The vicissitudes of the sea show the true character of the hero. The more volatile the market, the more it tests the ability of fund managers.
In the Analects, Confucius said: Those who know are not confused, those who are benevolent are not worried, and those who are brave are not afraid. The implication is that the wise will not be confused, the virtuous will not be sorrowful, and the brave will not be afraid.
In the first quarter of this year, the market was full of ups and downs. Central Huijin shot one after another, throwing more than 300 billion yuan. Through the latest disclosure of the first quarter report of public funds in 2024, we can see that some outstanding fund managers are not confused, worried, and afraid. In their view, when the market is volatile, it is the time to obtain the maximum excess returns, and it is the time to turn on the "firepower" in full swing.
Those who know are not confused, and the forward-looking layout should be coped
Those who know are not confused, can have a forward-looking grasp of the market, and carry out targeted layout in advance.
The market had ups and downs in the first quarter of this year, and from the perspective of structural opportunities, investing in the "dividend + AI" sector in the first quarter has become a market consensus. Behind the pursuit of dividend assets is the market's demand for stability, and the favor of the AI sector reflects the market's thirst for growth.
In addition, the non-ferrous sector performed well in the first quarter, and the gold sector was particularly eye-catching. In the volatile market, the fund manager who laid out resources in advance was like Taishan.
Taking Dong Chen, manager of Huatai Berry Multi-Strategy Fund, as an example, he has continued to hold heavy positions in gold stocks in the past few years. According to the fund's quarterly report, as of the end of the first quarter of this year, there were 4 gold stocks and 3 non-ferrous concept stocks among the top ten heavy stocks.
In Dong Chen's view, the economic recovery is expected to drive the recovery of demand for resources and industrial products, and the current commodity supply side is frequently disturbed, and the inventory is generally not high, which is worthy of continuous attention. Against the backdrop of declining US dollar credit and frequent geopolitical conflicts, the investment value of gold is expected to continue to increase.
Yinhua Domestic Demand Fund is also heavily invested in gold stocks. Liu Hui, the fund's fund manager, said that gold and silver assets will be an important investment theme in 2024, and they are assets with holding value rather than trading value.
Zhang Wenlong, manager of the upstream industry fund of China Commercial Enterprise, said that with resource stocks as a strategic position, it has increased its holdings in the non-ferrous sector represented by copper, and in the process of violent market fluctuations, the weight of the position in the stability sector has increased. Looking ahead, US dollar credit may remain weak, the repair of domestic demand and policy care are still the key, and optimism and patience need to be maintained in the bottom area. In terms of industrial allocation, core resource stocks represented by non-ferrous metals are still the top priority.
In the volatile market, fund managers who dare to maintain high positions are confident in the future development prospects of the industry. Taking Liu Yuanhai, manager of Soochow Mobile Internet Fund, as an example, he is firmly optimistic about the three major directions of AI computing power and application, electronic semiconductors and automotive intelligence.
"Although there will also be a significant drawdown in the net value of the fund in the event of a market crash, in mid-to-late January we think the market may have panicked a bit. At that time, the long-term investment value in the market was relatively obvious, so the operation of high positions was maintained, and the direction of industry allocation remained basically unchanged. Liu Yuanhai wrote in a quarterly report.
Judging from the performance of the Soochow Mobile Internet Fund, Liu Yuanhai has managed the fund since the end of April 2016, with a total return of more than 1.5 times so far, of which the net value has increased by 44.92% in 2023, and it is still performing well this year.
Benevolence does not worry and firmly believes in the value of high-quality enterprises
Behind the sharp fluctuations in stock prices, it reflects the quality of listed companies, the preference of funds in the whole market, and the changes in investors' expectations for the company's future development.
From the perspective of capital preference, it always flows to the most cost-effective place, and the price-performance ratio of stocks and bonds is usually an important perspective for fund managers to observe the market.
Zhang Kun, manager of E Fund's blue-chip select fund, said that from the perspective of the performance of long-term treasury bonds and bond-like equity assets, the market's risk appetite has been reduced to a very low level, which is reflected in the high weight of static dividend yield when pricing, and the skeptical attitude towards growth, especially the long-term growth of enterprises.
