Li Qian of Huatai Berry Fund: The balanced beauty of dividend investment

15.682 billion yuan! This is the latest scale of Huatai Berry Dividend ETF on October 11; from the perspective of turnover, the recent single-day transaction amount of dividend ETFs has repeatedly exceeded 300 million yuan, and even soared to 500 million yuan and 600 million yuan.

In the context of the popularity of broad-based and industry ETF funds, this Smart Beta fund has shown strong market appeal, becoming the only ETF product in the market with more than 770,000 holders.

A few days ago, Li Qian, fund manager of the dividend ETF, said that the dividend ETF tracks the Shanghai Dividend Index, using the dividend factor as the screening criterion, which is an investment weapon with both offensive and defensive attributes. Entering the fourth quarter, the market opportunities are complex and changeable, investment needs to be balanced allocation, and dividend investment is to provide investors with a balanced and far-reaching allocation tool.

Shiny dividend ETFs

Since the beginning of this year, the large-cap index has mostly performed flatly, while the dividend index has quietly come out of a new high.

According to exchange data, as of October 11, the latest scale of Huatai Berry dividend ETF reached 15.682 billion yuan, and even exceeded the 16 billion yuan mark at one point. From the perspective of turnover, the daily turnover of recent dividend ETFs has repeatedly exceeded 300 million yuan, and even soared to the level of 500 million yuan and 600 million yuan.

According to the data, Huatai Berry Dividend ETF was established on November 17, 2006, which is the first Smart-Beta ETF in the market. According to the fund's interim report data, as of June 30, the number of dividend ETF holders reached 773,500, of which individual investors accounted for a relatively high proportion and had a good "mass base" among investors. In today's "road" of traditional wide-based ETFs and industry ETFs, dividend ETFs have become a beautiful landscape in the market with their unique charm.

Li Qian said that the characteristics of dividend ETFs can be simply summarized into three characteristics: high dividends, low valuations, and pro-cyclical. According to the data, the underlying index of the dividend ETF is the Shanghai Dividend Index. Observing the industry distribution and dividend ratio of the index constituent stocks, it can be found that through the screening of dividend factors, the Shanghai Dividend Index has collected a number of high-quality stocks with high dividend ratio, relatively reasonable valuation, and close connection with pro-cyclical plates in the industry distribution.

Wind data shows that as of October 11, the dividend yield of the Shanghai Dividend Index in the past year was 5.68%, which is not only higher than the main broad-based index of A-shares, but also higher than that of similar dividend theme indexes; its price-earnings ratio is at a historical low of about 5 times, with a high margin of safety; the proportion of upstream resources in constituent stocks exceeds 40%.

"Dividend investment is a good fit for this year's market style. Generally speaking, for listed companies with mature life cycles and high profit quality, the ROE of the company's new investment projects is often lower than that of the company itself, and the company usually chooses to maintain a higher ROE level through dividends. In recent years, in a low-interest market environment, U.S. companies have used dividends and financing buybacks to keep their corporate ROE rising. From this perspective, dividends are more sensitive to currency liquidity. We expect the relatively loose liquidity in the fourth quarter to be conducive to the recovery of the dividend style. Li Qian said.

Balanced configuration tools

Li Qian said that dividend investment has both defensive and offensive attributes. In terms of defensive attributes, from the perspective of a longer investment cycle, the low volatility attribute of dividends is obvious and suitable for long-term investment. The offensive attribute of the index is reflected in the pro-cyclical industry distribution of the index in a relatively high proportion. "The recent pursuit of dividend ETF funds by market funds mainly focuses on the key allocation of indices and products in pro-cyclical industries, and such industry focus is the result of the objective screening of dividend factors." Li Qian said.

In Li Qian's view, in the fourth quarter, the market style is complex and changeable, the difficulty of investment is increasing, and the probability is still a structural market. In the construction of the portfolio, it is recommended that investors respond with a balanced allocation. In such a market situation, dividend investment with both offensive and defensive attributes is expected to provide investors with a better investment experience. It is reported that in order to provide investors with more abundant dividend investment tools, Huatai Berry Fund will issue Huatai Berry Shanghai Securities Dividend ETF Linked Fund from October 25. "The issuance of the linked fund will provide investors with a richer way to invest in dividend ETF funds." Li Qian said.

As we all know, domestic ETF funds, in terms of broad base and industry categories, have achieved rapid development, while Smart Beta ETFs have relatively slow development, in addition to "big factors" such as dividend factors, there are fewer ETF funds based on smart Beta strategies that have achieved rapid development. However, Li Qian believes that as the domestic capital market gradually matures, the fund products developed on top of the Smart Beta factor will become more and more abundant, and it is expected to get more attention and participation from investors.

"Unlike broad-based indices and industry indices, Smart Beta products need to 'take an extra detour' when they are introduced to investors, and it is difficult to directly equate factors with simple and straightforward selling points such as industry tracks and market styles." However, with the deepening of factor research, with the relative maturity and predictability of the performance of various factors in the A-share market, product research and development based on these factors will also become more and more in-depth. Through the accumulation of investment practices, the Smart Beta Factor will also be recognized by more and more investors after showing good market performance. Smart Beta products are ushering in new development opportunities. Li Qian said. (The above data source: wind, the fund investment needs to be cautious)