Style Drift Of Mutual Fund Falling Into Compliance Lawson Gate: 40% Of Fund Companies Are Involved In Three Categories Of "False Name"

"Sister Fang, China Unicom, sell it! If you change to new energy or chips, you will lose less! "

An investor's voice in the forum to persuade long, ushered in a lot of base people's agreement.

Yuan Fang, the fund manager of Credit Suisse of ICBC, has been a fund manager for nearly six years. The fund with the longest management time has obtained 310% return in less than six years. Currently, she is the fund manager of five funds with a management scale of 48.2 billion yuan. She is known as the "consumer king" because of her performance.

Faced with experienced top managers, investors didn't feel that there was anything wrong with his speech, because he said the right thing.

We have seen the trend of A-share in the first half of the year. Under the extreme differentiation of market style, hot industries and industrial chains such as semiconductor, photovoltaic and new energy vehicles performed strongly, and the performance of related stocks was also unique.

At the same time, the fund is doing the "right" and most efficient thing, buying new energy, photovoltaic and semiconductor.

As of the end of the second quarter, Ningde times, a leading lithium battery company in China, had 1362 funds with heavy positions, becoming the second largest individual stocks of partial equity funds, second only to Guizhou Maotai. Longji, a leading photovoltaic company, also had 933 funds.

Among these funds, many theme funds that have nothing to do with new energy have emerged, including BAOYING artificial intelligence fund, Boshi Internet theme fund, Jiashi sports and Entertainment Fund, Huaxia state-owned enterprise reform, China Post health and entertainment, Huabao everything Internet, Yinhua Internet theme, etc 118 funds of 40 fund companies, including Qianhai Kaiyuan belt and road fund and ICBC Credit Suisse's beautiful town theme Fund (A / C separate statistics).

As a matter of fact, at the end of the second quarter, all the "hybrid funds" with heavy positions in new energy, the "sports fund" without a heavy position in sports related stocks, and the cultural and entertainment funds with heavy positions in "new energy + chips" are not uncommon in the market.

According to the statistics of the 21st Century Institute of capital research, there are three types of funds with style drift in the market: small and medium cap funds buy large cap stocks, quantitative funds are "pseudo" quantified, and theme funds do not live up to the name. Nearly 40% of fund companies are involved, as well as several top-notch funds including ICBC Credit Suisse sports industry fund managed by star fund manager Yuan Fang.

Many funds "confront" regulatory and internal compliance requirements through word games of fund contracts. However, the confusion of investors' cognition in the mutual fund industry has seriously harmed the order and development of domestic capital market.

In this market where fund companies, sales channels, fund managers and funders all want to win, fund products do not live up to their names, and this "unhealthy trend" is becoming increasingly fierce

True and false supporters of new energy

The concept of the Internet has been very popular for a time.

In 2015, the hot debated concept of "Internet +" was "Internet + various traditional industries". Using information and communication technology and Internet platform, the Internet and traditional industries were deeply integrated to create a new development ecology.

Subsequently, a number of bull stocks of Internet concept appeared in the secondary market, such as palm technology, which is mainly engaged in the development, distribution and operation of mobile terminals and Internet page games, the Internet accommodation technology that provides Internet content distribution and acceleration, cloud computing, cloud security and other services, and LETV, which has been delisted, and so on.

Fund companies have also launched a large number of Internet + theme fund products.

In June 2015, the new fund of Huabao fund company, Huabao Internet of things is the theme fund of the Internet.

According to the fund's prospectus, the investment goal of the fund is to realize the long-term steady appreciation of the fund assets by capturing the investment opportunities in the Internet industry and related industries reflecting Internet thinking under the premise of strict risk control.

In terms of investment proportion, the investment in securities related to the theme of Internet of things is no less than 80% of non cash assets.

According to the third quarter report of 2015, the top ten positions of Huabao Internet of things include Internet concept stocks such as Zhongke Jincai, Shanghai Steel Union and Dean diagnostics.

But with the gradual cooling of the Internet concept heat, from the latest position, the Internet of things theme fund has deviated from the set investment direction.

