"Investor's Network" Cui Yuechen
With the disclosure of the annual report season coming to an end, the industry situation of public funds in 2023 has also surfaced.
Overall, due to the continuation of the A-share market volatility in 2023, the net profit of fund companies has diverged significantly. There are 8 companies with a net profit of more than 1 billion yuan, all of which are head public offerings. Among them, E Fund topped the list with a net profit of 3.382 billion yuan, continuing to maintain its status as the "first brother", and it is also the only company with a revenue of more than 10 billion yuan, with a revenue of 12.5 billion yuan in 2023.
GF Fund, China AMC Fund, China Southern Fund and Wells Fargo Fund followed, with revenue of 7.643 billion yuan, 7.327 billion yuan, 6.741 billion yuan and 6.751 billion yuan in 2023, and net profit of 1.950 billion yuan, 2.013 billion yuan, 2.011 billion yuan and 1.814 billion yuan respectively.
In addition, there are China Universal Fund, China Merchants Fund, Bosera Fund, etc., which will have a net profit of more than 1 billion yuan in 2023, and the Matthew effect of the leading public fund company "the strong Hengqiang" is also continuing to appear.
It is worth mentioning that the net profit of the mutual fund industry will generally shrink in 2023. Up to now, only 8 fund companies have increased their net profits year-on-year, and the rest have declined to varying degrees. This also reflects the operating pressure faced by many fund companies, especially those with a high proportion of active equity products, under the influence of multiple factors such as the volatility of the A-share market in 2023, the continued weakening of the money-making effect of funds, and the reduction of public fund fees.
The scale of management is stable and improving
According to data from the Asset Management Association of China, as of December 2023, the total scale of public funds in the whole market reached 27.6 trillion yuan, an increase of 1.57 trillion yuan from 2022. At the same time, the number of funds reached 11,528, an increase of 952 from 2022.
In the past year, public funds not only reversed the downward trend in 2022 in terms of management scale, but also surpassed bank wealth management for the first time at the end of the second quarter of 2023, properly occupying the C position of residents' wealth management.
Among them, the debt base is the largest increase, with the scale of the debt base at 5.31 trillion yuan at the end of 2023, an increase of 1.04 trillion yuan from 4.27 trillion yuan in the previous year.
Equity funds increased slightly, with the size of equity funds at 2.83 trillion yuan at the end of 2023. Equity products also show the characteristics of structural differentiation, and index products such as ETFs have sprung up, becoming the focus of each company's efforts in equity products, and at the same time becoming the first choice for investors to increase their positions against the market.
From the perspective of revenue, although it is common for revenue to decline and net profit to shrink in 2023, some companies have grown against the trend and achieved a turnaround by taking advantage of the "characteristic development" curve overtaking.
For example, with its performance in index products, Huatai Pinebridge Fund's revenue and net profit will both increase in 2023, and the increase is considerable.
In 2023, Nanhua Fund will achieve an operating income of 71 million yuan, an increase of 39.22% from 51 million yuan in 2022, and a net profit of 1.1941 million yuan in 2023 from a loss of 11 million yuan in 2022, successfully turning losses into profits, which is also the first time that the company has made a profit since its establishment more than 7 years ago.
Founder Fubon Fund also achieved contrarian growth in 2023, with a net profit increase of 63.66%. Its parent company, Founder Securities, pointed out in its annual report that in 2023, Founder Fubon Fund will strengthen active equity products, expand fixed income products, and deploy characteristic index products to create diversified investment management capabilities.
Fund companies are busy reducing fees
2023 is a year of major reform of public funds, especially the reform of fee rates and the innovation of floating rate products, which have a profound impact on the development of public funds.
In July 2023, the China Securities Regulatory Commission (CSRC) issued the "Work Plan for the Rate Reform of the Public Fund Industry", which intends to take 15 measures to comprehensively optimize the rate model of the public fund industry within two years and steadily reduce the comprehensive rate level of the public fund industry.
In December, the China Securities Regulatory Commission (CSRC) again issued the Provisions on Strengthening the Administration of Securities Transactions of Publicly Offered Securities Investment Funds (Consultation Paper), reducing the upper limit of the commission distribution ratio of equity funds from 30% to 15%.
Wind data shows that after the release of the rate reform work plan, the fee reduction of public funds has achieved remarkable results, and the management fee collected for the whole year decreased by 7.04% year-on-year.
Specifically, the management fee rate and custody fee rate of public fund active equity fund products have generally dropped to below 1.2% and 0.2%, which has a greater impact on the management fee income of hybrid funds and active equity funds.
In terms of product innovation, in August 2023, three categories of floating rate products were officially approved. The first category is scale-linked floating rate products, the second type is performance-linked floating rate products, and the third type is floating rate products linked to the holding period.
A total of 20 floating rate products were approved, involving 17 fund companies, including China AMC Fund, Wells Fargo Fund, China Merchants Fund, Industrial Securities Global Fund, China Europe Fund and E Fund Fund.
The listing of floating rate products means that the fund fee rate is firmly bound to the scale and performance, and the larger the fund size, the lower the fee rate. In this way, fund managers will not overly pursue scale growth, but maintain appropriate scale, easy to operate, and make better performance. Linked to performance, the better the performance, the higher the fee, so as to encourage fund managers to make high performance, so that fund companies and investors can better develop together.
