"Fund Manager's Notes" Asset Allocation Spring, Summer, Autumn and Winter

There are four seasons in a year, spring, summer and autumn and winter.

After millions of years of evolution, people have become well versed in the cultivation and harvesting of agricultural production: spring planting, long summer, autumn harvest, winter hiding.

In fact, asset allocation also has its own "spring, summer, autumn and winter", in this process, there are several similar to the "temperature" criterion in agricultural planting can be referenced.

The first is monetary policy. Monetary policy is the determining factor in the impact of asset allocation on liquidity.

Monetary policy is loose, liquidity is abundant, the lower the level of funding interest rate, under the same conditions, stocks, real estate and other assets that benefit from low interest rates have better performance in monetary easing.

The growth rate of total social financing is often used in the market to characterize the loose and tight monetary policy. From the perspective of large-scale asset allocation, when the growth rate of social finance bottoms out and rises, it will usher in the spring of allocation, and conversely, in the process of downward growth of social finance, it may have to withstand a cold winter.

The second is regulatory policy. Regulatory policies often determine the scope of investment and the degree of leverage. In the regulatory easing environment, the market is in the process of increasing leverage, financial products can be invested in a wider range, under the same conditions, high leverage brings high returns in the short term, regulatory easing is conducive to the emergence of asset price bubbles.

Asset allocation has a good performance in the time of regulatory relaxation, and the probability of withstanding a cold winter in the process of regulatory policy tightening is greater.

The third is corporate profits. The core of capital market investment is the long-term growth of enterprises, and in the final analysis, it is the ability of enterprises to obtain profits. The stronger the profitability of the enterprise, the more investment value the enterprise, the higher the pricing given by the stock market, the more active the market, and the stock index will repeatedly reach new highs because of this positive effect.

Stock prices tend to usher in the spring of allocation when the growth rate of corporate earnings bottoms out, and have better performance when corporate earnings rise rapidly. On the contrary, in the process of downward growth of corporate profits, we must bear the cold winter.

This investment strategy is characterized by models and is called Merrill Lynch Investment Clock. Considering the consistency of many economic policies, Merrill Lynch Clock clearly portrays the four seasons of asset allocation with the growth and decline of the above model with two indicators.

From the perspective of equity fund investment, the spring, summer, autumn and winter of stock allocation may be referred to as follows:

Spring: "Economic downturn, inflation downward" constitutes the recession phase, "kind" stocks.

Summer: "economic upswing, inflation downwards" constitutes a recovery phase, "long" stocks;

Autumn: "economic upswing, inflation upwards" constitutes an overheating phase, "closing" stocks;

Winter: "Economic downturn, upward inflation" constitutes a stagflation phase, "no" stocks.

Wen/ABC Anrui One Year Holding (FOF) Fund Manager Luo Wenbo

(Investment is risky, enter the market need to be cautious, this article is for reference only, does not represent investment advice.) ）

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