As of the end of the second quarter of 2021, Huabao has invested heavily in new energy stocks such as Ningde era, Yiwei lithium energy, Longji shares and Ganfeng lithium industry.

According to the statistics of the 21st century economic report, the Internet theme funds that focus on new energy also include BAOYING Internet, Shanghai, Hong Kong and Shenzhen, CCB Internet + industrial upgrading, Cathay Pacific Internet +, Boshi Internet theme, BOC Internet +, ICBC Credit Suisse Internet +, etc.

For example, Cathay Pacific Internet + theme fund has no connection with the Internet, and the top 10 stocks are mainly new energy, liquor and medicine. The top three warehouses of CCB Internet + industry upgrading are Wuliangye, Guizhou Maotai and Ningde era.

The changing investment direction also makes the scale of this kind of fund shrinking.

The scale of Cathay Pacific Internet + fund reached 4.5 billion yuan in 2017, and the latest scale was only 1.329 billion yuan. At the end of the second quarter, the fund scale of Huabao Internet of all things was 147 million yuan, and in the early stage of its establishment, the total share was 1.2 billion.

In this regard, some private fund personage suggested: "this kind of fund can keep pace with the times, timely modify the investment scope and investment objectives in the contract, so as to avoid being criticized."

Cultural and recreational style drift disaster area

Theme funds such as entertainment and sports are also disaster areas for fund style drift.

Yuan Fang, the top fund manager of the Mesozoic era, managed the latest heavy positions of ICBC Credit Suisse sports industry fund, which has nothing to do with the sports industry.

By the end of the second quarter, the top ten stocks of ICBC Credit Suisse sports industry fund were Ningde times, Hikvision, Qingdao beer, Fuyao Glass, Yaoming Kant, Ruike laser, Gujing gongjiu, Yili shares, China Unicom and Wuliangye.

In the overall position, manufacturing industry accounted for 66.88%, information transmission, software and information technology service industry accounted for 12.68%, scientific and technological research and technical service industry accounted for 5.06%, and culture, sports and entertainment industry accounted for 2.75%.

After reading the prospectus of the sports industry fund of ICBC Credit Suisse, it is found that the investment goal of the fund is to invest in the listed companies with long-term and stable growth in the sports industry.

The proportion of the investment portfolio is mainly that stock assets account for 80% - 95% of the fund assets, among which the stocks invested in the sports industry defined by the fund shall not be less than 80% of the non cash assets.

At the same time, the fund gives a clear scope on the definition of cultural industry.

The cultural industry includes traditional cultural industry, emerging cultural industry and cultural related industries.

Sports industry includes sports goods and facilities, sports services, sports media, emerging sports formats and sports related industries.

"At the end of the second quarter, the proportion of culture, sports and entertainment industry in the fund's net asset value was only 2.65%, far lower than that of manufacturing industry and information transmission, software and information technology services." A person from a fund company in South China told the reporter of the 21st century economic report that "it is inconsistent with the agreement in the contract that the stocks within the scope of sports industry defined by the fund should not be less than 80% of the non cash assets, which violates the agreement of the fund contract."

As a matter of fact, there are still many sports and entertainment theme funds with style drift in the market, such as Jiashi sports and entertainment, Shangtou Morgan sports and leisure, Ping'an Rui enjoying cultural and entertainment, and investment promotion, sports and cultural leisure, etc.

The manufacturing industry accounted for 56.29% of the latest positions of harvest entertainment, followed by information transmission, software and information technology service industry of 29.02%, and culture, sports and entertainment industry of 4.93%.

Its latest top ten warehouses are also the leading new energy or semiconductor industries such as Ningde era, Jingfeng Mingyuan and Hikvision.

People from a fund company in Beijing believe that the core assets enjoy a high valuation in the past two years, which makes the market convergence, obvious Matthew effect in the industry, and the investment style of more theme funds has drifted.

"One belt and one road", beautiful China and industry 4.0

Fund products with broader themes such as the belt and road initiative, beautiful China and industry 4.0 deviated from the direction set at the beginning of the period.