It is worth mentioning that management fee income is the main source of income for mutual funds. With the decline in management fee income across the industry, the performance of fund companies in 2023 has shown a general downward trend, and some small funds are near the profit and loss line.
In the future, the revenue of public funds needs to change and innovate. The reduction of the rate will affect the revenue of the public fund, which is also a new test for the company's investment research ability and sales ability.
Focus on the layout of three major industries
The annual asset allocation of public funds is also the focus of market attention.
In 2023, the daily consumption, information technology, and healthcare industries will be favored by public funds. Among them, Kweichow Moutai ranked first with a total market value of 145.411 billion yuan. In addition, CATL, Wuliangye, Luzhou Laojiao, Mindray Medical, etc. are also heavily held by public funds.
Specific to the industry, in the fourth quarter of 2023, the number of stocks in the A-share medical and technology sectors will be increased.
Among them, the number of stocks in the medical industry has increased considerably, mainly increasing the holdings of popular stocks such as United Imaging Medical, Zhifei Biotechnology, Mindray Medical, and Hengrui Pharmaceutical. In addition, individual stocks in the technology sector also increased their holdings, such as Haiguang Information, Montage Technology, Tongfu Microelectronics, SMIC, etc.
It is worth noting that in 2023, the enthusiasm of fund companies to invest in Hong Kong stocks will be rekindled. Attracted by high valuations, public funds have increased their positions in Hong Kong stocks as a whole, with some funds increasing their positions from underweight to sharply, and even directly hitting their positions in Hong Kong stocks to ninety. With the return of international funds and the accelerated influx of domestic capital, the sentiment of the Hong Kong stock market has risen sharply, and the "Hong Kong" fund has come out of the darkest moment.
In the allocation of Hong Kong stocks, public funds continue to be optimistic about many stocks, such as Tencent Holdings, which is still favored, with a total market value of 38.152 billion yuan and 831 funds.
According to the statistics of the proportion of shareholdings, the highest proportion of public funds held by public funds in 2023 will be Baili Tianheng-U, reaching 66.46%, and the total market value of the shares held will be 3.243 billion yuan. It is followed by Jingzhida and Maolai Optics, with shareholding ratios of 65.39% and 62.42% respectively.
Looking forward to 2024, many fund managers believe that A-shares and Hong Kong stocks are expected to reverse in 2024 and stage a bull market, while those high-quality stocks will likely usher in opportunities for excess returns.
In terms of investment direction, the technology track is generally optimistic, involving areas such as artificial intelligence, digital economy, smart cars, semiconductors, etc., these growth sectors are expected to be the main source of income in the structural market in 2024, and the above industries are currently undergoing extensive and positive changes.
A number of funds frequently "change leaders"
According to Flush iFinD data, as of March 12, a total of 60 senior executives have changed during the year, involving 36 public fund companies such as Huaan Fund, BlackRock Fund, and Xiangcai Fund.
Among them, the chairman of the board of directors has the largest number of changes, with 22 people; The number of general managers and deputy general managers was 12 and 20 respectively.
Compared with previous data, the number of senior management changes of public funds in 2023 will be at a relatively high level in the same period in history, and the frequency of senior management changes of small and medium-sized fund companies is relatively high.
Judging from the change of chairman, fund companies such as BlackRock Fund, China Life Security Fund, Xiangcai Fund, and Tongtai Fund ushered in a new chairman during the year.
Judging from the change of general managers, fund companies such as Taixin Fund, CICC Fund, and BlackRock Fund have ushered in new general managers.
In terms of changes in deputy general managers, fund companies such as JPMorgan Fund, Rongtong Fund, Galaxy Fund, and Xinhua Fund have all had "new officials" appointed.
Senior management changes are a common phenomenon in the mutual fund industry, and some senior executives in fund companies have shareholder backgrounds, and when the company's equity changes, the senior management team may face certain changes or adjustments.
In addition, the competition in the mutual fund industry is fierce, the market environment is changing rapidly, fund companies need to constantly adjust and optimize the management to meet the market demand, correspondingly, high-quality fund executives have more room for choice.
A change in the management of a fund company may also be related to the performance of the company's funds, and if the fund performs poorly, it may lead to a turnover of senior management to seek opportunities to improve performance. In addition, some executives may choose to leave or join a company due to personal development opportunities, compensation packages, or other personal reasons.
In November 2023, the Asset Management Association of China (AMAC) issued two self-discipline rules, the Rules for the Administration of Fund Practitioners and the Rules for the Registration of Investment Managers of Securities and Futures Operating Institutions. The frequent job hopping of fund managers and the resignation of the product during the closed period may gradually decrease.
The high frequency of senior management changes and short tenures have exposed the problem of unstable talent in public fund companies, and further highlighted the trend of increasingly fierce competition in the industry.
In the face of complex regulatory requirements and fierce industry competition, this puts forward higher requirements for the professional competence of executives. Looking forward to 2024, with the strengthening of supervision, it remains to be seen whether issues such as product resignation and fund manager illegal operations during the closed period will be improved. (Produced by Thinking Finance)■