The public offering has been opened for subscription, can the spring market be expected?

Author: Cao Lu

"Can I still buy funds now?" asked some fund investors on the public platform at the beginning of 2024. One of the individual investors told reporters that the products they bought still lost more than 30%, although the current market voices are saying "now is the end", but the performance has not improved. "When will this tangled grinding period pass?" he said helplessly.

Although the market has not changed the trend of shock adjustment, a number of fund products have recently lifted the "purchase restriction order" and announced the resumption of large-scale subscription business. According to incomplete statistics from Yicai, as of January 1, at least 15 funds have "opened their doors" since October 2023.

At the same time, institutional investors are actively laying out the spring market, and a number of equity products are "ready to go", and the trend of low-level layout is becoming more and more obvious. The reporter noted that in terms of subdivisions, index funds have become the focus of efforts. In the eyes of industry insiders, the current valuation of the A-share market is at a historically low level, and the cost performance is extremely high.

A number of funds "open their doors"

Since the beginning of the year, under the market turmoil, a number of public fund products have relaxed subscription restrictions, releasing positive signals. According to incomplete statistics from Yicai, as of January 1, at least 15 funds (different shares are calculated separately) have announced the resumption of large-scale subscriptions since 2024, of which more than 70 equity fund products such as active equity and passive index have been released.

On January 1, China Commercial New Trend Preferred announced that it would resume large-amount subscription and large-amount regular investment business from now on. According to historical announcements, the product has suspended the large-amount subscription and large-amount regular fixed investment business of a single fund account on a single day or a cumulative amount of more than 11,2023 yuan (excluding 5,4 yuan) from May 30, 30.

Among the above-mentioned fund products that have resumed large-scale subscriptions, China Commercial New Trend is one of the few "Big Mac" products with a level of 6 billion. At the helm of this product is Zhou Haidong, a 2023 billion fund manager, which is also the largest fund among the six products he manages. According to the data of the third quarter report of 129, the scale of the new trend of Chinese businessmen is 1.369 billion yuan, and the total scale of Zhou Haidong's management in the same period is 51.<> billion yuan.

Looking at the announcement, it can be found that the situation of the above-mentioned products "opening the door to welcome customers" is not an isolated case. Since 2024, a number of active equity fund products such as NORD Growth Advantage Hybrid, Changxin Lexin A, Guolian Strategic Preferred Hybrid, Bank of China Healthcare A, and Changsheng Growth Value A have announced the resumption of large-scale subscriptions.

The same is true for equity passive index funds. For example, Wanjia CSI 1000 Index Enhanced A recently issued an announcement stating that in order to meet the investment needs of the majority of investors, the product has cancelled the restrictions on the application for large-scale subscription (including conversion and transfer-in and regular fixed investment) with a cumulative amount of more than 1 million yuan in a single fund account on a single day since January 12.

In addition, index funds such as Dacheng Internet + Big Data A, Invesco Great Wall Shanghai-Hong Kong-Shenzhen Dividend Growth Low Volatility Index, and Wells Fargo ChiNext Index have also announced the lifting of the "purchase restriction order" a few days ago.

In the current market environment, why have fund companies recently opened up large-amount subscriptions for their fund products? As for the reasons for opening large-amount subscriptions, most of the above-mentioned products pointed out in the announcement that this move is to "meet the investment needs of investors". Some products also stated that "the fund is currently operating smoothly, and the impact on the investment operation of the fund has been eliminated due to the factors that previously restricted large-amount subscription, switching and transfer-in and regular fixed investment business".

"The impact of institutional behavior may lead to greater uncertainty in the product. A fund manager who took the initiative to relax the large amount of product restrictions also said in an exchange with reporters that the "purchase limit" is to control the scale, and the release of restrictions is to appropriately increase the scale boundary of the product after consideration. In their view, in a bear market or at the bottom of the market, the size of the product is relatively large.

New rights and interests "take the lead"

In addition to the release of large-scale subscription of existing funds that "open the door to welcome customers", the fund issuance market also seems to have sent some positive signals. Judging from the new funds since 2024, the proportion of equity products is large, and the intention of ambushing the spring market is obvious. In terms of subdivisions, index funds have become the focus of efforts.

Wind data shows that as of January 1, a total of 15 new funds have been established year-to-date (only the initial fund is calculated, the same below), all of which are equity products, with a total of 18.24 billion shares issued. At the same time, there are currently 33 fund products (only the initial fund is counted, the same below) in the state of issuance, and nearly 109 new products are scheduled to be launched in the first month. Among them, equity products also account for more than half, and with the entry of follow-up funds, they may bring more vitality to the A-share market.

