Why am I not keen on digging out dark horse fund managers?

With the intensified structural market and the increasing number of equity fund products, the performance differentiation among equity funds has become larger and larger. Regardless of whether the market is good or bad, there will be funds that have risen a lot and funds that have fallen a lot every day, even more so if you put them on a monthly or yearly scale. Because of this, many fund investors have begun to try to dig out various dark horse fund managers, make redemption transactions for funds more frequently, and invest in funds with a positive attitude of not wasting investment opportunities on each trading day, in order to strive to get the best results. Good investment returns, this style is very different from holding a fund for a long time without moving.

For a large number of fund investors, they are very fond of the active and promising investment model, because investing in funds in this way will give them a very strong sense of fulfillment. They are in contact with and research new fund managers every day, and then continue to do so. One investment decision after another, and the incremental benefits of making the right decision every now and then will make you more sure of the value of active research. In contrast, holding certain funds for a long time is much more tedious, especially when the performance of the fund of funds is not good, you will have a strong sense of frustration, and you will question whether you are too lazy to cause poor performance. tormenting.

As I have said frequently before, my frequency of making investment decisions is very low. After so many years, I have been holding heavy positions in small caps and value, which is a very typical lay-flat school. For this kind of fund investment model that actively explores the high turnover of dark horse fund managers, frankly speaking, I will also be jealous when I see those dark horse fund managers whose performance is rising slowly compared with the performance of their own funds. Also try to convince yourself in the past to be a little more aggressive in investing in the fund, so the returns may be better.

But after careful analysis, I will still be more inclined to stick to the long-term investment idea of ​​lying flat.

The reason for making such a choice should be mainly due to three aspects, one is the understanding of fund investment, the other is the comparison of FOF performance, and the third is personal personality reasons.

1. Knowledge of fund investment

First of all, it is a particularly difficult thing to dig out a dark horse fund manager. This matter cannot be directly demonstrated, so let’s think about these questions in turn:

(1) The person who understands fund managers best is the fund managers themselves. Before the performance of these fund managers broke out, how many of them bought a large proportion of their own money into their own products?

(2) Secondly, the person who understands the fund manager is the fund company where the fund manager works. So how many fund managers’ own funds and their own FOF products have purchased in advance or heavily invested in the products of their dark horse fund managers?

(3) Second, people who understand fund managers should be all kinds of institutional investors represented by FOF. They have research and information advantages that ordinary holders cannot reach to conduct in-depth research and analysis of fund managers. Then these institutions invest What is the ability of the player to dig out the dark horse in advance?

(4) Since the first three types of people are not very able to identify dark horses in advance, how can we ordinary holders who lack the most information advantage dig out dark horses in advance?

(5) Assuming that you are fortunate enough to identify a dark horse, how much proportion do you dare to allocate and how much trust do you give to the little-known young fund managers? If the buying position is very low or even dare not buy, then the contribution to the portfolio performance is almost better than nothing.

Second, mean reversion is everywhere. It is very difficult to dig out a dark horse fund manager, as we all know. Therefore, many people choose to take a second place and invest in those dark horse fund managers that have come out but are not large in scale. The common feature of these fund managers is that their recent historical performance is particularly excellent. In fact, mean reversion is everywhere. Maybe one or two of these many dark horse fund managers are really outstanding. Most other fund managers may be difficult To escape the doom of mean reversion, the extreme historical performance may be due to the extreme style configuration, which may bring extremely outstanding returns during a certain period of time, and may bring extremely backward returns during another period of time. Confined to one out of a hundred fund managers who are truly outstanding, can we really find these two out of many dark horses? Most people lack this cognitive ability. Many times we analyze all aspects of dark horse fund managers, and finally get a good conclusion, in the final analysis, because of the outstanding historical performance. A handsome man hides a hundred ugliness, and his outstanding historical performance can cover up all problems, which can make you look at his investment philosophy, industry selection and stock selection in a different way.

Finally, short-term performance is almost impossible to explain scientifically . For active and promising fund investors, they tend to frequently increase and decrease positions on the products of various fund managers. The increase and decrease of positions is nothing more than considering that the performance of one fund manager is not as good as that of another fund in the next few months or even just a few weeks. manager. As for the performance comparison between ultra-short-term fund managers, I think it is almost impossible to get a scientific explanation. The reasons are:

(1) The underlying assets invested by the equity fund, that is, the short-term trend of stocks, has no fundamental logic at all. It is completely driven by capital. It may be that Maotai’s performance is not as good as a certain ST stock in a month or two, so it can prove that Maotai is not as good as a certain ST stock. ST shares? Since there is not much fundamental logic in the short-term performance of stock prices, there is little correlation between the short-term performance of a fund and the investment ability of the fund manager. Just like investing by ourselves, it is not difficult for us to outperform a well-known investment boss in a few months’ performance, but this does not mean that we are more capable than him, and we cannot predict such investment results in advance.

