On May 4, 2024, Warren Buffett's shareholders' meeting, known as the "Spring Festival Gala of the investment community", was held as scheduled. After experiencing the ups and downs of the global equity market over the past year, more than 40,000 value investing fans gathered here to listen to Warren Buffett, Chairman and CEO of Berkshire Hathaway, once again share his investment philosophy and the true meaning of life.
At this shareholders' meeting, Warren Buffett, who is about to turn 94, led more than 5 hours of Q&A sessions, once again presenting a wonderful investment feast for the "pilgrims".
A never-ending value investment
Warren Buffett and his former best friend Charlie Munger have witnessed the innovation and reshaping of the world economic pattern and the fierce transformation of the capital market in the past one-year period; They have created a huge value investment ecosystem, created investment myths one after another, and accumulated huge amounts of wealth. At the same time, the concept of value investment has been recognized by the market and investors, and has been widely circulated. Zou Xinjin is deeply influenced by this concept and continues to insist on deep cultivation and improvement on the road of value investment; In his 15-year investment career, Zou Xinjin has adhered to the anchor of "cost performance", in-depth value investment, and "is committed to creating sustainable, low drawdown, and long-term high investment returns".
Zou Xinjin
Executive Director of Equity Investment Department of Guolianan
The two equity funds currently under Zou Xinjin's management have considerable medium and long-term returns, proving the charm of value investing.
- Guolianan Value Preferred Stock has been established for nearly 5.3 years, with a return of 74.39% and an annualized return of 11.10% since its establishment;
- Guolianan Small Cap Select Blend has returned 183.30% over the past 10 years, with an annualized return of 10.97%.
Data source: Wind Information, fund regular report, as of 2023.12.31, the performance has been reviewed by the custodian bank.
As of 2023.12.31, Zou Xinjin has a total of three products under management, namely Guolian An Value Preferred Equity Securities Investment Fund, Guolian Anderson Small Cap Select Securities Investment Fund, and Guolian An Tianli Growth Bond Securities Investment Fund.
Performance Review:
Guolian An Tianli Growth Bond Fund was transformed from Guolian An Xinying Hybrid Securities Investment Fund on April 30, 2019, and the successive fund managers since the transformation are Xue Lin (2019.1.31-2020.5.25), Wang Huan (2019.12.31-2021.12.22), Zou Xinjin (2019.12.31 to present), and the annual returns of Class A/Class C from 2019 to 2023 are: 2.61%/2.31%, 9.54%/9.05%, 9.40%/8.91%、-0.51%/-0.96%、1.51%/1.05%； The performance comparison benchmark for the same period is: 2.29%, 2.62%, 1.50%, -1.78%, 0.71%, and the performance comparison benchmark: the yield of China Bond Composite Index ×90% + the yield of CSI 300 Index ×10%.
Guolianan Value Preferred Stock was established on September 20, 2018, and the previous fund manager is Zou Xinjin (2018.9.20-present), the fund has returned 74.39% (annualized return of 11.10%) since its establishment, and the performance benchmark for the same period is 9.03% (annualized 1.65%), the fund's 2019-2023 annual return and performance benchmark: 40.65%/29.43%, 39.02%/22.61%, 1.72%/-3.12%, - 5.89%/-16.86%、-4.34%/-8.40%； Performance comparison benchmark: CSI 300 Index yield * 80% + SSE Treasury Bond Index yield * 20%.
Guolianan Small Cap Select Mix was established on April 12, 2004, and has served as fund managers Yuan Bonan (2004.4.12-2004.9.18), Zhang Xuejun (2004.7.6-2006.11.16), Wang Yi (2006.3.18-2007.11.28), Wu Renhao (2006.12.21-2007.9.4), Wu Peng (2007.9.4-2010.3.16), Zou Xinjin (2010.3.6-present). The fund's net value has increased by 183.30% (annualized return of 10.97%) over the last 10 years, compared to 60.11% (annualized return of 4.82%) over the same period. The fund's 2019-2023 annual return and performance benchmarks: 32.40%/18.38%, 39.21%/16.78%, 7.32%/10.20%, -8.77%/-10.92%, -1.51%/-1.25%; Performance comparison benchmark: (Tianxiang small-cap stock index * 60% + Tianxiang mid-cap index * 40%) * 60% + SSE Treasury bond index * 40%.
