Qu Yanli | wen
Brown-Forman, the largest spirits company in the United States, is the number one brand with whisky Jack Daniel's.
In 1920, the United States issued a "prohibition order", which was quite amazing, and Brown-Forman's profitability did not seriously decline. The addictiveness and robustness of pure spirits is enough to counter mainstream social values.
In the global capital markets, stocks such as Brown-Forman are valued at EV/EBITDA (Corporate Value/Interest, Tax, Depreciation and Amortization Before Profit) for a long time at around 30 times.
This story was told by Zhan Jia of Everbright Prudential Fund.
In the A shares, every year a researcher asks him: "Liquor is expensive, can it still be bought?" ”
Zhan Jia used the EV/EBITDA valuation of high-end liquor to benchmark the global benchmark Brown-Forman, which is almost similar. China's high-end liquor is steadily raising prices, and the growth rate of net profit has maintained double digits, far better than the latter.
"Slightly more expensive, you take it." Every time it plummets, buy decisively. Consider selling again at the inflection point of the big economic cycle. Zhan Jia commented, this is a type of high return, low volatility target.
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For Zhan Jia, volatility is an important indicator of consideration.
He put the list of five-year average ROE and five-year average annualized volatility of Shenwan first-class industries:
Food and beverage, home appliances, pharmaceuticals, and real estate, banking, transportation, and automobiles in cyclical stocks are high ROE and low volatility, with volatility of about 30% or even lower.
Military industry, computers, electronics, etc., the volatility rate is naturally high, at about 40%.
Looking back at history, Zhan Jia's representative everbright advanced service industry, the core positions in consumption, medicine, small household appliances, etc., as of July 4, 2021, the risk-return ratio in the past year is better than that of similar funds of 81%. Another fund it currently manages, Everbright Industry Rotation, has a 97% better risk-return ratio in the past three years than similar funds. (Source: Alipay) (1)
This is also one of Zhan Jia's most core investment philosophies: focus on risk-adjusted returns, rather than income ranking.
"Push the volatility to 26-27%, whereas usually a fund has a volatility of around 30%. In this way, the same yield, the Sharpe ratio is 10% higher. Zhan Jia said.
Therefore, he is cautious about the sectors and stocks with volatility of more than 40%, and tries to find about 30%.
To summarize Zhan Jia's investment framework, it is "three highs and one low": low, that is, low volatility.
The three highs represent high efficiency, high space and high barriers.
For example, Zhan Jia pays special attention to high capital efficiency, such as ROCE (return on capital using) and ROIC (return on invested capital) and other quantitative indicators.
(Source: Fund 2020 Interim Report.) Historical position data is lagging behind and does not represent the fund's current position or future investment direction, nor does it serve as any investment advice or opinion)
A top fund manager in the industry once said that if the stock market is closed and cannot be traded for three years, is there still confidence to buy? "Companies with a high probability of running out are companies with high capital efficiency." Zhan Jia added.
No matter how the market changes, Zhan Jia always maintains the "high capital efficiency" of the portfolio, which is the principle.
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Zhan Jia's favorite consumer goods giant Nick Train, the investment principle is very interesting:
"Delicious things can basically be cast, the best to eat a little more, unpalatable and unpalatable do not buy."
In 2017, Zhan Jia joined Everbright Prudential Fund as a fund manager and director of overseas investment department.
Prior to that, he spent 9 years in Hong Kong public funds, including CCB International, Fortis Belgium, Italy's Loyalty Life, etc., covering Hong Kong stock self-operated, global large-scale asset allocation FOF, QFII and RQFII stock accounts.
In the early years, Zhan Jia, as a researcher who "speaks Mandarin" and "often runs to the mainland", he wanted to "cut his brain in half", half guess how A-share fund managers think, and half guess what foreign managers think; after 2017, the rise of A-share value investment, Zhan Jia felt that his thinking began to integrate.
The European insurance asset management company he once worked for was more demanding in the verification of long logic, which laid the foundation for Zhan Jia's underlying thinking: "What kind of enterprise will grow into ten years later?" ”
In stock selection, Zhan Jia naturally compares with the global industry leaders in the same direction.
