Author | Zheng Li
Source | Unicorn Finance
The management ability of star fund managers determines the ceiling of the "personal department" public offering, and the management scale of 25.044 billion yuan "personal department" public offering Zhonggeng Fund Management Co., Ltd. (hereinafter referred to as "Zhonggeng Fund"), its "top" manager Qiu Dongrong was rumored to leave before the holiday, although investors are unwilling to believe it, but the rumors have once again become a far ahead of the prophecy.
According to the "Daily Economic News" report on May 9, Qiu Dongrong, the head fund manager of Zhonggeng Fund, may leave his post, and the departure may not be so fast, and the whole process is estimated to take some time.
In the post bar area of the Tiantian Fund, some netizens have different opinions, but basically most netizens are wondering whether Qiu Dongrong is really leaving?
Source: Tiantian Fund Network
Subsequently, the products managed by Manager Qiu also hired additional fund managers. On May 11, Zhonggeng Fund disclosed that Zhonggeng Value Quality had hired Wu Chenggen as the fund manager and Liu Sheng as the manager of the Zhonggeng Value Pilot Fund for one year, and the two products were co-managed with Qiu Dongrong, and the two products were Qiu Dongrong's masterpieces.
At the moment when the public offering dilutes star fund managers, stepping down from the product is not the same as resigning. However, as the top stream of Zhonggeng Fund, the scale accounts for 8% of Zhonggeng Fund, and it is also the chief investment officer and the fourth largest shareholder of the company. If you really choose to leave, it will be an unbearable burden for Zhonggeng Fund.
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2 products hired additional fund managers,
Institutional investors have "redeemed" early
Qiu Dongrong is currently managing 5 funds, and only Zhonggeng Value Smart Flexible Allocation Mix was co-managed with fund manager Wu Chenggen, who has been co-managed with Qiu Dongrong since June 3, 2020.
Choice data shows that the product has shown strong resilience in the volatile market in the previous two years, with annual returns of -0.65% and -0.31% in 2022 and 2023, respectively, outperforming the CSI 300 Index.
Source: Canned Gallery
According to public information, Wu Chenggen, master of accounting from Shanghai University of Finance and Economics, 12 years of experience in the securities industry, has served as trust assistant, junior trust manager, trust manager, investment manager and so on in AVIC Trust Co., Ltd. In January 2019, he joined Zhonggeng Fund Management Co., Ltd. as an investment manager of the fixed income department.
According to public information, Liu Sheng is a doctor of chemistry from Nanjing University, has nearly 9 years of experience in the securities industry, and has served as a researcher in the research department of Taiping Asset Management Co., Ltd. and a researcher in the investment department of HSBC Jinxin Fund Management Co., Ltd. He joined Zhonggeng Fund Management Co., Ltd. in July 2018 and has successively served as a researcher, investment manager assistant, investment manager, and currently serves as the director of the research department and fund manager of the investment department.
After the addition of fund managers for 2 products, Qiu Dongrong and other fund managers jointly managed 3 funds, including Zhonggeng Value Pilot, Zhonggeng Value Quality, and Zhonggeng Value Smart Mix.
The resignation turmoil has not been eliminated, why did Zhonggeng Fund make arrangements to hire additional fund managers? In this regard, Zhonggeng Fund said that such an arrangement can maximize the alpha of investment research talents, and also allow everyone in the investment research team (including fund managers and researchers) to better play the effectiveness of the systematic development of investment research.
As for whether Qiu Dongrong will resign, Zhonggeng Fund said that if there are further arrangements in the future, the company will issue an announcement in a timely manner and the announcement shall prevail, and the information obtained through other unofficial channels should not be gullible or arbitrarily speculated.
At present, there are also Zhonggeng small-cap value stocks and Zhonggeng Hong Kong Stock Connect value 18-month closed-end stocks, which are managed by Qiu Dongrong alone. Among them, Zhonggeng Hong Kong Stock Connect Value was established in January 2023 and will usher in the expiration of the first closed period in July this year.
It is worth noting that there are a total of 22,000 holders in the value of Zhonggeng Hong Kong Stock Connect, which will be transformed into an open-end fund after the expiration of the closed period. For the fund's holders, the biggest concern is whether it can return on its capital.