The above data is as of 2023.12.31. Data source: Wind Information, regular report of the fund, and the performance is reviewed by the custodian bank.
Reviewing and summarizing Zou Xinjin's style and practical characteristics in the process of managing funds, we can see his insistence on the belief in value investment; Through his experience, he has also refined his investment methodology around value investing, such as the investment strategy with "value for money" as the golden rule. In him, we can appreciate the light of "holding on to what we believe and persevering".
There is no eternal "holy grail of investment", but there are tried and tested values
Warren Buffett has been at the helm of Berkshire since 1965, and by the end of 2023, the company has risen by more than 40,000 times, equivalent to an annualized return of 19.8%, far exceeding the annualized return performance of the S&P 500 index over the same period (data source: Wind Information, as of 2023.12.31). The legendary investment performance may be due to Warren Buffett's "timeless" value investment philosophy; In the Q&A session at this year's shareholders' meeting, Buffett's emphasis on value investing and long-term holding can also be observed.
Value investing theory has endured and influenced generations of investors. Zou Xinjin has not only adhered to the belief in value investment in more than ten years of investment practice, but also fully considered the characteristics of China's macro economy and enterprise development, and created a value investment strategy that is more suitable for the long-term layout of A-shares.
What is the key to value investing?
- Pay attention to the intrinsic value of the enterprise and pay attention to building a margin of safety
Value investing is at the heart of Warren Buffett's investment strategy, which emphasizes that investors should focus on the intrinsic value of a company, rather than the market price; At the same time, Warren Buffett believes that investors should set aside a certain margin of safety when buying stocks, that is, buying stocks at a price lower than the intrinsic value of the company.
- A good company has to wait for a good price
In Zou Xinjin's view, "good company" and "good price" are indispensable for successful value investment; Through the explanation of the concept of "cost performance", Zou Xinjin showed investors in detail the two key dimensions of value investment in his eyes: "sex" refers to the growth of the company's performance, values the sustainability of the performance, and predicts the possible returns of the investment target; The "price" refers to the price or valuation of the stock, which requires a horizontal and vertical comparison to weigh the risks that the investment target may face.
Pay attention to risk management and strictly control drawdown
- Risk control remains key
Berkshire's cash reserves exceeded $180 billion last fiscal quarter, another record high. Warren Buffett's explanation for this is, "I don't think anyone sitting at this table knows how to use it effectively, so we don't use it", "Controlling risk is still key, and when something goes wrong, it's good to have a lot of cash reserves".
- Strictly control the drawdown and protect the low-volatility growth of the fund's net value
In investment practice, Zou Xinjin has always attached great importance to the control of drawdown risk, and in his view, low volatility is the key to caring for and improving the return experience of fund holders.
Since Zou Xinjin's tenure on March 6, 2010, Guolianan Small-Cap Select Mixed has ranked 1/71 among similar funds in terms of maximum drawdown, and Guolianan Value Select Stock has ranked 5/185 among similar funds since Zou Xinjin's tenure on September 20, 2018.
Data sources: Wind Information, Fund Periodic Report, Galaxy Securities, performance reviewed by the custodian bank. Guolianan Small Cap Select Mixed Fund is Galaxy Classified Equity Fund (80% of the stock limit) (Class A), and Guolianan Value Preferred Equity Fund of the same type is a Standard Equity Fund (Class A), as of 2024.2.29.
Stay cautious on the hot outlet
- Balanced configuration of the industry, not nostalgic for overheated tracks
Out of the absolute practice of value investment, Zou Xinjin practices bottom-up selection of low-valuation high-quality stocks in investment, and the industry allocation is balanced and diversified; At the same time, he does not take the initiative to chase and nostalgia for the "overheated" track. As clearly shown in the figure below, in the distribution of heavy holdings of the funds managed by Zou Xinjin, there is almost no trace of market hotspots in recent years, and the correlation between industries is relatively low.
