Brief introduction of the guest and moderator
Wang Kun
Wang Kun, with 10 years of experience in the securities industry and more than 6 years of investment management experience, was the first rating business expert of the Securities Industry Association, and is now the deputy general manager/fund manager of the mixed asset investment department. He has a strong foundation in the investment of credit debtors, and also has rich management experience in the field of pure debt and fixed income + investment, and has participated in the management of many fixed income + products.
Chen Daye
Fund Manager of Mixed Asset Investment Department of Penghua Fund.
Wang Kun's golden sentence
1. The popularity of "fixed income+" products stems from the "new regulations on asset management" introduced in 2017 and officially implemented in 2018, which broke the rigid redemption of bank wealth management and promoted the transformation of bank wealth management net worth.
2. Through the mixed allocation of fixed income plus equity assets and other products, the "fixed income+" product will exert a more obvious "seesaw" effect of stocks and bonds within a specific period of time, which has the opportunity to iron out the fluctuations between investments and provide customers with relatively stable income.
3. With the yield of the entire bond at a low level, and based on the background of the concession of real enterprises, the current low interest rate level will continue for a long time, and the future coupon return of pure bond products may be lower than that of the previous period, and the yield of bond products may be more dependent on the spread return brought by the decline in interest rate bonds.
4. In the period of obvious economic recovery, credit and M1 continue to rise, and corporate earnings continue to improve, in this case, equity assets may be more favored, so the allocation of equity assets will be increased; In the whole economic downturn, some of the time it may be predicted that the earnings of the whole enterprise will be less than expected, including the overall market confidence is relatively weak, and more attention will be paid to the easing of monetary policy, including the general demand for credit, which will bring investment opportunities for the whole bond.
5. For stocks, a successful investment mainly makes money in three directions: the first is the long-term growth and value growth of the company, the second is the volatility of the company's earnings cycle, and the third is the opportunity brought about by the change in market perception, which corresponds to the company's long-term EPS growth and the opportunity for short- and medium-term earnings elasticity fluctuations and valuation fluctuations.
6. In the next period of time, there is still the possibility of easing monetary policy, especially in the context of real concessions, there is still room for interest rates to fall in the entire short and medium term, and at the same time, the entire bond yield is in a relatively steep period in history, and the entire long end also has some room for game.
Chen Daye: "Fixed income+" products have been developed for many years, but they have only begun to be continuously concerned by investors after 2020, and they have also shifted from institutional customers to retail customers. What do you think of the development trend of the "fixed income +" industry and the positioning of fixed income + products of Penghua Fund's mixed asset investment department? What are the features?
Wang Kun: "Fixed income+" products have gradually evolved and developed from the secondary debt base, the earliest secondary debt base is mainly for institutional customers, and since 2020, the customer base of "fixed income +" has gradually expanded to the retail side, and the overall development has also developed from relative income to absolute income. The popularity of "fixed income +" products stems from the "new regulations on asset management" introduced in 2017 and officially implemented in 2018, which broke the rigid redemption of bank wealth management and promoted the transformation of bank wealth management net worth as a whole. The crowding out of traditional principal-guaranteed products and the decline in the yield of wealth management have allowed "fixed income +" products to undertake the needs of more wealth management customers. On the other hand, in the process of fluctuations in any economic cycle, a single asset will inevitably cause some net value fluctuations, and equity assets may fluctuate a little more than the whole bond.
Considering various product categories and product attributes, "fixed income +" products sometimes exert a more obvious "seesaw" effect of stocks and bonds within a specific period of time through the mixed allocation of fixed income plus equity assets and other products, which has the opportunity to iron out the fluctuations between the entire investment and provide customers with relatively stable income.