Source: Product Annual Report
Although there have been cases of some fund managers leaving their jobs during the lock-up period in the past, according to the relevant regulations, under normal circumstances, the fund manager cannot leave the company before the maturity of the product in the lock-up period. If it is necessary to change the fund manager due to special circumstances, the company shall submit an application for change to the regulatory authority.
Qiu Dongrong has been a public fund manager for more than 9 years, with a return of more than 100% on his 3 products, a return of 52.14% on the mixed tenure of Zhonggeng Value Quality during the one-year holding period, and an unsatisfactory return on the 18-month closed stock of Zhonggeng Hong Kong Stock Connect, which was only established in November 2023, at -8.07%.
Source: Tiantian Fund Network
Regarding Qiu Dongrong's departure, public opinion was in an uproar. After all, he is not only the fund manager with more than 8% of the management scale, but also the fourth largest shareholder with nearly 10%. "Why is nearly 10% of the equity still leaving?" Some investors expressed puzzlement.
"His statement is that he owes more to the family in the past two years and hopes to return to the family." A source said. Some market participants also believe that Yau Dongrong's resignation may be related to the trend of salary restrictions in public funds.
Qiu Dongrong is a fund manager who has been highly sought after by the public and even institutions in recent years. According to public information, the two products are also active equity funds that have been heavily held by institutional funds, with a holding ratio of more than 50% for many years.
Before the rumors of Qiu Dongrong's resignation twisted and turned, Qiu Dongrong's two masterpieces were redeemed, and the total share of the two products in the first quarter decreased by 16.5% compared with the end of 2023. At the end of 2023, the institutional holdings of these products have fallen below 50%.
"If you want to go, please at least follow open and transparent information disclosure, don't just let the big stakeholders go first, and then let the market be flooded with all kinds of true and false information, leaving only the retail investors at the bottom of the news chain." An observer told Caijing magazine.
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"Top stream" alone in the "fight"?
In fact, the products previously managed by Qiu Dongrong have experienced a decline in scale and revenue in recent years, which has also put Qiu Dongrong under a lot of pressure.
According to the first quarterly report of Qiu Dongrong's fund under management disclosed by Zhonggeng Fund, in terms of scale, the scale of the five products under its management has slipped to less than 20 billion yuan. According to Choice data, as of the end of the first quarter, Qiu Dongrong's management scale was 19.854 billion yuan, and the company's management scale was 25.044 billion yuan, accounting for more than 8 percent, a decrease of 3.928 billion yuan compared with the end of last year.
Source: Canned Gallery
This is not the first time that the scale of products managed by Yau Dongrong has declined. Previously, Unicorn Finance sorted out the 2023 quarterly reports of five products managed by Qiu Dongrong, including Zhonggeng Value Pilot, Zhonggeng Small Cap Value, Zhonggeng Value Smart, Zhonggeng Value Quality One-year Holding, and Zhonggeng Hong Kong Stock Connect Value 18-month Closure. As of the end of the fourth quarter of 2023, the scale of the above five products was 8.529 billion yuan, 5.718 billion yuan, 2.63 billion yuan, 5.106 billion yuan, and 1.798 billion yuan respectively, compared with the scale at the end of the third quarter of 2023, the scale of the five products all declined slightly.
Judging from the performance of the five funds managed by Qiu Dongrong, the value of Zhonggeng Hong Kong Stock Connect has been closed for 18 months, and the return rate has been -13.63% since Qiu Dongrong took office, and the rest of the funds have positive returns. Among them, Zhonggeng Value Pilot has the best performance, achieving a return of 133.22% since 2018 and an annualized return of 17%, ranking 64th among 604 fund products in the whole market.
In terms of position adjustment and share swap, in the first quarter, Qiu Dongrong increased his position in Hong Kong stocks in the Internet, biomedicine, real estate and other fields. Similarly, in the fourth quarter of 2023, Qiu Dongrong also carried out a large degree of position adjustment and share exchange.
Compared with the position at the end of the third quarter of 2023, the biggest change in the fourth quarter of 2023 is that Saiteng shares and Goertek shares have newly entered the top ten, while Kuaishou-W and Meituan-W have exited the top ten.
