Since the beginning of this year, the ultimate interpretation of the structured market and the staged thematic investment have dominated the market. In the past two years, the well-recognized balanced style fund has ushered in a "headwind".
In terms of occupations, driven by the global wave of technology, the communication and media industries led the rise, while the pro-cyclical sectors such as commerce and retail, food and beverage, building materials, and beauty saw larger declines. According to Wind data, as of July 14, the 31 Shenwan primary industry indexes had a difference of more than 70% in the year-to-year rise and fall.
The extremely decomposed market poses a great challenge to balanced style funds. Nearly 70% of balanced style funds have negative returns during the year, and the annual decline of many products has exceeded 10%. Some fund managers said that balanced investment in the past may have only stayed at the level of industry balance, but this year's market is worthy of reflection by fund managers of balanced style, and that the industry balance should be deepened toward market value balance and style balance, so as to achieve a true balance.
Balanced style funds suffer headwinds
The popularity of this round of balanced style funds originated in 2021. CITIC Futures Research Institute pointed out that since the end of 2021, due to the increasing uncertainty of the macro environment, the overall bearishness of the market, and the low winning rate of the sector, more and more public offering products have switched back to balanced configuration; especially since 2022, the market as a whole Downward, rotation funds with high beta attributes will underperform balanced funds in 2022, and balanced funds will become more popular.
But this year, under the extreme interpretation of the structured market, the balanced style fund that has been recognized in the past two years has encountered headwinds.
If the incomplete statistics are based on the standard of "Balance" in the name, Wind data shows that as of July 14, there were 71 balanced strategic funds in the market, of which 48 had negative returns during the year, accounting for nearly 70%. Some products have fallen by more than 10% during the year.
For example, a balanced fund managed by a well-known fund manager in South China has fallen by nearly 14% during the year. Judging from the first quarterly report, the fund's positions are balanced in multiple industries such as technology, consumption, finance, and new energy. Among them, Guolian, the largest holding stock, has fallen by more than 40% this year. In addition, the fund also has a heavy holding Shanxi Fenjiu, Enjie shares and other individual stocks with more callbacks have also brought drag on the fund's income.
For another example, the general manager of the Balanced Strategy Department of a public offering in Shanghai made a large adjustment in the first quarter, not only making some adjustments to the technology sector, but also strengthening the equipment in the semiconductor and pharmaceutical industries. The top ten heavily held stocks were replaced. eight. However, under the vigorous adjustment of positions, the performance of the fund manager has dropped from 3% in the first quarter to the current -8%, which means that many individual stocks may have just increased their positions at the stage high.
In addition to the above-mentioned funds with "balanced" in their names, there are many star fund managers known for their balanced style in the market, and they generally performed poorly this year. 15%.
Just occupational balance is not enough
The headwinds encountered by balanced style funds have a lot to do with the relatively extreme market conditions this year.
In the first half of this year, driven by the wave of artificial intelligence, the technology sector led the market, while industries that are highly related to economic fundamentals, such as consumption and real estate, were relatively sluggish. According to Wind data, as of July 14, the Shenwan Communication Index rose by more than 50% during the year, ranking first among the 31 Shenwan primary industry indexes; at the same time, the Shenwan Commerce and Retail Index fell by more than 20% during the year. The difference is more than 70%, and the performance decomposition between different occupations is relatively large.
"This year's extremely fragmented market is actually not friendly to fund managers with a balanced allocation style, because the part of the investment portfolio that is not a popular track will have a great impact on the net value of the fund." A balanced style in Shanghai The fund manager said in an interview with a reporter from the Securities Times. He pointed out that in the past few years, balanced investment has been highly sought after by the market, but this year's market has posed a big challenge to the balanced style. Balanced style fund managers may need to reflect on what is balanced. From the most superficial meaning, balance is the balance in the occupational allocation, which means that the fund manager should achieve high coverage and low concentration in the occupational allocation, and the deviation between the allocation ratio and the market broad-based index is not large; but He believes that balance should be more of a balance of market styles, that is, a relatively balanced allocation of mainstream styles such as growth and value, and market capitalization styles such as large, medium, and small caps, which will give certain stocks a certain amount of prosperity, profitability, and business model sustainability. Only in this way can we obtain excess returns from different sources and adapt to different market styles.
Chen Baoguo, research director of Western Lead, also pointed out that the balanced allocation of many investors is only reflected in the industry, but each industry still buys leading companies and core assets, all of which are companies with large market capitalization. "I don't think this is called balanced equipment, but risk exposure. The real balanced equipment must not only be balanced in terms of occupation, but also balanced in terms of market value and style." Chen Baoguo said.
For example, take the above-mentioned fund of the general manager of the balanced strategy department as an example. According to Wind data analysis, although the fund’s individual stocks and industries are extremely dispersed, the weight of the top ten heavily held stocks only accounts for 28%. The weighting ratio is only 33%, but more than 95% of the fund's holdings are in the small-cap growth style. In fact, it has not achieved a balanced style.
"Balance is not the panacea for investment." The above-mentioned fund manager said that with the expansion of the scope of investment targets in the portfolio, the requirements for the diligence of the fund manager and the investment process will also be higher, and any link will be lost. affect investment outcomes.
Market structure may be more balanced in the second half of the year
Although the market in the first half of the year was relatively extreme and thematic investment was the main focus, the balanced strategy suffered headwinds, but this does not mean that the balanced strategy has no value. Looking forward to the second half of the year, many fund managers said that with the improvement of economic data and rising policy expectations, the market structure may become more balanced than in the past.
Xu Da, manager of Morgan Stanley's modern service hybrid fund, pointed out that recently, thematic investment has continued to be active, individual stocks have performed extremely well, and procyclical sectors and institutional blue chips have repeatedly hit new lows during the year. However, as the semi-annual report is approaching, the market's attention to performance will increase significantly, which may not be beneficial to the strong sectors in the early stage, and the market structure will most likely be more balanced.
Some fund managers also stated that they have recently begun to adjust the position structure to a moderate balance. For example, in the first quarter of 2023, Han Dongyan, general manager of the Equity Investment Division of Lion Fund, has a relatively concentrated position structure, mainly focusing on subdivided areas such as communication operators, industrial digitization, and intelligent Internet of Things in the general direction of technology. . As the market changes, she said recently that the investment strategy at this stage will shift from relatively concentrated to moderately balanced. In addition to the direction of technology, it will also focus on the direction of consumption and advanced manufacturing that can reflect economic recovery and structural optimization. The main directions include Light industry, OTC (over-the-counter) medicine and automobiles in consumer manufacturing, wind energy and new materials in new energy manufacturing.
Guotai Junan Securities also stated in the public offering fund allocation forecast that in the second half of 2023, the allocation direction of equity funds is recommended to shift from dumbbell-shaped centralized allocation (AI + medium special estimate) to balanced growth, and gradually increase with the subsequent steady growth. The midstream manufacturing direction is balanced Growth active funds will be more cost-effective.