Dutch chemical group Akzo-Nobel is the world's largest painter. Even under the financial crisis, Akzo-Nobel still maintained a high ROE, and the stock price was like a crazy cargo base, with a small drawdown.
The coating process is simple, the most important thing is the scale effect, and the brand barrier is high. In China's A-share market, there are also corresponding paint brands, which often have a price-earnings ratio of 70 or 80 times, which is prohibitive. But if judged by an international perspective, time will digest the valuation.
"I will combine overseas assets to see the cost performance of A shares." Compare it, you know how high the configuration demand of 'foreigners' is. Zhan Jia introduced.
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"This year, we've made a big move to reduce the valuation of the overall portfolio." Zhan Jia said.
Zhan Jia's combination is more dispersed, and the top ten heavy positions are between 4-6% each. Reducing concentration is also to control volatility. He has seen extreme cases in overseas markets, the top ten heavy positions are between 1-3% each, "the more dispersed, the more it reflects the true level of the fund manager, and the lower the drawdown." ”
In terms of asset allocation, Zhan Jia pays attention to "big wheel movement and small wheel movement".
The so-called "big wheel", that is, eating watermelon in summer and winter bamboo shoots in winter.
He uses GDP growth expectations and inflation expectations as vertical and horizontal axes, and divides four quadrants to judge the wind direction of the global economic cycle.
"At the moment, the wind is on the right, and the world is in the process of inflation." Zhan Jia said that allocating equity in emerging markets is a good choice.
In an inflationary environment, which consumer goods companies can transmit price increases to the C-end and convert them into corporate earnings is the direction that Zhan Jia pays close attention to.
The so-called "small wheel" is between companies, between subdivisions of industries, in each quarter as a unit, the degree of prosperity changes.
In order to capture the period where the expected change is strongest, "the top ten heavy positions may be repeated back and forth, but the weights will be switched." Zhan Jia described.
(Source: Periodic reports of the Fund. Historical position data is lagging behind and does not represent the fund's current position or future investment direction, nor does it serve as any investment advice or opinion)
Taking Everbright's advanced service industry as an example, during the epidemic period in the first and second quarters of 2020, Zhan Jia's heavy warehouse small food, paper towels and other home consumption targets, by the third and fourth quarters, increased the offline consumption, such as high-end liquor.
The same is true for the pharmaceutical sector: in the first and second quarters of 2020, Zhan Jia switched to APIs, due to the tight global supply chain, by the third and fourth quarters, offline diagnosis and treatment, global clinical trial recovery, and new drug research and development targets.
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In Everbright Prudential Fund, Zhan Jia's representative works include Everbright Advanced Service Industry, Everbright Industry Rotation, and Everbright Dingxin/Yongxin/Yuxin and other three products.
Everbright Advanced Service Industry, which has been managed since December 28, 2019, has a return of 128.08%. Among them, the yield in 2020 is 93.07%, and the yield is 17.85% year-to-date. (Data as of June 30 this year, the yield has been reviewed by the custodian bank)
As of the end of June this year, Galaxy Securities showed that the performance of the past three years ranked third among 384 partial stock hybrid funds in the same period.
On July 1st, the Everbright Prudential Quality Life Hybrid Fund (A:012744, C:012758) helmed by Zhan Jia was officially launched.
"It is still in the late stages of global water release." Zhan Jia said that the Fed will have to wait for the recovery performance of the global economy next year, at least to see the US apparent unemployment rate fall to 5.5% and the 10-year Treasury yield rise to more than 2%, and there is no need to worry too much this year.
In A-shares, consumption upgrading and population aging have just begun, and the dividend will last for more than ten years. Consumption, medicine and technology-enabled terminals and Internet services are the direction that Zhan Jia has been optimistic about for a long time.
The new fund will be included in Hong Kong stocks. "The retracement of Hong Kong stocks has reached the level of the beginning of this year, which is an ideal position. Zhan Jia added that he is optimistic about anti-inflation mass consumer goods, medical services, and property management.
"Everbright quality of life involves intelligence, such as sweeping robots, intelligent micro-projection, kitchen small appliances, drones and other emerging intelligent terminals that help people improve the quality of life, this piece I will have more than before." Zhan Jia talked about the characteristics of the new fund.
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The turnover rate of Everbright's advanced service industry is not low.