With the overall bond yield at a low level, based on the background of real corporate concessions, we believe that the current low interest rate level will continue for a long time, and the future coupon return of pure bond products may be lower than that of the previous period. In the future, the yield of bond products may rely more on the spread return brought by the decline in interest rate bonds. At present, the valuation of the entire equity market is at a historically low level, for example, the dividend yield of broad-based indices such as CSI 300 is higher than that in 2020, and the overall equity market has improved its cost performance compared with the previous period. Therefore, at the current point in time, for "fixed income +" products, the winning rate is higher than that in the previous period.
Chen Daye: I would like to share with you what are the characteristics of the current mainstream "fixed income +" products in the market? What are the differences and advantages between the products produced by the mixed asset investment department team of Penghua Fund and other "fixed income +" products?
Wang Kun: Looking back on the performance of various "fixed income +" products in the market, it can be found that many "fixed income +" products in the market have large short-term fluctuations, but the long-term income is relatively considerable, which is different from the demand for financial substitution from retail product customers, because some customers will redeem when they see short-term fluctuations, so that the product makes money but the holder is not very profitable. In the past few years, for retail customers, bank wealth management products have always had institutional advantages, it has a bond yield smoothing mechanism, relatively speaking, there are almost no products in the market that can match the risk and return characteristics of bank wealth management products, but I believe that with the passage of time, there will be more and more such products.
At present, in the process of managing "fixed income +" products, we have also carried out the portrait of investment personnel and customer risk appetite, fully understand the acceptance of investors for the risks and returns of such products through various customer channel research, and on this basis, combined with risk control and investment capabilities, try to allocate some products and allocation proportions that satisfy customers.
In terms of product design, there are differences between "fixed income+" products and traditional secondary debt bases. Usually, the secondary bond base is what we often call "82 open", that is, "80% bonds plus 20% stocks", but in the actual operation process, this kind of portfolio fluctuates greatly. Based on historical data using parity theory and quantitative practice, 7%-10% of equity positions can meet the return requirements of most retail customers, and can better control the overall drawdown and risk profile. In the context of risk control and net worth management, our products tend to pay more attention to drawdowns than others, and will put control of drawdowns and volatility in the first place, because usually when the net value falls by 0.3%-0.5%, customers will start to inquire.
Compared with other "fixed income +" products, our team carries out more refined management and strictly controls drawdowns. Controlling drawdown is always a delicate job, and it must be "close to it as soon as there is a wind and grass", and the team has also done a strict assessment in this area, such as the absolute return strategy of the product completely adopts the absolute return assessment, and at the same time will assess the drawdown control. The relevant departments will monitor the drawdown level of the net value of the entire portfolio and the decline of individual stocks and bonds, and the investment staff will always pay attention to the changes in the net value of their own portfolio and the net value of individual stocks and bonds, as well as have a strong sense of take-profit and stop-loss awareness and discipline, so as to prevent a relatively large drawdown of the entire portfolio as much as possible.
Chen Daye: "Fixed income +" products involve two types of assets, not only focusing on asset allocation, but also paying attention to the characteristics of each type of asset itself.
Wang Kun: I understand that our team makes decisions together, and the overall process of "fixed income +" products is currently divided into three steps:
The first step is to determine the possible direction of asset allocation, including the main proportion of stocks and bonds, based on the current macro cycle and policy orientation. For example, during the period of obvious economic recovery, credit and M1 continue to rise, and corporate earnings continue to improve, in this case, equity assets may be more favored, so we will increase the allocation of equity assets as a whole; Throughout the economic downturn, at some point we may predict that the earnings of the entire corporate sector will be lower than expected, including the relative weakness of the overall market confidence, and we will pay more attention to the overall monetary policy easing, including the general credit demand, which will bring investment opportunities in bonds.
The second step is to invest according to the categories of stocks and bonds, and in terms of stocks, Daye and several other colleagues generally select some assets with upward profits and a margin of safety with absolute returns; In terms of bonds, we will make a better allocation switch according to the fundamentals of the entire economy, including monetary policy, the current interest rate level and the cost performance of various corresponding assets.