"Under the simplified model, between 5% dividend yield + 1% growth company A and 3% dividend yield + 8% growth company B, the market is more inclined to choose company A at this stage, and such companies also attract a large number of fixed income capital allocation. Zhang Kun further explained.
Zhang Kun said that if you review the long-term history of the capital market, an important reason why stocks have a higher long-term yield than bonds is that stocks have sustainable growth, and the necessary condition for becoming a high-quality stock is to have long-term sustainable growth, and stock investors should always give considerable weight to finding long-term growth.
In the ups and downs of the market, only high-quality companies can cross the bull and bear. While optimistic about growth, Zhang Kun also emphasized: "Growth must be of high quality, not brought about by extensive operation or burning money, and should be obtained under the condition of a reasonable marginal return on investment." ”
Specific to the selection criteria, Zhang Kun said that the company pays attention to the company's ability to control costs and expenses, the ability to control working capital, the ability to generate free cash flow, the ability to allocate capital and the willingness to return shareholders.
As the fund manager who has managed a single fund for the longest time in the current market, Zhu Shaoxing, manager of Wells Fargo Tianhui Fund, always emphasizes the quality of the company in his previous periodic reports. He once again said in a quarterly report that he does not have the reliable ability to accurately predict the short-term trend of the market, but focuses on patiently collecting excellent companies with great prospects, waiting for the realization of the company's own value creation and the cyclical return of market sentiment at some point in the future. In the selection of individual stocks, we prefer to invest in companies with good "corporate genes", perfect corporate governance structure and excellent management.
From the perspective of fund investment strategy, fund managers who are optimistic about high-quality companies and do balanced allocation show more certainty and worry. Take Zhou Haidong, manager of China Commercial New Trend Preferred Fund, as an example, the holdings of the China Commercial New Trend Preferred Fund he manages are very diversified. As of the end of the first quarter of this year, except for the top heavy stock Zijin Mining, the market value accounted for more than 9% of the fund's net value, the rest of the heavy stocks accounted for less than 4%, and the top ten heavy stocks accounted for only 33.04% of the fund's net value. With balanced allocation and diversification of positions, fund managers will not have too many worries even in the face of extreme market conditions.
The brave are not afraid to increase their positions against the trend when they fall sharply
"The market was very volatile in the first quarter. On the days when there was trading, the Fund was a net buyer almost every day, but I didn't dare to buy when I should have bought it, and the Fund's mediocre performance in the first quarter was partly due to that. In the first quarterly report, Xu Yan, chief equity investment officer of Dacheng Fund, said with emotion.
Xu Yan's emotion may be a portrayal of many high-performing fund managers. But for high-performing fund managers, the most important thing is to firmly believe in common sense and dare to increase their positions when the market value is highlighted. Looking back, the fund managers who were able to achieve net buying every day in the first quarter were undoubtedly brave contrarians.
Also buying against the trend is Huang Hai, deputy general manager of Wanjia Fund. As a deep value fund manager, the Wanjia Macro Timing Multi-Strategy Fund managed by him has performed well in the past few years. When managing the fund, he places special emphasis on balancing the defensive and offensive aspects of the portfolio, so as to better adapt to changes in the macro cycle. This fund manager, who pursues stability, showed an offensive side in the panic market in the first quarter.
In the first quarterly report, Huang Hai said that in the stage of panic in the market, the elasticity and aggressiveness of the portfolio were moderately increased, especially when the liquidity risk was greatly impacted before the Spring Festival, and the position of growth industries such as computing power, electronics, and new energy was rapidly increased. When there is a pullback in dividend assets due to the rotation of styles, most of the highly elastic targets are cashed out and re-allocated to energy stocks represented by coal.
Judging from the above statement of Huang Hai, when the market encounters a liquidity shock, it undoubtedly takes a lot of courage and action to dare to quickly adjust positions and buy flexible growth positions. Judging from the performance of Wanjia Macro Timing Multi-Strategy Fund, the performance in 2022 and 2023 is eye-catching, with a year-to-date return of 10.02% as of April 25.