On May 23, according to the latest data released by the China Foundation Association, the scale of domestic public offering fund management has reached the 30 trillion yuan mark for the first time. For a while, the news sparked a heated discussion among the people.
In fact, the Matthew effect in the current public fund industry is very prominent, that is, the top 10% of fund companies manage 50% of the industry's funds.
According to the latest released data, there are 148 public fund companies in China, and if the head fund companies are calculated according to the 10% quantile, there are about 15. According to Wind statistics, by the end of the first quarter of 2024, the total size of public offerings managed by the 15 head fund companies was 15.Foldablepokertable.06 trillion yuan, accounting for 51.58% of the total public offering fund market.
But what exactly is a head fund company? Is it just big? Some fund company executives admitted to the Securities Times reporter recently that at present, many head fund companies are facing the problems of "big but not strong, many but not excellent, complete but not skilled". The scale of management is large, but there is no healthy and strong scale structure. there are a large number of funds but no excellent and eye-catching performance, but the product layout is lack of the advantage of specialized and meticulous research.
Big but not strong, but not excellent, complete but not good.
Putting aside the habitual thinking of "scale-only heroes", in fact, the problem of domestic head fund companies "big but not strong, many but not excellent, complete but not sophisticated" is more common.
For example, according to Wind statistics, among the top 15 fund companies under management, 5 fund companies account for more than 50% of the money fund size. Six fund companies account for more than 40% of the money fund size. In other words, the management scale of most head public offerings is still heavily dependent on money funds, and even some head companies rely on money funds to support 70% of the scale, and the structure is far from balanced and healthy.
For example, recently, Haitong Securities counted the performance distribution of large, medium and small fund companies in the past three years, which also revealed the current situation that the performance of large fund companies is not in the lead to a certain extent.
In terms of active equity funds, by the end of the first quarter of 2024, the average returns of active equity funds of large, medium and small fund companies in the past three years were-26.94%,-13.92% and-20.03%, respectively. The overall performance retracement of medium-sized fund companies is relatively smaller, while the overall pullback of large fund companies is significantly larger, with the return of large fund companies corresponding to the top 50% being-27.59%. The return of large fund companies corresponding to the last 10% quartile is-33.25%.
In terms of active fixed income funds, by the end of the first quarter of 2024, the average returns of active fixed income funds of large, medium and small fund companies in the past three years were 9.76%, 11.18% and 8.77% respectively, and large fund companies were also second to medium-sized fund companies. only the large fund companies corresponding to the first 10% quantiles have a return of 11.55%.
In addition, large fund companies often have a cultural tendency-companies that like to pursue "big and comprehensive", companies that are good at fixed-income investment want to layout equity funds, and companies that start active equity funds want to catch up with index funds. funds of various subdivisions, themes and styles are all laid out, widely spread the net, build stars in large quantities, and expand the scale.
A public equity executive told the Securities Times: "the rapid development of the asset management industry over the past 20 years has enabled many fund companies to take advantage of the east wind, but if they mistook the dividend of the times for their own strength and did not really refine themselves, the scale will be like taking an elevator, getting up and down quickly."
Only scale theory is no longer desirable
If the past 25 years is the early stage of the expansion of the public offering fund industry, then in recent years, with the gradual slowdown of the growth rate of the industry, the fund industry urgently needs to transform from high-speed development to high-quality development, and the habitual thinking of "scale-only heroes" is no longer desirable.
According to Wind statistics, since May, about 60 new public offering funds have been established in the market, with a total initial public offering size of about 51 billion yuan, both in terms of quantity and scale, which are at the lowest level in nearly three years. Even large public offerings are frequently extended or the initial public offering scale is not ideal, and the issuing market of public offering funds is still in a cold winter.
The reason is that many fund companies issued a large number of funds at the market peak three years ago, while large fund companies issued a larger number and scale because they were more easily supported by resources. Wind data show that in the first half of 2021 alone, there were more than 30 large public fund offerings, which led to large losses in public funds in the past three years, star fund managers have fallen to the altar, and even if the market recovers, it is difficult to reverse investors' mistrust of the fund industry.