The third step is to consider the hedging relationship between the entire stock and bond, including finding that there is some adjustment in the stock market, and the risk aversion has led to the weakening of stocks and the rise of bonds, at which time a hedging between bonds will be formed to a certain extent. Historically, the CSI 300 Index has formed a good hedge against the bond market, and we will make a good allocation based on past experience and future judgments on the economy, policy and market.
Chen Daye: Regarding "fixed income +" investment, on the one hand, it is the allocation of large types of assets, and on the other hand, it is the allocation of various types of assets. First of all, for "fixed income +" products, fixed income is the cornerstone and core of the product. You have very unique experience in bond investment, can you please share the bond investment ideas in "Fixed Income+"?
Wang Kun: I'm not particularly unique in terms of bond investment, but I'm actually doing it along two lines:
The first is the investment idea of bond funds, we will conduct an overall analysis of the entire medium-term economic fundamentals, monetary policy and the overall supply and demand of the credit market, and then determine the medium-term trend of the entire bond market. Under this medium-term trend, the allocation should be relatively reasonable according to the current level of interest rate bonds, credit spreads, maturity spreads, and variety spreads.
The second is that for products such as "fixed income +", we will combine the characteristics of stock and bond hedging to do a good job of hedging between large categories of assets in the more extreme market of the stock market, for example, when the stock market is slightly weaker at the beginning of the year, the phased hedging between 30-year treasury bonds and stocks has played a good seesaw effect. In the past few years, among the major "fixed income+" products in the market, bonds have made a significant contribution to the net value of the entire portfolio. For the entire "fixed income +" product, bonds, as the bottom position, are also the main source of income.
In addition to hedging strategies, intensive farming is also the main source of excess income for "fixed income+" products.
Chen Daye: On the bond side, our main investment target is credit bonds or interest rate bonds, and what are the main options in terms of bottom position varieties? What are the considerations for credit subjects? What are the reasons for choosing these credit subjects? Can you share with us?
Wang Kun: At present, the bond market, especially in the "fixed income +" portfolio, mainly invests in credit bonds, and the default risk of high-grade credit bonds we invest in is very limited, but it can improve the profitability of the entire portfolio to a certain extent. Frankly speaking, because of the game of multiple participants in the entire market, the entire credit bond market is relatively slow to make money, but sometimes it will lose money relatively quickly. At present, mainstream institutions include fund companies, wealth management companies, etc., and now the credit rating is relatively strict, in the current economic environment, we will eliminate more slightly flawed business entities.
In the context of the current system is not particularly perfect, we are unlikely to reduce credit bonds at a significant discount, and the overall investment ideas of most institutions in the market are relatively stable. At present, from the original multi-party participants in credit bonds, including insurance, self-operated institutions and other institutions, it has gradually become a large market dominated by financial institutions, and other institutions are still used as large demand sides. As a result, spreads as a whole have fallen somewhat since 2016.
When residents can re-understand the entire wealth management net worth situation, there will be a certain degree of relief. Therefore, for the entire investment strategy, if there is no particularly clear interest rate spread strategy opportunity, we may adopt some ideas based on relatively stable coupon income. If there are more clear trading opportunities, we will participate in some interest rate bond volatility, credit bond fluctuations and trading methods between varieties. Because for "fixed income +" products, the entire bond investment direction is relatively complete and complete, so we still have some space in it.
Chen Daye: Another very important factor in the "fixed income+" section is equity investment. In 2022 and 2023, the overall performance of the equity market will be average, and the entire market is also paying attention to how to achieve the real "+" of "fixed income +" products in equity investment, and what are the differences in stock thinking.
Wang Kun: Chen Daye has rich experience and experience in the field of "fixed income +", especially in the field of equity investment, can you share with us the part of how to achieve "+" in equity?
Chen Daye: First of all, compared with general funds, the most important requirement for the equity part of "fixed income +" products is to emphasize absolute returns. For stocks, a successful investment mainly makes money in three directions: the first is the long-term growth and value growth of the company, the second is the volatility of the company's earnings cycle, and the third is the opportunity brought about by the change in market perception, which corresponds to the company's long-term EPS growth and the opportunity for short- and medium-term earnings elasticity fluctuations and valuation fluctuations.