Data source: Wind Information, fund regular report, as of 2024.3.31
In recent years, the wind of the A-share market has changed several times, and it has gradually shifted towards value investment. After reviewing the market performance in April, Zou Xinjin believes that the A-share market may have been exhausted, and the resilience of the market performance is highlighted.
Specifically, April ushered in a centralized disclosure of quarterly reports, and the historical market performance was poor; Looking back at April this year, A-shares showed a steady and progressive trend, which may have released a signal that the market is getting stronger. At the same time, a blockbuster meeting of the Political Bureau of the CPC Central Committee was held at the end of April to continue to consolidate the tone of steady growth. On the one hand, the real estate policy has ushered in a major turning point, and the inflection point is imminent; On the other hand, the convening time and main agenda of the Third Plenary Session of the 20th Central Committee of the Communist Party of China have been determined, and the market is looking forward to the reshaping and boosting of the capital market brought by the Third Plenary Session.
Overall, under the current low valuation, after the improvement of the market transaction structure, along with the gradual recovery of the economy under weak expectations, the entire market may gradually rise in the future, and May may be the time to step up. At this time, it may be a more appropriate choice to share the dividends brought by the return of value by deploying low-valued high-quality assets.
According to the announcement, Zou Xinjin as the fund manager of Guolianan Value Selection Hybrid (019430) will end the fundraising ahead of schedule on May 10, and the fund is expected to continue to implement the cost-effective-oriented value investment rules, balance the attack, and select the most cost-effective sectors and stocks.
There may not be a "holy grail" in investing once and for all, but there is a "truth" that has undergone multiple tests. Through an in-depth understanding of value investment, the rule of cost performance with this as the core may be able to last for a long time and accompany the holder on his voyage.
Product risk level: Guolianan Value Selection Hybrid Securities Investment Fund, Guolianan Small Cap Select Mixed Securities Investment Fund, Guolianan Value Preferred Equity Securities Investment Fund have a risk level of R3 (medium risk), and the risk of Guolian An Tianli Growth Bond Fund is R2 (low risk), and this risk level is only the evaluation result of the fund manager, and the evaluation result of the fund distribution agency is not necessarily consistent with the fund manager. Investors are advised to make independent investment decisions based on the risk assessment and matching results of the applicable sales agency before investing.
Risk Warning:
Funds are risky and should be invested with caution. This material is promotional material and is not intended as any legal document. The information provided in this material is based on or from sources believed to be reliable, is for informational purposes only and does not constitute material advice to investors. The fund manager undertakes to manage and use the fund assets in an honest, trustworthy, diligent and conscientious manner, but does not guarantee that the funds under its management will be profitable, nor does it guarantee a minimum return. The performance of other funds managed by the fund manager does not constitute a guarantee of the performance of a particular fund. The Fund will invest in the underlying stocks of the Hong Kong Stock Connect and will be subject to the risks of large fluctuations in the stock price of the Hong Kong stock market, exchange rate risks, risks that may arise from inconsistencies in trading days under the Stock Connect mechanism, and risks in overseas markets. The registration of a fund by the CSRC does not mean that the CSRC makes a substantive judgment, recommendation or guarantee of the risks and returns of the fund. Mainland fund products have been in operation for a relatively short period of time and do not reflect all stages of market development. For details of the fund, please carefully read the fund's prospectus, fund contract, fund product key facts statement and other legal documents. The fund manager reminds investors that the "buyer bears" principle for fund investment, and that after making any investment decisions, the investment risks caused by changes in the operation status of the fund and the net value of the fund shall be borne by the investors. Fund managers, fund custodians, fund distribution agencies and related institutions do not make any promises or guarantees for the investment returns of the fund. This product is issued and managed by Guolianan Fund Management Co., Ltd., and the agency does not assume the responsibility for the investment, redemption and risk management of the product.