When the fund rose very well last year, there was an advertisement for the fund in the subway in Shanghai, which roughly said: Be kind to yourself and take a taxi home.
The protagonist of the advertisement is a certain fund, and the implicit subtext is of course to buy some funds, it will help you make money, and then you can treat yourself better.
On the advertisement screen in the subway passage, such a slightly tired figure of a young man who just got off work is a true portrayal of thousands of people coming and going.
Such a warm reminder in the Financial City subway should warm the hearts of many office workers who return late.
In most of 2021, this advertisement about fund investment is indeed correct, because if you bought funds last year, most people could make money, and quite a few made a lot of money.
However, at the beginning of the Year of the Tiger, as the stock market turned downward, the Shanghai Composite Index, Shenzhen Component Index and ChiNext Index fell by about 5%, 10% and 15% respectively by mid-February.
After the index fell so much, individual stocks naturally fell a lot, and the entire fund was deeply affected.
The more profitable funds last year, the more they fell at the beginning of this year. For example, defense and military industry, medicine, power equipment and new energy became the three industries with the largest decline at the beginning of the year.
It is these three industries that have achieved greater growth in the past year.
There are also some thematic funds, how beautiful last year, how embarrassing it was at the beginning of this year.
At the end of last year, several well-known fund managers were crowned champions of return. As a result, before they could take the hot seat, their funds had fallen sharply, and the top players in the fund industry had almost fallen to the altar.
However, in the long run, these new changes in fund investment since the beginning of the year are not surprising, because the fund industry has its inherent characteristics.
Understanding these characteristics and the truth will help investors better understand this industry and make better investments.
No fund manager can beat the market for a long time in a row
No fund manager can continuously beat the market for a long time. This is a norm in the fund industry, and it has almost become a theorem. Some people even call this phenomenon the "champion's curse".
Taking the top three funds in the domestic market last year as an example, the annual revenue of Qianhai Kaiyuan Public Utility in 2021 is 119.42%, ranking first; the annual revenue of Qianhai Kaiyuan New Economy is 109.36%, ranking second; the annual revenue of Baoying Advantage Industry is 100.52%, Ranked third.
This group of funds is the only three of the more than 8,000 funds that have doubled their performance in 2021. Last year's performance can be said to be remarkable and earn enough attention.
However, since the beginning of this year, as of the end of February, Qianhai Kaiyuan's Qianhai Kaiyuan Utilities has fallen by 14%, ranking 682 among 743 similar funds; Qianhai Kaiyuan New Economy has also fallen by 8%, ranking among 2,095 similar funds. 1234; Baoying's advantageous industries fell by 15%, ranking 2004 among 2095 funds of the same kind.
Although this year is still a long time, the temporary return cannot explain the whole problem, but it does seem to confirm the curse of the championship once again.
Funds that have achieved impressive performance in the previous year are often difficult to reproduce the next year. One of the reasons is due to the investment characteristics of the funds.
Most funds have relatively clear themes.
This topic can be an industry, such as medical care or new energy; it can also be a concept, such as the concept of a free trade zone or the concept of carbon peaking and carbon neutrality.
Funds formed according to industries or concepts, if they bet on the right track, can achieve amazing returns within a year or two.
However, once the industry or track is rotated, the fund that made a lot of money yesterday can easily be beaten back to its original shape.
The reality is that the conversion of tracks and concepts in the capital market is getting faster and faster, so after a fund betting on a certain track has achieved a high return in a certain year, such a rate of return is often unsustainable.
Another reason is that a fund with good continuous returns will inevitably attract more attention and be favored by more investors. With the influx of investors, the size of the fund will become larger and larger. .
Although the management of the fund company hopes that the larger the fund size, the better, but for the fund manager who trades, this is not entirely a good thing. It is more difficult to manage a large-scale fund and achieve high returns than a small and medium-sized fund. a lot of.
One of the important metrics for measuring a fund manager's performance is "beating the market," which is to make the fund achieve a higher rate of return than the overall market (which is reasonable, otherwise what is your fund manager doing).
If it is a small-scale fund, it is easy to collide in the market, emerge suddenly, and achieve returns that are different from, or even much higher than, the market.
But when the fund is large enough, "you are the market itself" to a certain extent, so it is even more difficult to beat the market.
This is why we sometimes see some well-known fund managers take the initiative to close the channel for subsequent investors to join in order to maintain a high rate of return. The purpose of this is to keep the fund at a certain scale and not too large.
Some people have done statistics to track the top ten funds with the best returns in the previous year, and observe their returns in the second year. The final result is disappointing. The high return in the first year is not the second year. A strong guarantee of returns, there is no positive correlation between the ranking of the previous year and the returns of the following year.
No fund company can make AUM bigger than the ultimate goal
As a professional investor, although fund companies have various system designs and guarantees, and strive to make them trustworthy professional investors for individual investors, the inherent characteristics of being a for-profit organization also make fund companies have inherent defects that cannot be overcome. For example, the ultimate goal will be to enlarge AUM (Asset Under Management).