As a result, there has been significant negative feedback in the industry, with Wind data showing that by the end of the first quarter of 2024, eight of the top 15 fund companies with non-cargo management had experienced a year-on-year decline.
Warburg Securities said that under the guidance of the sales model dominated by sellers' thinking in the past, the issuance and product line layout of public offering funds showed more "pro-cyclical" characteristics, and institutions were used to "chasing up and killing falls". As a result, the market often saves too much money at the high level and lacks financial support at the low level, which not only makes it difficult for investors to get a better investment experience and expected returns. It also makes the distribution of funds in the capital market uneven, which is not conducive to the healthy development of the market in the long run.
"it is easy to raise a bull market, but difficult to raise a bear market". Behind the theory of scale, more and more institutions take "easy and short-term" things for granted, and it is all the more necessary for head fund companies to take the lead in jumping out of the cycle. from "scale-oriented" to "putting the interests of holders first".
The Morningstar (China) Fund Research Center also believes that the size of fund companies is only the result of the development of fund companies and should not be the ultimate goal pursued by fund companies. Excessive pursuit of scale expansion while neglecting the ability to invest in research and service quality may lead to insufficient research capacity and imperfect risk management of fund companies, which may lead to a decline in investors' trust in fund companies. It is not conducive to the long-term development of fund companies.
First-class investment institutions need to play a leading role
In March this year, the China Securities Regulatory Commission issued four "Two Strong and Two Strict" policy documents, including the "Opinions on Strengthening the Supervision of Securities Companies and Public Funds and Accelerating the Construction of First-Class Investment Banks and Investment Institutions (Trial)"(hereinafter referred to as "Opinions"), which put forward the goal of "about 10 high-quality leading institutions leading high-quality development of the industry", and also pointed out the development direction of public funds in terms of business philosophy, function performance, governance level, and compliance awareness.
Specifically, in addition to basic requirements such as "strengthening the construction of core capabilities of public fund investment and research", the "Opinions" also propose to "focus on grasping the long-term trend and strengthen counter-cyclical layout","abandon the phenomenon of star fund managers, and strengthen the construction of 'platform-based, integrated, and multi-strategy' investment and research system","Focus on long-term returns of investors, improve fund investment management and sales assessment and evaluation mechanisms","Strengthen managers, The mechanism for binding the interests of executives and fund managers and investors, etc., which means that first-class investment institutions must have greater missions and responsibilities, as well as higher ethical standards.
Pengyang Fund once stated that first-class investment institutions cannot be divided by size, but should have a leading and exemplary role in corporate governance, professional capabilities, and cultural construction. They should be able to firmly assume their missions, give full play to their functions, lead industry standards, and form Demonstration effect.
Pengyang Fund believes that first-class investment institutions should have the following characteristics: providing holders with appropriate asset management services and promoting the maintenance and appreciation of customer assetsfoldablepokertable; Operate in compliance with laws and regulations and do not touch red lines in pursuit of investment returns and corporate profits; fully consider investors 'risk appetite, and investment strategies do not exceed customers' risk tolerance; maintain long-term sustainability of profits, and conduct in-depth research on institutional investment strategies and behaviors. The impact of consistency on financial stability and macroeconomic operations will not cause mismatch of financial resources or even cause financial risks due to the pursuit of short-term excess profits; Adhere to the combination of reasonable profits and social responsibilities, actively guide customers 'investment behavior to be long-term, and support the continuous optimization of the investor structure in the capital market.
The investment research director of a large fund company in Shanghai also told a Securities Times reporter that for a fund company, being big does not mean being strong, but being strong can only be big and achieve healthy growth in performance and scale. Against the background of the market stock game, head fund companies need to set an example, advocate and practice long-term investment and rational investment with practical actions, and assume their own industry responsibilities.