The Qianhai Kaiyuan belt and road fund, established in 2015, will seize the investment opportunities brought about by the belt and road strategy and share the long-term investment value brought about by the construction of the Silk Road Economic Belt and the maritime Silk Road through theme selection and individual stock selection.

The latest second quarter report shows that the fund's top ten warehouses are Ningde times, Wuliangye, Huaxi biology, Mindray medical and other core assets.

Wu Guoqing, the fund manager, is the fourth fund manager of the product. The latest fund size is only 147 million yuan, which is significantly smaller than the 950 million yuan when the fund was established.

Similarly, the definition of beautiful China and industry 4.0 theme funds is very broad.

The beautiful town theme fund of ICBC Credit Suisse expresses its investment goal by actively selecting stocks that benefit from such themes under the background of comprehensively promoting the development of new urbanization.

The theme of beautiful cities and towns defined by the fund includes four areas: urbanization infrastructure, urbanization ecological civilization, urbanization intelligent management and urbanization consumption upgrading.

From the perspective of the latest ten major warehouses, such as Ningde era, Bank of Ningbo and Wuliangye, it is a beautiful town theme.

The investment target is defined as focusing on the stocks that benefit from the transformation of economic structure and the improvement of economic quality under the theme of building a beautiful China.

At present, the scale of the fund is only 0.06 billion yuan. In the second quarter report, Donghai Meili China fund disclosed that the net asset value of the fund was less than 50 million yuan on April 1, 2021. As of the end of the report period, it has lasted for 60 working days. Meanwhile, the fund manager has reported the solution to the CSRC.

"For those fund contracts that clearly stipulate that if the fund manager fails to do so in accordance with the provisions of the contract, whether or not he has made money for the foundation people, it is actually in violation of the fiduciary duty of the industry and should be corrected." A person from a head fund company in South China believes that for the fund contracts that do not specify the investment scope of products, fund managers should, based on their own judgment, reallocate the products of one or several industries, and should fully reveal the risks, so that investors can be responsible for their investment behavior on the basis of understanding the risk return characteristics of the products and heavy positions; In other words, fund managers should be allowed to give full play to their subjective initiative as long as they meet the requirements of laws and relevant systems.

Three types of style drift

In fact, in addition to the theme funds, there are three types of funds also suspected of style drift.

In order to pursue excess returns, some funds named medium and small cap stocks are mostly blue chips and do not choose small and medium-sized stocks.

For example, heavy positions in Ningde times, Longji shares, Mindray medical Everbright small and medium-sized enterprises.

Secondly, some pseudo quantitative funds only publicize the use of quantitative strategies, but the proportion of the top ten stocks is not low, so the subjective decision-making of fund managers may be more important.

In some quantitative funds, the proportion of the top ten heavy positions has exceeded 60% of the total size of the fund, significantly exceeding the size of the top ten active equity funds.

Zhao Wei, a senior fund analyst at Shanghai Securities Fund Evaluation Center, found that style drift only has a certain effect on improving the returns of partial stock funds, while style drift is not more conducive to creating additional returns.

Research by the 21st Century Capital Research Institute shows that for fund companies, after the establishment of the product, the general risk control department will set up a stock pool according to the contract agreement to restrict the investment behavior of fund managers. Therefore, most fund style drift should be at the level of system implementation.

In the short term, this drift style of investment will bring some performance gains, but in the long run, this kind of fund will make investors confused. In particular, when the market falls, investors complain about funds that are not worthy of their names, and these funds are ushered in a huge amount of redemption.

"If investors buy theme funds, but the actual position of the stock does not live up to the name, this is a misleading, suspected of breach of contract." Huang Jiangdong, a senior consultant of Guohao law firm, believes that although this kind of misleading is not a mistake in principle, it needs to be handled properly.

Therefore, a number of industry insiders have suggested that, on the one hand, when the direction or style of the fund is greatly deviated, how to timely and accurately transmit this information to fund investors needs to be clarified in laws and regulations, rules and regulations.

On the other hand, for some concept themes without performance support and derivative concept theme funds, fund companies should reduce the issuance of some new products, increase efforts to change the investment scope of these theme funds in accordance with the contract, and make changes after the holders pass the new voting scheme.