The pension FOF fund, which is regarded as a supplementary personal pension tool, has seen a wave of intensive delisting. According to Wind data, in the past year as of June 12, there have been eight pension FOF funds, including Penghua Changle Stable Pension for one year, Ping An Pension 2045 for five years, CITIC Prudential Pension for 2035 for three years, SPDB AXA Pension 2040 for three years, Bank of China Pension target date 2040, and Great Wall Hengtai Pension 2040 for three years. The pension FOF funds that have been liquidated before include four products, including Morgan Jincheng Positive Growth Pension Target for five years, TEDA Pension 2040 for three years, Invesco Great Wall Pension for 2045 for five years, and Guolian Anxiang Stable Pension for one year.
Pension FOF funds generally use the initiation method of raising, fund companies use their own funds to subscribe, in the establishment of the fund plays a key role, but after the establishment of the fund, the scale has not been able to achieve significant growth, the more than ten funds have been liquidated, there are more pension FOF funds struggling in the 200 million yuan liquidation red line.
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Historically, the performance has been generally poor
The direct reason for the lack of scale is that the performance is not attractive.
According to the data of Oriental Wealth Choice, since the beginning of this year (as of June 19), among the 454 pension FOF funds with statistics, 268 have achieved positive returns during the year, accounting for 59%. Among them, the best performer is CCB's five-year preferential and enterprising pension target, with a return rate of 6.18%; The worst performer was Huaxia Pension 2055, with a return of -11.07%.
Looking at the positive return ratio of 59%, the overall performance of the pension FOF fund this year is not bad. However, if you look at it for a long time, the performance will be very sluggish.
In the past two years, among the 182 pension FOF funds with statistics, only 13 have achieved positive returns, accounting for less than 10%. Among them, the best performer is the Industrial Securities Global Anyue Stable Pension Target, with a return rate of 3.59%; The worst performer was Huaxia Pension 2055, with a return of -31.30%.
In the past three years, among the 117 pension FOF funds with statistics, only 16 have achieved positive returns, accounting for 14%. Among them, the best performer is CEIBS Foresight Pension 2025 held for one year, with a return of 5.65%; The worst performer was Huaxia Pension 2055, with a return of -34.83%.
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Where do pension funds lose
It stands to reason that the pension FOF fund should not lose so much. First of all, from the perspective of the operation mode, the FOF fund should be able to fully diversify the risk by establishing a fund portfolio. Secondly, from the perspective of investment strategy, the current pension fund mainly adopts two strategies: target date and target risk.
The pension target date fund first sets a target date, which is usually the year in which the investor expects to retire, such as the target investor of Huaxia Pension 2055 for five years, which is the group of people who retire in 2055. Throughout the investment cycle, the equity allocation of target-date funds has gradually decreased, and the allocation to fixed income has gradually increased. This is because as investors age, their ability to resist risks decreases, and the degree of risk aversion gradually increases. According to this law, the target date fund smoothly adjusts the position portfolio, so that the return rate and volatility are more suitable for the changes in demand brought about by the aging of investors.
The strategy of the pension target risk fund is to set a risk fluctuation target in advance, and control the risk at a fixed level by controlling the asset allocation ratio and risk parameters, which is usually conservative, steady, balanced, active, etc.
These two strategies look beautiful, the former becomes more and more robust as the holder ages, and the latter controls the risk from the start. So, what are the factors that lead to the early exit of the pension FOF fund?
Taking the China AMC Pension 2055 Fund, which continues to be at the bottom of the performance, as an example, according to the fund's 2023 annual report, the top four targets of the fund's heavy positions are four ETFs, including ChinaAMC CSI 1000, Wanjia CNI 2000, Fuguo CSI 1000, and ChinaAMC CSI 1000 Enhanced, all of which are typical small-cap stock style indices. According to the first quarter report of this year, the fund's top five heavy positions retained three CSI 1000 and CNI 2000 ETFs, and added a new national financial quantitative multi-factor fund, which is also a small and micro cap style.
From late 2023 to the first quarter of 2024, small-cap stocks are the market's leading sectors. A review of Huaxia Pension 2055 shows that the fund manager has a strong preference for small-cap stock style, and the preference for a specific style of assets will invisibly magnify the risk.
On the other hand, CEIBS Foresight Pension 2025, which has a better performance, has only one hybrid fund among the top ten holdings of the fund at the end of 2023, and the rest are all bond funds, and they are biased towards short-term bond funds with low risk levels.
The comparison of the two funds shows that for the management and operation of the pension FOF fund, the fund industry has not yet formed a mature and stable model, resulting in large losses in some products, which completely deviates from the demands of investors for pension value preservation and appreciation.
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Looking forward to more and more stable pension funds
Judging from the past data, the pension FOF fund, which should be the main word "stable", has not performed satisfactorily, but in the context of the accelerated aging of the population, investors' demand for pension products is growing.
According to the National Health Commission, by the end of 2021, the number of elderly people aged 60 and above in the country reached 267 million, accounting for 18.9% of the total population. The number of elderly people aged 65 and above reached more than 200 million, accounting for 14.2% of the total population. According to the United Nations standard, when the proportion of the population aged 65 and over in a country or region exceeds 7%, it is defined as aging; When it reaches 14%, it is defined as deep aging.
China has entered a deep aging society, and population growth is slowing down, with a natural population growth rate of -1.48‰ in 2023, which means that basic pension insurance is facing huge financial pressure. According to the "China Pension Actuarial Report 2019-2050" released by the Chinese Academy of Social Sciences in 2019, the basic pension insurance fund for urban enterprise employees across the country will reach a peak by 2027, and then will begin to decline rapidly, and the cumulative balance will be exhausted by 2035.
Investors' demand for accumulating pensions and realizing the preservation and appreciation of pension money is undoubtedly urgent. It is expected that after this wave of delisting, the surviving pension FOF funds can learn lessons and provide holders with a more stable investment experience.
Source: Home News Financial Observer