From the perspective of the time dimension of investment, if we want to grasp the first type of opportunity, we need to hold stocks for a longer period of time, and during the holding period, stocks may fluctuate more, which is also the focus of traditional equity funds. However, for the profit elasticity brought about by the upward profit cycle and the investment opportunities brought about by market mispricing, from the perspective of absolute returns, the drawdown is generally controllable, and the length of time that may be realized in the time dimension is not too long, and the overall investment effect and investment efficiency are relatively better. Therefore, from the perspective of "fixed income +" stock investment, we focus more on industries and individual stocks in the upward cycle of earnings, as well as certain investment opportunities brought by periodic market mistakes, so as to fully do a good job in absolute returns. On the other hand, we will also use a variety of tools, such as convertible bonds, because the drawdown of convertible bonds is controllable, and at the same time, we can follow the equity market to have a certain chance to rise, so in the left stage of the equity market, it is also a better layout opportunity for convertible bonds, and there are better investment advantages.
Wang Kun: You just mentioned that in the industry and individual stocks, try to choose industries and stocks with upward profit cycles, and the stock market sometimes has a greater impact on market styles, how to determine which industries have upward profit cycles in this context?
Chen Daye: The investment style of the equity market is mainly divided into value and growth, and the value style may perform better in some years, and the growth style may perform better in some years. After the split, from the perspective of terminal demand, the entire value and growth are divided into five areas: consumer industry, TMT industry, high-end manufacturing, cycle and financial real estate. According to the traditional economic cycle, growth stocks are usually more sensitive to interest rates in the early cycle of the traditional economic cycle, when the policy is more likely to drive economic development through the direction of economic transformation. In terms of cycles, TMT usually performs relatively well, but with the gradual expansion of credit and the gradual recovery of the economy, there has been a significant recovery in sectors such as consumption, high-end manufacturing, and financial real estate, so some absolute return opportunities have also begun to emerge in these industries. In the later cycle, the whole cyclical stocks will have obvious excess returns because of the strong demand and the supply cannot be released immediately. From the perspective of the traditional economic cycle, we can judge the profit cycle through the split of the terminal.
On the other hand, we will also take into account the development and support of industrial policy, due to the change of domestic industrial policy, it may have a very large impact on the profitability of many industries, so the support and encouragement of industrial policy is also the focus of our focus on its upward or downward cycle of profitability. In addition, historically, the entire A-share market is still a barometer of the economy, the earnings growth rate of the CSI 300 is basically consistent with the nominal GDP growth rate, and from the perspective of stock price performance, except for 2014-2015, the performance of the CSI 300 index is basically consistent with the performance of the earnings cycle, and the performance of the stock market is slightly ahead of the changes in the earnings cycle.
Based on the judgment of the domestic macroeconomic cycle and nominal GDP, we can make a better judgment on the future profit cycle of the CSI 300, and combined with the current valuation level of the CSI 300, we can effectively judge the entire economic cycle to a certain extent, so as to make our own judgment on the upward or downward profitability of the industry.
In addition, in terms of industry selection, we are also concerned about the valuation quantile and transaction congestion of the industry. In terms of industry cycle, the core is to start from demand, in recent years, some traditional industries due to supply changes, there have also been changes in the profit cycle, so the direction of the entire industry cycle, on the one hand, is demand, on the other hand, supply, in the combination of supply and demand to make a more accurate judgment of the industry profit cycle.
The position of the industry is the valuation quantile, and the valuation quantile is also a very good margin of safety for the selection of industries or individual stocks. First of all, on the one hand, we can make a historical valuation comparison, on the other hand, we can conduct a horizontal valuation comparison, if the investment logic of some industries has changed significantly, its valuation center may be systematically improved when the horizontal comparison. For example, the new electricity in 2021 and the liquor in 2020, including coal and cyclical stocks in the past two years, are also due to the increase in valuation due to industrial changes in horizontal comparison, which is also an important focus of our industry analysis.