This is different from the situation in 2023 when bond funds "take the lead" in the issuance market. Wind data shows that the total issuance share of public funds in 2023 will be 1.15 trillion. Among them, bond funds accounted for the majority, and a total of 377 bond funds were established throughout the year, with a total issuance scale of 8198.63 billion yuan, accounting for 71.08% of the total, a new high in the past 20 years.

The reporter learned from the interview that both fund companies and investors are now very popular with index funds. Major fund companies continue to increase the layout of index products. For example, among the 18 fund products established this year, there are 14 index products, such as China Merchants CSI 2000 Index Enhanced A, and some connecting products, such as E Fund SSE Science and Technology Innovation Board Growth Connect A.

"Active equity products are difficult to sell, and our current focus is on index products. A person from a "big factory" told Yicai that active equity products have been trapped in market shocks and adjustments in the past three years, and their performance has been under pressure, and they have lost the trust of investors who account for a large proportion.

He believes that when investors are not confident in capturing alpha, they may temporarily diversify their risk by indexing their investments and choose instruments with lower transaction costs. In the person's view, the current work of fund companies in index investment "is actually to conform to and grasp this trend".

And the attitude of some investors obviously confirms this view from the side. "I only buy index funds right now. Individual investor Wang Xiao (pseudonym) told reporters that he is currently holding a number of loss-making active equity products, and he still has no confidence in the recovery of performance. "If you want to lose, you must at least understand the loss when you buy an index (product). He said.

Is there a good opportunity for layout?

So, is it a good time to deploy equity products?"The current market valuation has been at a historical low, and the revision of investors' pessimistic expectations may bring investment opportunities for an over-falling rebound. China Merchants Fund told reporters that in the medium term, the recovery of economic fundamentals, the positive aggregate policy, and the easing of domestic and foreign liquidity are expected to provide support for equity assets.

"The current valuation of the A-share market is at a historically low level, and it is extremely cost-effective. Morgan Stanley Fund told the first financial reporter that in addition to the relatively good performance of high dividends last week, over-falling sectors such as new energy and social services also rebounded significantly, which reflects that investors are still more cautious.

From a medium and long-term perspective, the person believes that it is necessary to consider multiple perspectives such as policy tone, industrial development trends, and performance fulfillment, and maintain optimism about the technology sector that is in line with scientific and technological self-reliance and self-reliance and truly benefits from the rapid development of the AI industry, and the high-end manufacturing sector that maintains a high level of prosperity and benefits from the continuous increase in policies.

"The turnover has been hovering at a low level after New Year's Day, which may require institutions to concentrate on adjusting their positions in an overall illiquid environment, which may be the reason why the theme differentiation has fallen into the extreme again after the New Year. A person from a fund company in East China told reporters that this reflects the highly consistent risk-aversion of investors in the sluggish liquidity environment.

In his view, the "sporty" exit from tech growth and the influx of investors into the concept of dividends reflects the demand for cash value from institutional investors amid the current fundamentals and market sentiment.

Deng Mo, director of quantitative investment at China Commercial Fund, has a similar view. He told reporters that in the macro context of slowing economic growth, the logic supporting the A-share valuation system has changed, and investors pay more attention to the stable operating cash flow and shareholder returns of listed companies.

"The high-dividend sector is more cost-effective in the current economic environment, and it is likely to become the main line of investment in 2024. Dunmer said that along with the market trend, high dividends, low valuations, low volatility and other "high margin of safety" assets are favored by the market, and the adjustment of growth sectors at the beginning of this year has further improved investor risk aversion, prompting the high dividend sector to continue to strengthen at the beginning of the year.

In the eyes of industry insiders, the resumption of large-scale subscriptions of equity funds, the increase in the layout of equity products, and the active preparation of "ammunition" to enter the market are some signals of the fund.

"It may be that the current market timing implies better expected returns. A fund industry analyst said that judging from the past situation, the industry tends to relax purchase restrictions at low points. However, in addition to being optimistic about the market outlook, it will also be related to various factors such as performance, scale fluctuations, and contract restrictions.

Another person from the marketing department of a large fund company told reporters that the fund company's "initiative" is to attract more investors to participate in the market, so as to supplement the loss of part of the funds; on the other hand, it is also based on the fact that when the current valuation is at the bottom of the range, A-shares currently have medium and long-term reallocation value, and the fund company absorbs funds and prepares to enter the market to "buy the bottom".