Since the beginning of this year, the market has fallen for 5 consecutive months. When the market was at its worst, the proportion of active funds with positive returns in the whole market was even less than 2%!
In such a situation, many investors have “led the knife into a quick success” in the endless decline of the market. Then the question arises. What if, I mean, if the market has been falling for 3 consecutive years, what should you do?
Is it pain, is it despair, or is it premature to give birth?
Things in the future are unpredictable, but we really don’t need to use our imagination today, because in the past history, there have been consecutive shocks and declines for nearly three years, and the overall return of the Shanghai Composite Index was negative.
It happened at the beginning of 2016, after the A-share sentiment entered freezing point, our “hard years” had just begun.
The market has fallen for 3 years, what should we do?
That was the second year after the market broke through the periodical highs, and the Shanghai Composite Index began to enter the starting point of a long downturn—on January 27, 2016, we can see two lows in the red box, 2688.30 and 2440.91, from the lowest It took nearly 3 years to go even lower, until January 4, 2019, when the long downward trend of the broader market ended and a retaliatory rebound was ushered in.
The chart of the Shanghai Composite Index in this range is as follows:
As a senior fund investor and researcher, when faced with this situation, I can think of only one way to break the situation that is most suitable for ordinary investors: select one or several excellent fund managers and rely on his investment ability Help us traverse the long road.
Just do it, we set two filter conditions:
1. According to the range from 2016 to the beginning of 2019 (2016.1.27-2019.1.4), find all fund managers who have experienced this round of decline and have performed exceptionally well, because only after experiencing a real bear market can they hope to survive the next one Round underestimation cycle.
2. Limit the screening list to balanced funds with no more than 30% in a single industry, and exclude the luck component of the past structural bull market because the track affects returns.
According to these two criteria, we finally screened out 159 funds among active funds in the whole market!
In the event of a long bear market, the list of 159 funds will help you survive the next shock cycle. You can get a complete list of funds by leaving a message “Balanced Win” in the comment area or in the background.
How did these 159 balanced funds perform?
In order to verify my screening logic, I fitted 159 funds into an index, named it “Balanced Winning” index, and compared them with all active funds in the whole market.
First, let’s look at the retracement performance of this index. Statistics show that balanced style funds have a slight advantage in retracement control . The average maximum drawdown of active funds in the whole market is -33.35%, while the average maximum drawdown of the 159 funds selected is -31.12%, and the defensive ability will be significantly better.
(Data source Wind, 2016.1.27 to 2019.1.4)
After that, let’s look at earnings performance. Statistics show that the average annualized rate of return of the selected 159 funds was -4.5% during the three-year decline, while the average annualized rate of return of active funds in the whole market was -7% during the same period. In contrast, these 159 funds were balanced . Although the overall style fund has not achieved positive returns, it is still better than the market average.
(Data source Wind, 2016.1.27 to 2019.1.4)
Finally, we will compare its trend with the trend of the CSI 300 index to see how it will perform.
(Data source Wind, 2017.5.18 to 2022.5.18)
As can be seen from the above figure, in the past 5 years, the index composed of 159 funds has performed in the same way as the CSI 300 in the early stage. After 2019, the fitted index opened the gap and the increase began to far exceed the CSI 300.
Wait, judging from the current results, the performance of this index in the three-year decline is basically the same as that of the CSI 300. The overall performance during the decline did not exceed the return, and the gap began to widen only after the staged bull market. Is our screening logic unreasonable?
Neither nor nor!
Because our purpose is not to buy 159 funds at one time, but to find the top ten really excellent ones in it, remove the rubbish and save the essence, and find the few that are most suitable for you.
Next, we come to the real highlight, revealing the real “Noah’s Ark” in the next three years, and the TOP10 balanced styles in the last three-year bear market.
Balanced style fund performance TOP10
Without further ado, just get on the list. Here are the top 10 returns among the 159 funds:
(Data source Wind, 2016.1.27 to 2019.1.4)
Sure enough, real gold is gained in the big waves, and the fund managers on the list are basically the powerful representatives of their respective fund companies.
The top one is Yang Ming, a veteran of Huaan Fund. The Huaan Strategy Preferred A under his management has an annualized return of 11.8%, which is the only fund among the 159 funds with an annualized return of over 10%;
The second place is the Dongfanghong industry upgrade managed by Wang Yanfei, with an annualized income of 9.15%;
The third place is Huatai Pineapple Innovation Upgrade A managed by Zhang Hui, with an annualized income of 8.52% .
It is worth mentioning that in this “Top Ten List”, Zhang Hui alone has two seats . Not only that, the two funds on the list have the best drawdown control among all 159 funds . If the next round ” Three-year shock” comes, and he may be the option with the least retracement.
After reading the performance comparison, let’s take a look at the three positions:
Yang Ming has been a fund manager for nearly 14 years and has an annualized rate of return of 8.53%. He is an extremely rare veteran in the market. Its investment style is value-oriented, and its long-term industry allocation direction is finance and real estate .
Both Wang Yanfei and Zhang Hui have long-term allocation of food and beverages, while in other industry choices, Wang Yanfei has long-term allocation of real estate, computers, and media ; Zhang Hui has long-term allocation of pharmaceutical biology and electronics , with a higher industry concentration and a more dispersed allocation of individual stocks.
(Data source Wind, as of 2021.12.31)
From the perspective of position distribution, if you tend to deploy “Ningmao portfolio”, Zhang Hui is the best choice; if you want to deploy TMT, choose Wang Yanfei; if you want to deploy traditional low valuation areas, Yang Ming is the best partner.
By the way, in the list, there are also some fund managers whose performance was average in the past year’s shocks, so when making a specific selection, we should also look at their recent performance.
At this point, our data statistics are all over, and there must be risk warnings here. All data screening logic is based on the past performance of fund managers, and it is only unknown whether there will be a long shock in the future. Standing on 5000 points, history will not simply repeat.
However, as investors, we must anticipate the best and worst cases, and then invest with the most optimistic attitude. Even if the long-term bear market of the index reappears, there are still a group of excellent balanced fund managers to help us pass through the bulls and bears. Reach the other side of victory.
I think it’s well written, don’t ask for anything else, remember to like it!
Risk warning: Fund investment is risky, and investment should be cautious. Any opinions, analysis and forecasts in this article are for reference only and do not constitute any form of investment advice to the reader.
@Today’s topic @雪ball @雪ball Fund # Response to the downtrend# #Falling is the biggest positive# $ Shanghai 50(SH000016)$ $ Shanghai and Shenzhen 300(SH000300)$ $ CSI 500(SH000905)$
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