The third angle is trading congestion, we mainly focus on some short-term trading congestion, such as the industry turnover rate, the proportion of industry turnover in the overall turnover of A-shares, including the industry internal movement index, etc., if there is a more extreme level, we will also reduce positions in these industries to avoid sharp fluctuations at the top of the net value has a significant impact.
Wang Kun: Let's talk about the future outlook for the entire market in the past two years. For the equity segment, the market can still be more volatile at times. But we hope to give investors a better holding experience, and we have also done a lot of version updates for the drawdown management of the equity part, can you share with you the whole drawdown management idea and execution method?
Chen Daye: Drawdown management has always been a problem that everyone in the fund is very concerned about, and it is also a relatively difficult problem. At present, the main management system is to do a good job in the management of the drawdown management system in advance and during the event, and at the same time to do a good job in the post-event summary and evaluation, and constantly revise this work.
First of all, in terms of ex-ante, the most important thing is to set a reasonable portfolio risk exposure, because under the risk exposure management, at least the approximate risk-return characteristics of our portfolio can be seen. This equity-risk exposure consists of two aspects: on the one hand, the exposure to the equity position, and on the other hand, the exposure to the equity style. In terms of exposure to equity positions, we first determine the maximum acceptable drawdown of the portfolio according to the portfolio positioning, including the maximum acceptable drawdown according to the risk-return characteristics of different clients.
Secondly, according to the current position of the equity market and the subsequent potential economy and policies, a general scenario assumption is made for the market, and the adjustment range of the main broad-based index in extreme cases is estimated, so as to determine a corresponding equity position center. In terms of equity style exposure, the volatility of assets varies from industry to industry and style. Overall, the volatility of growth stocks is significantly greater than that of value stocks, so we will also manage sectors with different volatility levels in advance according to the range of volatility that the portfolio can bear. For example, what is the risk exposure of growth stocks and what is the value stocks, so that we can at least have a clearer understanding and risk constraints on the potential drawdown of the portfolio in the early stage.
In terms of in-process management, we mainly rely on whether the market has unexpected adjustment risks and whether we have reached several stages of drawdown monitoring, when our portfolio has reached a drawdown of 0.3% to 0.5%, if there is a certain phased drawdown at this time, we will also make very obvious judgments and adjustments. When the maximum drawdown is reached 1/4, it is necessary to consider whether the market will adjust beyond expectations, and then combined with the current market situation and judgment, we need to further manage the equity position and industry exposure. For example, after a certain stage, we must control the risk exposure of certain high-risk and high-volatility industries, so as to avoid quickly reaching the maximum drawdown, strive for more initiative for the portfolio, and at the same time leave more room for the portfolio to increase positions after the market has undergone a significant adjustment.
In terms of post-event management, after a drawdown, the entire market and portfolio enter a stable stage, and we will review whether the drawdown management of the portfolio is effective, and what shortcomings and experience in this area can be further improved, which is the current way we manage the drawdown.
2024 is about to enter the second half of the year, can you share the investment ideas and market views for the second half of the year?
Wang Kun: I would like to briefly share my thoughts on the entire macroeconomy and the bond market.
At present, the entire economy is still in a stage of stable development, but frankly speaking, the overall inflation level and price level have not yet shown some significant improvements, so in this context, it is difficult for the entire interest rate level, especially the short-term interest rate level, to rise significantly. The bond market should still be a positive pattern, and we will face a big change in the third quarter - the US election. A few days ago, the European election brought great uncertainty to everyone, and at the same time, the domestic real estate market is still in the process of recovery, and there is no obvious overheating or overheating.
Therefore, in the next period of time, the entire monetary policy is still likely to be loose, especially in the context of real concessions, the entire short and medium end still has a certain amount of room for interest rates to fall, and the current bond yield should be in a relatively steep period in history, and the entire long end also has a certain game space.