In terms of increasing and decreasing positions, the positions of China Hongqiao, Luye Pharmaceutical, Xiaopeng Motors-W, and Yuexiu Real Estate have all increased, and the main ones that have reduced their holdings are China Overseas Land & Investment, COSCO Shipping Energy, and Shenhuo. Among them, the position of Shenhuo shares has decreased by nearly half.
Zhonggeng small-cap value stocks, Qiu Dongrong made significant adjustments to the top ten heavy stocks of this fund in the fourth quarter of 2023 - Bozhon Seiko, Antu Biotech, Goertek, Aidi Pharmaceutical, Huatong Shares, and Changying Precision entered the top 10; The top 10 exits are Guangxin shares, Emma Technology, Shenhuo shares, Meichang shares, Liu Pharmaceutical Group and Jingchen shares.
In the increase and decrease of the remaining individual stocks, only the position of Lihua shares has increased, and the positions of Saiteng shares and Chuanyi shares have decreased.
Zhonggeng Value Smart Flexible Allocation Mix is also one of the funds with a relatively large adjustment range in the fourth quarter of 2023, and 6 of its top ten heavy stocks are also new stocks, including Goertek, Bank of Ningbo, Kain Technology, Shanghai Hanxun, Crystal Optoelectronics and Huafa Shares; The top 10 exits are Changshu Auto Decoration, Huatong Shares, Chuanyi Shares, Shenhuo Shares, Emma Technology and Liu Pharmaceutical Group.
It is worth noting that in the fourth quarter of 2023, Changshu Auto Decoration and Chuanyi Shares are still the top ten heavy stocks of Zhonggeng small-cap value stocks, and the number of shares held by Changshu Auto Decoration has not changed, but in the mixed flexible allocation of Zhonggeng value, these two stocks have withdrawn from the top ten.
In addition, in terms of Zhonggeng Value Quality One-Year Holding Fund, there are also 4 new entrants in the top ten heavy stocks, namely Luye Pharmaceutical, SciClone Pharmaceutical, Changshu Auto Accessories and China Overseas Hongyang Group, while China Hongqiao and Chuanyi Shares have also increased their holdings.
In terms of reducing holdings, the number of holdings of Shenhuo shares, China Overseas Land & Investment, and Xpeng Motors-W has declined.
Also reducing the holdings of Xiaopeng Motors-W and Meituan-W is the value of Zhonggeng Hong Kong Stock Connect closed for 18 months; It is worth noting that Zhonggeng Value Pilot Hybrid has slightly increased its position in Xpeng Motors-W. Zhonggeng Value Quality bought SciClone Pharmaceutical into the top ten in one year; However, the value of Zhonggeng Hong Kong Stock Connect has been closed for 18 months, but it has significantly reduced its holdings in SciClone Pharmaceutical.
Looking forward to the investment ideas for the future, Qiu Dongrong analyzed in the product report that the focus is on growth stocks and value stocks, as well as supply-side contraction or rigid industries, but there are still value stocks with high growth.
Regardless of whether Manager Qiu continues to serve as the fund manager of the above products in the future, he expects the performance to turn around.
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Can Equity Incentives Retain Talent?
Zhonggeng Fund was established in November 2015, with Meng Hui as the actual controller, holding 33.49% of the shares, and the second largest shareholder is Zhonggeng Real Estate Group Co., Ltd. (hereinafter referred to as "Zhonggeng Real Estate"), accounting for 23.75% of the shares.
In terms of investment research team building, Zhonggeng Fund has gradually developed from an investment research team of nearly 20 people when it was established in 2018 to an investment research team of nearly 40 people (the number of investment researchers accounts for nearly 50% of the company's total number). The research covers from A-shares to Hong Kong Stock Connect stocks, forming research groups in TMT, manufacturing, cyclical, financial real estate, consumption, medicine and other industries, as well as professional teams in quantitative, fixed income, trading and other industries.
In recent years, the management scale of Zhonggeng Fund has expanded rapidly, exceeding the 10 billion yuan mark at the end of the second quarter of 2021 and exceeding 20 billion yuan at the end of that year; At the end of 2022, the company's management scale jumped to more than 36 billion yuan, ranking 89th among 197 fund companies.
Source: Canned Gallery
As of the end of 2023, the scale of funds under management of the company was 30.3 billion, a year-on-year decrease of 5.7 billion, and a decrease of 25.044 billion yuan at the end of the first quarter of 2024. According to industry analysts, there may be two objective reasons for the decline in scale:
First, since the fourth quarter, the volatility of the A-share market has intensified, and the amplitude of Hong Kong stocks is greater than that of A-shares.