Why do fund companies have to make their assets bigger?
This is determined by the income model of the fund company. The main source of income for public funds is the collection of management fees, which are charged according to a certain percentage of the asset size, such as 1% of the management fees.
In this way, to do large-scale is the eternal impulse and goal of the fund company.
Even if the expansion of the scale is not conducive to the improvement of a fund's return rate, even if the fund company judges that the fundraising at some point is likely to be detrimental to the return of investors, the fundamental purpose of the expansion of the scale will not change.
Fund companies can charge more management fees when they are large-scale, and only by being large-scale can they gain a foothold in the competition.
Achieving higher returns is of course also the goal of the fund company, which helps to promote the growth of scale, but there is no direct relationship between the investor's return rate and the fund company's fees. There is a cruel reality in the fund's fees. That is, even if the fund loses money, the company still charges investors a management fee.
Under the premise that scaling up is the first goal, when there is a conflict between improving the return rate of all investors and scaling up, the fund company may also make some arrangements that are not conducive to investors.
For example, the industry or track effect of the stock market has been particularly evident in recent years, and there will be some popular tracks emerging every year. If the fund has already established a layout in the relevant industry, it will not only have a significant profit-making effect, but may even become the first in the year's rate of return. .
As a result, many fund companies and fund managers have made heavy bets on multiple industries at the same time, so that they may hit one of the hottest tracks of the year and become one of the funds with the highest returns that year.
Because the fund company knows that once one of its funds ranks among the top in the current year, the fund manager will have the opportunity to become a star-level fund manager, and the fund company can also use the star effect to expand.
However, the excessive use of such investment strategies by fund companies deviates from the original intention of real value investment, which is not much different from individual investors who simply gamble on the industry and the track.
As a professional investment institution, the fund company should do is to discover value and invest rationally. This kind of practice of betting on the track is simple and rude, and it will be more conducive to the creation of a single star fund of the fund company, but there is no such thing as Benefit all investors of the company.
The above may only be the practice of some investment institutions, but it does exist. Through this case, understanding the truth of the fund company's pursuit of a larger asset management scale can enable investors to discover the motivation behind the fund company's strategy, avoid their non-professional practices, Enables safer fund investments.
Investing with high probability is a painful thing
For most people, investing isn't just about money, it's about emotions.
These two are the cost of investment; and the pay and benefits of investment should include the emotional loss in the process, in addition to the profit and loss of the calculation result.
For example, a fund investor buys 10 million yuan in a certain fund, and after one year of investment, he has achieved a 20% return.
That's already a pretty good return, but the process for achieving that investment benefit can be quite different.
In one case, after buying the fund, the fund climbed slightly, with almost no pullback, and achieved a return of 2 million yuan a year later; in the second case, it suffered losses most of the time in the middle, and did not rebound sharply until the last few days. , barely made 20% of the income; another situation may be that the income of 100% was obtained in the middle, but because it was not sold in time, it fell sharply in the later period, and there was still 20% of the profit at the end of the one-year period.
The above examples are consistent from the point of view of money, that is, they have achieved a lot of income of up to 2 million yuan.
But from the point of view of whether it is painful or not, it is completely different.
In the second and third scenarios, investors suffered in the process.
In the second case, because of the large losses in the middle, investors will experience long-term anxiety, hesitation and self-blame, and experience negative emotions; In the reality of earning 2 million yuan, there should be few people who can not feel annoyed, not remorseful, and do not blame themselves for not being in the pocket earlier.
In the three cases, two are actually very painful, and I believe that there are not a few investors who have had similar experiences.
Moreover, the above examples are also an analysis under the condition of obtaining a 20% return.
In reality, the result of more investment is actually a loss. In that case, from the perspective of money and emotions, investing is a painful process.
Interestingly, in order to find an investment without pain, some people actually found a type of fund, and called this genre without suffering the "striping school", which means that this kind of fund rises all the way and hardly falls, even if there is a fall. , is also limited to a certain percentage.
In this way, the rising curve of this type of fund looks like a straight upward sloping line drawn, so it is called the "line school".
In the market, the most successful liners in the past three years have risen by 51.96% in three years, and the maximum retracement during the period is only 2.68%; the most successful accumulative increase in the past five years has increased by 73.67%, and the maximum retracement during the period has been 3.77%; In the ten-year dimension, the best performance was a cumulative increase of 177.76%, and the maximum retracement during the period was 9.16%, which is already the king of the "line".
However, such funds are few and far between, and buying them is a small-probability event.
Therefore, from a high probability point of view, investing is more likely to be painful.
Romain Rolland famously said in his book "Michelangelo Biography": "There is only one true heroism in the world, and that is to love life after recognizing the truth of life."
Similarly, we should also invest prudently and love life after seeing the essence and truth of fund investment.
[The author Xue Jian is the general manager of the head office department of a national foreign-funded bank, and an expert in the L/C group and the factoring forfaiting group of the International Chamber of Commerce China National Committee (ICC CHINA) Banking Committee]