Zhan Jia explained that the reason for the high turnover rate is also to reduce the volatility.
"Like a gardener, leaves grow too fast and they cut off a little." Zhan Jia described that the trigger selling is often short-term overheating, or the stock price is overvalued, such as "rising up and generally selling directly.".
It seems to be the nature of emerging markets, like medical beauty, where everyone seems to have found a treasure and lashed out until it overheats.
Another example is that in July last year, the pharmaceutical sector overheated, or at the beginning of this year, the liquor sector overheated, Zhan Jia slashed a wave, if not, it caused the subsequent volatility to rise.
Zhan Jia's research frequency is also very high, any single product, including soy sauce, vinegar inventory, moving sales, year-on-year base is not high, whether the price has risen, large packaging or small packaging rise, which regional problems, "like doing homework", daily high-frequency tracking.
Zhan Jia's favorite Terry Smith, the turnover rate is negative, and after buying it, it does not move.
"I hope that in ten years, I can do the same, that means: First, I have become stronger, looking at a thing is particularly accurate, and I have basically not moved for ten years." Second, A shares have matured, and there are not so many big ups and downs. At the end of the interview, Zhan Jia laughed.
To summarize Zhan Jia's core points:
1. Volatility is an important indicator of consideration. "Three highs and one low" is the foundation for winning the market. Three highs, that is, high efficiency, high space, high barriers. A low, that is, a low volatility.
2. Cautious and optimistic about the second half of the year, liquidity is generally good. There are three risks: us job market data in September, US inflation may continue longer than expected, and US risk-free interest rates are rising too fast.
3. In the process of inflation, it is recommended to allocate equity in emerging markets, far from the time to allocate cash.
4. The big strategy this year is which companies can transmit the inflationary effect of rising upstream costs to the C-end, can resist inflation, and even benefit.
5. Describe yourself in three words: focused, inclusive, and optimistic.
(1) The risk-reward ratio indicator uses the Sharpe ratio to show that the indicator is an annualized value. Measure the excess return that a fund can receive for each unit of risk it bears. The above indicators are calculated and provided by the third-party fund rating agency , Tianxiang Investment Co., Ltd.)
Risk Warning: The fund is risky and the investment needs to be cautious. Before making an investment, investors are kindly requested to carefully read the "Fund Contract", "Prospectus", "Product Information Summary" and other legal documents, and the product risk level of Everbright Quality Life Hybrid Fund is R3 (medium risk), which is suitable for investors with risk rating C3 (balanced) and above. Investors are invited to pay attention to the risk rating of the product and their own risk rating for independent decision-making. This material does not constitute any legal document or investment advice or recommendation. The Fund Manager undertakes to manage and use the assets of the Fund in good faith, diligence and responsibility, but does not guarantee that the above-mentioned funds will be profitable, nor does it guarantee a minimum return. The performance of other funds managed by the Manager does not constitute a guarantee of the performance of such funds. The investment scope of Everbright Quality Life Hybrid Fund includes Hong Kong stocks and will face unique risks due to differences in investment environment, investment targets, market systems and trading rules. Fund assets are not necessarily invested in Hong Kong stocks. The fundraising scale of the Fund is capped at RMB8 billion (excluding interest during the offering period). If it exceeds, it will be confirmed according to the proportion of the last-day subscription application (see the announcement of the offering of fund shares for details). This product is issued and managed by the fund company, and the distribution agency does not assume the responsibility for product investment, redemption and risk management.
Important Note: From June 2008 to June 2011, she worked as a research analyst at Zhongli Insurance Company Limited; Zhan Jia served as a Head of China Equity and Investment Analyst at Fortis Investment Management Co., Ltd. in Hong Kong from 2011/7 to 2013/6; a director and acting head of portfolio management at CCB International Asset Management Limited from 2013/7 to 2017/12; and joined Everbright Prudential Fund Management Limited in 2017/12 as the Head of Overseas Investment in the Equity Investment Department. 2018/6 so far management Everbright Dingxin, 2018/7-2020/10 management Everbright dividend, 2019/12 to manage Everbright advanced service industry, 2020/5 to manage Everbright Yongxin, 2020/6 so far to manage Everbright Yuxin, 2020/10 so far to manage Everbright industry rotation.