, and as of the end of the first quarter, the total size of the fund was 11.83 billion yuan.
In terms of position changes, in the first quarter, Meituan-W and China Property Insurance newly entered the top ten heavy stocks of Ruiyuan Balanced Value in the first three years, Oriental Yuhong and Country Garden Services withdrew, CATL, Wanhua Chemical, and Weiming Environmental Protection were increased, and China Mobile, Tencent Holdings, Sieyuan Electric, Sino Biological, and China Resources Beer were slightly reduced. As of the end of the first quarter, the top 10 heavy stocks were China Mobile, Tencent Holdings, CATL, Sieyuan Electric, Wanhua Chemical, Weiming Environmental Protection, Sino Biologics, China Resources Beer, Meituan-W, and China Property Insurance.
First of all, he clearly stated that the view on the economy and the market in the first quarter tends to be positive, and the main reasons are: 1. The valuation of many companies has been very attractive, even if the future economic and earnings growth slows down, its potential return level has far exceeded that of other assets; 2. The market sentiment is extremely pessimistic, and investors' expectations have basically bottomed out; As of February 2024, the PPI of all industrial products has been declining year-on-year for 17 consecutive months, and social inventories have been continuously compressed at a low level.
"Based on our judgment of the future and market conditions, we have made some adjustments to our portfolio, reducing our holdings in companies related to fixed asset investment, as well as companies with unattractive static valuations and difficult future growth judgments, and increasing our holdings in some new energy companies with attractive valuations, as well as companies with low valuations and stable and predictable fundamentals. In the recent annual report exchanges of listed companies, more and more companies have indicated that they will control the pace of expansion, shrink loss-making business lines, and pay more attention to the balance between revenue growth and profitability. We expect that as demand growth slows, listed companies will be more rational about expansion and will pay more attention to profitability and shareholder returns, which will improve the quality of earnings and returns of Chinese listed companies. Zhao Feng said in a quarterly report.
Rao Gang: In the second quarter, the fiscal traction on economic momentum may be strengthened
As a partial debt hybrid fund, Ruiyuan Stable Allocation holds a hybrid for two years, and the proportion of equity investment in the first quarter of the fund is 35.61% of the fund's net asset value, a slight increase from the end of 2023. In terms of equity positions, the top 10 heavy stocks are China Mobile, CATL, Tencent Holdings, Sieyuan Electric, Weiming Environmental Protection, Industrial and Commercial Bank of China, Meituan-W, United Precision, Baosteel, and Midea Group. As of the end of the first quarter, the size of the fund was 8.424 billion yuan.
Regarding the asset allocation in the first quarter, Rao Gang and Hou Zhenxin, managers of Ruiyuan Stable Allocation Fund for two years, said in the first quarterly report that in terms of stocks, in the liquidity shock of the equity market at the beginning of the year, on the one hand, when the prices of dividend assets and growth assets were greatly differentiated in the short term, the position structure was rebalanced according to the expected rate of return. High-quality targets with cheap valuations, resulting in a slight increase in equity positions compared with the end of last year.
In terms of convertible bonds, it still mainly holds low-valued convertible bonds, such as convertible bonds of financial companies with higher pure bond yields and more adequate valuation protection, convertible bonds of new energy companies, etc., and the long-term holdings of public utilities convertible bonds have met the conditions for conversion with the rise of the underlying stock, and the fund has reduced its holdings and achieved good returns, so it has slightly declined compared with the previous quarter.
In terms of pure bonds, the rapid decline in long-end and ultra-long-end yields to record lows since 2024 also reflects the "rushing" action driven by the demand for capital allocation to a certain extent, and then with the gradual transmission of loose monetary policy to easy credit, the increase in the supply pressure of interest rate bonds or the improvement of real estate and infrastructure data may lead to the amplification of the volatility of medium and long-end bonds, so after the long-end interest rate fell significantly in the first quarter, the fund moderately reduced the leverage and duration of bond assets. At present, domestic real interest rates are still at a high level, and inflation does not constitute a monetary policy constraint for the time being. Although the issuance of special treasury bonds will be ushered in around the second quarter, and the choice of issuance method may have a phased impact on the market, the supply of bonds will generally not change the trend, and bond assets still have good allocation value in the medium and long term.
Looking ahead, the signs of the global manufacturing industry gradually switching from the contraction range to the expansion range are becoming more and more significant, and the pull of external demand on mainland exports has also been preliminarily verified. In terms of domestic demand, in the case of the low rate of government bond issuance in the first quarter of the budget, the second quarter may gradually move closer to the normal seasonality, so that the fiscal traction of economic momentum has been strengthened, and the transmission chain of "bond issuance-fiscal expenditure-physical workload" is also worthy of attention to the pull of domestic demand.
Hou Zhenxin: The valuation of high-quality companies is still in the cost-effective region
Ruiyuan Wenyi Enhanced 30-day Holding is a hybrid bond secondary fund established in September 2023, as of the end of the first quarter, the fund's equity investment accounted for 19.51% of the fund's net asset value, and the fund size was 411 million yuan.
It is worth noting that since 2024, the bond market has performed relatively well, and the fund shares have seen a relatively large net redemption, of which the C share decreased by 332 million shares in the first quarter, a decrease of about 50%.
Fund manager Hou Zhenxin analyzed the asset allocation of the fund in the 30-day quarterly report of Ruiyuan Stable Benefit Enhancement, in terms of stocks, based on the cost performance of each sector and the current cyclical position, the main investment direction is companies with low valuation, strong competitiveness, good free cash flow, and emphasis on shareholder returns, as well as companies with reasonable valuations, strong competitiveness, good competitive pattern, and rapid growth. Taking into account the position of the industry cycle and the valuation level of stocks, the proportion of exposure to battery, power grid and service consumption increased in the first quarter. In terms of convertible bonds, the overall convertible bond market presents the characteristics of "high conversion premium rate + low pure debt premium rate", and the fund selects some convertible bonds with sufficient protection of the debt base and high embedded option value for investment. In the process of market recovery in the first quarter, the fund dynamically adjusted the allocation ratio of stocks and convertible bonds according to the risk-return ratio, and switched most of the convertible bond holdings to stocks.
In terms of pure bonds, the current real interest rate is still at a high level, inflation does not constitute a monetary policy constraint for the time being, and the risk of a sharp upside in bond yields is relatively limited. However, it should also be noted that behind the rapid decline of long-end and ultra-long-end yields to record lows since 2024 is the "rushing" action of some funds driven by allocation demand. After a significant decline in long-term interest rates in the first quarter, the fund reduced the leverage and duration of its bond assets.
At this point in time, from the perspective of discounted free cash flow returns, the valuation of high-quality companies is still in the cost-effective region. In addition to cheap valuations, after about two years of adjustment, the supply side of some industries has improved significantly, and inventory levels are low, so even if there is a small improvement in demand beyond expectations, it may make some companies usher in a good situation of both volume and price rise. In terms of bonds, in the context of the downward trend of the risk-free rate of return of the whole society, pure debt assets still have allocation value, and under the current still relatively flat yield curve, the structural opportunities in the short and medium end are worth paying attention to.
Editor-in-charge: Tactical Heng
Proofreading: Liao Shengchao