Since 2024, the rotation of the A-share industry has accelerated, and dividend assets and resource stocks have performed strongly, while last year's small and micro market style with unlimited scenery has pulled back significantly.
As a result, some high-performing active equity funds in 2023 chose to adjust their positions in the first quarter of this year: either adjust their heavy positions to large-cap stocks, such as increasing their positions in consumer stocks, or replace heavy stocks and increase their positions in AI industry chains, innovative drugs and other industries.
Among these funds, fund managers who choose the right industry or are good at choosing the right time will continue their performance advantage in 2023, but there are also funds whose performance has "taken a sharp turn".
It is worth noting that in recent years, with the increasing volatility of the A-share market, it is also becoming more difficult for active equity funds to "maintain stable performance growth year after year". According to Wind statistics, there are only 94 active equity funds with positive annual returns in 2022 and 2023.
A researcher from the Tianxiang Investment Advisory Fund Evaluation Center pointed out to the 21st Century Business Herald reporter that the performance of active equity funds lacks stability or is affected by the following factors. The first is the investment strategy of the fund manager. Some fund managers may always maintain their investment strategies in different market environments, but when the market style changes, the original investment strategy may not be able to adapt to the new market environment, resulting in unstable fund performance. The second is the concentration of the fund's holdings. Some active equity funds may invest a large amount of money in a small number of sectors or stocks, resulting in a high concentration of holdings. If these sectors or stocks underperform, the performance of the fund may be significantly affected.
Large rebalancing
In 2023, the overall performance of A-shares was poor, but the small and micro cap stocks and low-volatility dividend sectors performed well, and active equity funds with heavy positions in these two types of assets also gained a lot.
For example, in 2023, the returns of Oriental Regional Development, Soochow Mobile Internet A, Taixin Industry Selection, Golden Eagle Dividend Value A, Jinyuan Shun'an Quality Selection A, China Merchants Advantage Enterprise A, and Jinyuan Shun'an Yuanqi will reach 55.01%, 44.92%, 35.20%, 34.25%, 28.60%, 27.25%, and 25.45% respectively, all of which are ranked in the top 30 of the 2023 return list of active equity funds.
Entering 2024, A-shares will show a V-shaped trend in the first quarter, and the market style will gradually switch to the direction of the market and value.
However, the attitudes of the above-mentioned high-performing funds in 2023 to respond to the market style change are differentiated.
Among them, some funds "turned" in a timely manner and significantly adjusted their heavy positions in individual stocks, so that this year's performance continued to grow.
For example, compared with the end of 2023, the changes in the top 10 heavy stocks of enterprises with investment advantages are more obvious. As of the end of the first quarter of this year, Zijin Mining, Guangguang Media, WuXi AppTec, Bilibili, Meitu, and Tigermed have newly entered the top 10 heavy stocks.
"At the beginning of the first quarter, during the rapid decline of the market, we significantly increased the proportion of optical modules and AI computing chips. Stimulated by the brilliant stock price performance of overseas computing giants and the release of Sora, the relevant holding companies have risen tremendously, reaching or even exceeding our pre-set target price. Considering the market's overall expectation of AI computing power and high valuation, we have cashed in a higher proportion of this part of the position. Zhai Xiangdong, fund manager of China Merchants Advantage Enterprise, pointed out.
Zhai Xiangdong attaches more importance to investment opportunities with high odds and high winning rates, and tends to avoid low-odds assets with high and consistent market expectations, crowded transactions and high valuations, "eating less or even not eating the last fishtail market". He admits that at a certain time period, this kind of operation may cause the portfolio to lose a certain sharpness, but it is more likely to avoid the potential for greater downside risks.
In the first quarter of this year, the net value growth rate of China Merchants Advantage Company A was 1.22%, and as of April 29, the fund has returned 2.78% year-to-date.
There are also funds that have made quick transitions within different industries. Taking Wanjia Select A, which has a net value growth rate of 11% in the first quarter of this year, as an example, from the changes in the top ten heavy stocks of the fund, compared with the end of the fourth quarter of last year, the fund only replaced 3 heavy stocks at the end of the first quarter of this year.
Its fund manager Huang Hai pointed out that the overall idea in the first quarter continued the practice of defensive counterattack in the past two years, when the market was in a panic stage, moderately increased the elasticity and aggressiveness of the portfolio, especially before the Spring Festival, when the liquidity risk impact was larger, quickly increased the position of growth industries such as computing power, electronics, and new energy, and when the dividend assets due to the rotation of the style of the pullback, it cashed out most of the highly elastic targets and reconcentrated the allocation to energy stocks represented by coal.
Of course, for active equity funds, there are also certain risks associated with large and frequent position changes.
Eastern Regional Development, the second-highest active equity fund in 2023, is a typical case, with a return of -16.55% in the first quarter of this year, and a return of -18.30% this year as of April 29.
As of the end of the first quarter of this year, the top 10 heavy stocks in the development of the Oriental region were all from the daily consumption industry, including Wuliangye, Gujing Gongjiu, Luzhou Laojiao, Shanxi Fenjiu, Tsingtao Beer, Kweichow Moutai, Jinshiyuan, Yingjia Gongjiu, Chengde Lulu, and Huiquan Beer.
For more than a year, the fund has frequently adjusted its heavy positions. As of the end of the first quarter of last year, its top ten heavy stocks are information technology industry stocks, in the second quarter of last year, the fund adjusted the direction of heavy positions to daily consumption, this holding style continued to the end of the third quarter of last year, to the fourth quarter, its heavy position direction turned to information technology, industry and materials three industries.
Change the style
It is worth mentioning that in recent years, the rotation of the A-share industry has accelerated, and the market hotspots have changed frequently, making it more difficult for active equity funds to maintain stable performance.