Chen Daye: Let me talk about the perspective of the equity market. Since February, the entire equity market has rebounded significantly, and the market risk appetite has also improved, but due to the two-year bear market, coupled with the great uncertainty faced by the entire macroeconomic and external environment in the past. The sustainability of corporate earnings improvement needs to be further confirmed, so the equity market is still in a state of volatility, but the overall equity market still has a relatively high cost performance.
First, in the context of the downward shift of the entire interest rate pivot, those dividend assets that can provide stable returns and stable free cash flow have a certain cost performance. On the other hand, the current dividend yield of the entire CSI 300 Index is also at a historically high level, and the valuation of the entire market is at a historically low position, providing a certain margin of safety for the entire equity market.
On the other hand, some small and medium-sized market capitalization stocks have undergone significant adjustments this year, but many companies currently have a certain cost performance in earnings and valuations, and many small and medium-cap companies are also growing bigger and stronger, so we will also choose companies with relatively good profits and valuations to participate according to the stage of the market.
At the same time, many convertible bonds are also at a relatively low price level, on the one hand, they can control the drawdown, on the other hand, if the equity market rises, these convertible bonds still have certain investment opportunities, so we can choose some of the lower credit risk, if there is a valuation repair behind the equity market, these convertible bonds that can drive the rise as an allocation.
Source: wind.
The risk warning is as follows
Dear Investors,
"Fixed Income+" does not mean that investing in the Fund will be profitable, nor does it guarantee a minimum return. The Fund's investment in equity assets may not only bring the possibility of increasing returns, but also expose the Fund to the risk of principal loss due to fluctuations in the equity market. The expected risk, drawdown rate and volatility of "fixed income+" products are generally higher than those of ordinary pure bond funds. The risk level of the Fund, the proportion of investment in equity assets and the risks that may be faced by investing in the Fund are advised to carefully read the legal documents of the Fund and the introduction on the product page on the official website of the Fund Manager and the sales agency. The content of the live broadcast is limited to the purpose of publicity and promotion between the fund manager and the cooperative platform, and it is forbidden for third-party institutions to excerpt, intercept or rebroadcast it in other inappropriate ways. The above mentioned individual stocks and industries are only examples and do not constitute actual investment advice and do not represent portfolio holdings. The fund manager undertakes to manage and use the fund assets in good faith, diligence and responsibility, but does not guarantee that the principal of the fund will not be lost, does not guarantee that the fund will be profitable, and does not guarantee the minimum return. Past increases in the market and the Fund are not indicative of future performance, and the performance of other funds managed by the Fund Manager and the past performance of its investment staff are not indicative of its future performance and do not constitute a guarantee of the performance of the Fund. There is a risk of income fluctuation in fund products, and investors should agree to the principle of "buyer's responsibility" when making investment decisions, and the investment risks and losses caused by changes in the operation status of the fund and the net value of the fund shall be borne by the fund investors after making the investment decision. Investors should carefully read the Fund's Fund Contract, Prospectus and other legal documents to understand the specific circumstances of the Fund. Caution should be exercised when investing in funds. The speeches of the guests do not constitute any form of investment advice, and only represent their personal views, and have nothing to do with their institutions and platforms. Regular investment is a simple and easy way to guide investors to make long-term investments and average investment costs. However, regular investment does not avoid the inherent risks of fund investment, does not guarantee investors to obtain returns, and is not an equivalent financial management method to replace savings. The fund manager undertakes to manage and use the fund assets in good faith, diligence and due diligence, but does not guarantee that the principal of the fund will not be lost, does not guarantee that the fund will be profitable, nor does it guarantee the minimum return, and the fund products are subject to volatility risk. Investors should carefully read the fund contract and prospectus and other legal documents of the fund to understand the specific situation of the fund. The performance of other funds managed by the fund manager and the past performance of its investment personnel are not indicative of their future performance, nor do they constitute a guarantee of the performance of the fund.