(Economic Observer) China's fund market blew the "Assembly Number", where will the over 350 billion yuan be invested?

  China News Service, Beijing, January 22 (Reporter Xia Bin) Entering 2021, China's fund sales are booming.

Four new funds went public on the 22nd. Although the final fundraising result is still unknown, the market as a whole is already in a state of "crazy grab".

According to data, as of January 21, 76 new funds have been established this year, with a total fundraising scale of 350.111 billion yuan (RMB, the same below), which is a difficult "climax period".

  On January 11, four "Sunlight Funds" (funds that were sold out in one day) got together and issued. On January 18, E Fund's competitive advantage corporate fund received nearly 240 billion yuan in subscription funds in a single day.

Behind the crazy selling of funds is the frequent occurrence of “low placement ratios”. Take the above-mentioned E Fund’s competitive advantage corporate fund as an example. Its fundraising ceiling is 15 billion yuan, and the final placement ratio is about 6.25%. In addition, there are many new fund placements. The ratio is less than 30%.

  The Chinese fund market has sounded the "Assembly Number", and people have a strong sentiment to "borrow the fund" to enter the market. What is the reason?

  "Since 2020, the fund has continued to outperform the overall return rate. In the most recent year, the median return of equity funds was 40%, and the weighted average return rate was 59%, which was significantly higher than the 19% return of the broader market during the same period." Chief Economics of AVIC Fund Deng Haiqing told a reporter from China News Agency that many investors used to believe that individuals could outperform the broader market. After 2020, they discovered that funds can only outperform the market, so they accelerated their purchases.

  According to data released by the Galaxy Securities Fund Research Center, as of December 31, 2020, the return rate of standard stock funds in 2020 is 54.99%, and the return rate of mixed partial stock funds is 59.57%.

  Chuangjin Hexin ESG Responsible Investment Fund Fund Manager Wang Xin said in an interview with a reporter from China News Agency that the total share of equity funds has grown rapidly since the fourth quarter of 2019, and positive feedback has been formed with continued better performance returns, forming a recent fund Sales boom.

Since 2016, the entire stock market has presented structured opportunities, and “investing in stocks is worse than buying funds” has been increasingly recognized by individual investors.

  “Some people may ask whether the frequent appearance of hot funds is a signal of peaking. In fact, the emergence of hot funds occurred under the background of the large transfer of household savings, not because the market has risen too much. In fact, we see The Shanghai Composite Index is still around the historical average valuation, and the price-earnings ratio of the Shanghai and Shenzhen 300 is also at the historical average level." said Yang Delong, chief economist of Qianhai Kaiyuan Fund.

  In Deng Haiqing's view, funds are actually a substitute for individual investment by retail investors. Retail investment is more irrational to chase the rise and fall, while funds are more inclined to value investment analysis, which must be beneficial to the A-share market in the long run.

Encouraging institutional investors is also an important reform direction for China's stock market.

  Wang Xin pointed out that from a mid- to long-term perspective, considering China's economic development potential in the next 5 to 10 years, especially when compared with other major economies, China's equity market still has a lot of room for development.

"But from the past history, it is very difficult to achieve a return rate of more than 20% in the medium and long-term. On the basis of the past two years, the probability of obtaining a higher return rate again this year is relatively small. In general, I hope investors Reduce this year’s earnings expectations and choose the fund’s investment from a longer-term perspective."

  Where will the money for the new fund go?

Equity funds are currently the largest "main force" for new funds this year.

The data shows that the total size of stock funds and hybrid funds has reached 328.25 billion yuan, which is the highest value in the history of the establishment of new equity funds on a monthly basis.

If calculated based on 70% of positions, this will bring 230 billion yuan of incremental funds to the market.

  Deng Haiqing believes that the new fund investment will mainly be Hong Kong stocks, and the market hotspots will be new energy, medicine, banking, electronics, and chemicals.

For fund investors, it is recommended to focus on the long-term and reduce the expectation of making money in the short-term, especially to avoid "buy when it rises and sell when it falls."

In addition, different funds can be allocated in a balanced manner to diversify investment risks.

  Wang Xin said that most of the current new funds, in addition to new energy, high-end manufacturing, medicine, technology, and consumption, will add some pro-cyclical industries to allocate, especially companies with cyclical growth.

In addition, some high-quality companies with low valuations and scarcity in Hong Kong stocks will also receive more attention.