In the long run, there are still a few active equity funds that can achieve sustained growth in returns by choosing the right time.
According to Wind statistics, there are only 94 active equity funds with positive annual returns in 2022 and 2023.
Among them, the funds that have ranked among the top in their category in terms of single-year return for two consecutive years include Wanjia Select A, Wanjia Macro Timing Multi-Strategy A, Invesco Great Wall Value Pilot Two-Year Hold, Taixin Industry Select, Jinyuan Shun'an Yuanqi, etc.
Among them, Wanjia Select A, Wanjia Macro Timing Multi-Strategy A, and Invesco Great Wall Value Pilot held for two years continued to grow in return this year.
As of April 29, these three funds have returned 12.03%, 10.80%, and 15.96% respectively this year.
These fund managers are more firm in their choice of the industry track.
For example, Huang Hai, manager of Wanjia Select and Wanjia Macro Timing Multi-Strategy Fund, has been firmly bullish on energy stocks since 2022.
For the investment in 2024, Huang Hai said, "The characteristics of low valuation, high dividends, low debt and high cash flow of upstream energy stocks are still not fully priced by the market, and they are high-quality scarce assets with both offense and defense under the condition of gradual stabilization of domestic and foreign macro expectations, and we will continue to hold heavy positions." At the same time, it will also actively explore the investment opportunities brought by some globally priced industrial products, booming manufacturing industries and some mass consumption that are expected to exceed expectations. ”
In addition, at the end of last year, Soochow Mobile Internet focused on the three major directions of AI computing power and application, electronic semiconductors and automotive intelligence.
"Although the A-share market fell sharply in January this year, and the net value of the fund also retreated significantly, we believe that the market may have been overly panicked in mid-to-late January, when the long-term investment value in the market was more obvious, so the fund still maintained a high position operation, and the direction of industry allocation basically remained unchanged. In early February, as the market bottomed out and rebounded, the net value of the Fund also rebounded rapidly. Fund manager Liu Yuanhai analyzed.
The fund has returned 44.92% in 2023. As of April 29, it has returned 14.62% year-to-date.
However, there are also high-performing fund managers who are good at seizing phased opportunities.
Bao Wuke, manager of Invesco Great Wall Value Pilot Two-Year Holding Fund, pointed out that in 2023, "some companies in the fund portfolio benefited from the market's attention to AI in the first half of the year and rose more, and we cashed in profits at a higher position".
Overall, as of the end of the fourth quarter of last year, the energy-related resources sector accounted for a significant portion of the fund's portfolio. In the first quarter of this year, the level of positions held by Invesco Great Wall Value Pilot for two years has decreased, and the shareholding structure has not changed significantly.
"Some of our holdings are showing signs of being overvalued due to rising prices and changes in fundamentals, and we have chosen to reduce our exposure to these stocks when the prices are higher, while increasing our exposure to other stocks. Bao Wu said.
However, if you look at it in the long run, in the past three years, the investment styles of the above three fund managers have changed significantly.
According to the analysis of reporters by researchers from Tianxiang Investment Advisory Fund Evaluation Center, the investment style of Huang Hai and Bao Keke in the past three years has been dominated by value style, and at the same time, the investment style has been dominated by the value of the large market to the value of the middle market. At the same time, over the past three years, these two fund managers may have been more skewed towards small- and mid-cap stocks. Specifically, Huang Hai's investment style will be dominated by large-cap value to mid-cap value on July 7, 2022, and Bao Wuke's investment style will be dominated by large-cap value to mid-cap value on 2023/3/15.
In the past three years, Liu Yuanhai's investment style has been dominated by growth style, and his investment style will switch from mid-cap growth to small-cap growth on February 10, 2023.
New mainline
Looking ahead to the second quarter, what are the judgments of high-performing fund managers?
According to Huanghai's analysis, from a domestic point of view, due to factors such as the post-Spring Festival and the convening of the two sessions, the resumption of work and production of infrastructure investment this year is relatively later than in previous years, and the recovery of domestic demand is slow. From overseas, the global manufacturing PMI has been in the expansion range above 50 for two consecutive months, and at the same time, the Federal Reserve's March interest rate meeting was relatively dovish, and the market traded the secondary inflation expectations after the interest rate cut in advance, and the price of gold, copper and oil strengthened.
"Although the current external demand supports exports and manufacturing, in the coming time, the market's focus will return to the domestic economic and policy response, and A-shares will deduce the structural market of shock and differentiation. Huang Hai judged.
Liu Yuanhai believes that the A-share market is expected to fluctuate upward in the second quarter. With the implementation of systems such as improving the quality of listed companies and increasing the dividend ratio of listed companies, the construction of these systems is expected to improve the valuation level of listed companies and benefit the A-share market. At the same time, this year's government work report proposes to vigorously promote the construction of a modern industrial system and accelerate the development of new quality productive forces. With the development of new quality productivity, the future may see new economic growth points and the emergence of new investment lines in the A-share market.
For the main line of investment in the second quarter, Liu Yuanhai paid relative attention to the three major investment opportunities that benefited from the development of AGI technology: AI computing power and applications, electronic semiconductors, and automotive intelligence. He believes that the AI industry may develop faster than expected in 2024.
Bao Keke continues to be bullish on energy-related resource sectors. He analyzed that although China's economy is currently facing certain pressures, the economic performance of the rest of the world is stable, and the demand for resources, especially energy, continues to grow. On the supply side, due to environmental, social and governance (ESG) factors, the global production growth rate of energy resources is low. Even in the context of high product prices, capital investment in crude oil, coal and other industries is still at a low level.
"Given this supply-demand pattern, we expect that the contradiction between supply and demand of resources may further intensify. As a result, the market is likely to significantly increase forward price expectations for these products. Bao Wu said.
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