Second, out of the need to protect the interests of holders, all products of the company have been restricted from large-amount subscriptions. As an asset management company that adheres to low-valuation value investment, Zhonggeng Fund's purpose is to meet the real investment needs of customers, and the purchase restriction of its products is also a prudent decision made based on this. In the future, the company will also dynamically assess market changes and the real investment needs of investors, and adjust the restricted products accordingly at the appropriate time.
The "individual department" fund is generally initiated by the mechanism of "partnership" of key talents of the team. At the beginning of the establishment of Zhonggeng Fund, the only shareholders with relevant experience in the fund industry in the early days were Meng Hui and Chairman Yan Xin, while institutions outside the securities fund industry held a total of more than 60% of the shares, occupying an absolute controlling stake, which also planted the seeds of equity "turmoil" for Zhonggeng Fund.
Before 2022, the most important external shareholders of Zhonggeng Fund were Dalian Huisheng Investment Co., Ltd. (hereinafter referred to as "Dalian Huisheng"), Zhonggeng Real Estate, and Dalian Haibo Education Development Co., Ltd. (hereinafter referred to as "Dalian Haibo Education"), and with the changes in the operation of the real estate and education industries in the later period, these shareholders were also caught in litigation.
However, with the gradual development of the company, the proportion of shares held by natural persons is gradually increasing, and corporate shareholders have begun to withdraw. In March 2022, 5 executives and employees of Zhonggeng Fund auctioned 25% of the shares held by Dalian Huisheng Investment in the name of individuals or institutions, of which Qiu Dongrong invested 9.98 million yuan to subscribe for 4.99% of the shares, and was newly promoted to the fifth largest shareholder of Zhonggeng. In August 2023, Qichacha data showed that Dalian Haibo Education Development, whose equity was frozen, withdrew from the ranks of shareholders, and Yan Xin and Meng Hui took over, and the shareholding ratio of the two increased to 18.99% and 34.99% respectively.
Since then, Qiu Dongrong has further increased his holdings, and on September 4, 2023, the China Securities Regulatory Commission issued the "Reply on Approving the Change of Shareholders Holding More than 5% of Zhonggeng Fund".
The China Securities Regulatory Commission said that it approved Qiu Dongrong to become a shareholder of more than 5% of Zhonggeng Fund. In addition, the registered capital of Zhonggeng Fund was changed from 200 million yuan to 210.5 million yuan, and Qiu Dongrong subscribed for the company's new 10.5 million yuan in accordance with the law.
After the completion of the equity change, Qiu Dongrong's shareholding ratio was further increased, and the total amount of capital contributed also reached 20.48 million yuan. According to the amount of capital subscribed by shareholders/registered capital of the company, Qiu Dongrong's shareholding ratio is about 9.73%. The shareholding ratio of natural person shareholders and professionals of Zhonggeng Fund has been further increased, totaling more than 70%.
Data source: Qichacha
Zhonggeng Fund has responded to the media that with the increase in the shareholding ratio of the professional management team, the corporate governance structure will be more stable and clear. At the same time, the dominant position of the company's management team has been further consolidated, which has effectively improved the company's operating efficiency and made its management more scientific and standardized. Since its establishment in 2018, the company has established a sound business isolation system between the company and the corporate shareholders, and in the future, the company will continue to firmly adhere to the strategic positioning of "deeply cultivating value and only doing value investment", and concentrate all resource endowments to continuously create core competitiveness in the field of active equity investment.
It can be determined that the "individual department" public offering through the core personnel stock ownership and equity incentive plan, the professional talents and the company's development, the interests of the holders are deeply bundled, and the goals pursued by shareholders and management are highly consistent, which is conducive to the long-term development of the company.
If Yau Dongrong's departure is true, will it have an impact on his shareholding? Some fund managers said that there is no clear provision in the regulations on this, and it currently depends on the internal agreement of each company, and some companies stipulate that they will be recovered at a specific price after leaving the company.
Qiu Dongrong, the "pillar", has achieved rich returns for investors, where will it go next, and what should Zhonggeng Fund do to retain the people? See.