(2) Many people see that the short-term performance of fund managers is not good, and they often look for various reasons. For example, there is a problem with the fund manager’s stock selection, and the increase in the management scale affects the operation. For these reasons, I think it is far-fetched, because short-term performance is basically random, and the correlation between good and bad is very low with the ability of fund managers. In particular, it is worth mentioning the management scale of fund managers. I agree that the change in scale will affect the performance of fund managers, but I think this kind of performance impact is more long-term, rather than a month or two or even a day or two. For many funds As far as managers are concerned, they will not even carry out rebalancing operations in a very short period of time, so how can it be said that scale affects performance? Moreover, in the short and medium term, the impact of management scale on performance is not as great as imagined, and the lag in short-term performance is mostly caused by style, not scale. I remember that in the second half of 2020, Feng Mingyuan’s performance was not satisfactory for a period of time. Everyone complained that his management scale was too large, and his performance was significantly affected. However, after 2021, Feng Mingyuan’s management scale became larger, and his performance was on the contrary. Better yet, is this scale explainable?

2. Comparison of FOF performance

The investment performance of FOF fund managers who are known for mining dark horse fund managers is not so ideal. Although I am not an active and promising fund investor, we might as well observe the performance of such fund investors. As a professional fund manager, FOF fund managers provide us with a rare observation sample. If you are talking about who is a well-known dark horse fund manager, you have to talk about Zhou Heng of Zhongrong Fund. The Huaxia Jufeng he previously managed has become one of the few equity FOF products in the market, and the label everyone put on it is Good at mining dark horse fund managers.

At present, Zhou Heng’s manager, Zhongrong Tianyi Enterprising such a FOF product, opened his holdings. This year, he did hold some hot fund managers, such as Zhou Zhishuo of CCB , Dong Chen of Huatai Bairui, and Chuangjin Hexin . Wang Haobing from Invesco, Li Jin from Invesco Great Wall , Shenaiqian from Ping An and Zuo Jian from Zhong Hai (who has resigned) , etc. If you look at the performance of these underlying fund managers, they are all very, very outstanding. The performance in 2021 will be 50%+ at every turn. This year, many fund managers have fallen within single digits and even recorded positive returns. Since this is the case , Zhou Heng’s performance should be very, very outstanding, right?

But this is not the case. The annual income of Huaxia Jufeng managed by Zhou Heng in 2021 is 16.22%, and the year-to-date income of Zhongrong Tianyi managed by Zhou Heng in 2022 is -16.16% (as of September 26). His performance did beat the CSI 300 and the partial stock fund index, but his performance did not surprise me, and even slightly disappointed me, because the underlying funds he bought performed so well.

What does the huge performance difference between FOF and the underlying fund indicate? This shows that Zhou Heng has not been able to dig out excellent fund managers on the left side, and more of these fund managers have run out of performance and then carry out a layout on the right side; it also shows that Zhou Heng may indeed look at some dark horse fund managers. However, the position is not heavy enough, which dilutes the contribution of the dark horse to the FOF portfolio.

On the other hand, among the FOF fund managers, Lin Guohuai, who manages Xingquan is the most aggressive, and rarely buys these so-called dark horse funds. However, the returns of this product in 2021 and 2022 are 8.63% and -14.75%, respectively. The overall performance is not much worse than that of Zhou Heng, and more importantly, the volatility of Xingquan’s performance is significantly lower than that of Zhou Heng’s management. FOF products, the investment experience is significantly better than Zhou Heng…

Since professional base selectors who are good at digging for dark horses can’t dig out dark horses in advance, considering the return and volatility comprehensively, I think the cost-effectiveness of mining dark horses is lower. What you earn is the money of the performance momentum of the dark horse fund manager. Once the performance of the dark horse is not good, it will go away immediately. It seems to be digging out dark horses and analyzing the investment concepts of dark horses. In fact, the essence is just quantitative basis selection based on the historical performance momentum factor of fund managers.

3. Personality factors

If you often pay attention to my articles, it is not difficult to find that I seldom follow hot topics, and the frequency of article updates is not high.

Of course, it is precisely because my reaction is half a beat, so when I analyze a matter, I often ask to consider this issue as comprehensively and deeply as possible. I have written a lot of fund manager analysis articles before, and I believe many of my friends have read them, although The number of fund managers analyzed is not large, but when analyzing a fund manager, I hope to be comprehensive, so that everyone can have a more thorough understanding of the fund manager, so I need to spend a lot of time analyzing a fund manager, even if I myself Fund managers who have been analyzing for several years are not new, but I am still in this state.

Although it took a lot of time to do a more in-depth analysis, I think there is still a certain distance if I can actually make buying and selling decisions on the fund managers I have analyzed. Even after analyzing the public opinions and position information of fund managers many times, it is still very difficult to establish trust or distrust like real money. A fund manager is a person rather than a thing. Constrained by the limited information, it is difficult to enter the fund manager’s heart and feel his enthusiasm for investment and the most direct thinking about investment ideas. What’s more, the opinions and remarks published by fund managers are all modified, and there are often traces of packaging, which will be detrimental to everyone’s research and judgment.

I hold a lot of index (enhanced) funds in the medium and long term in my portfolio, and many of my friends didn’t understand it before. I believe that through the explanation in the above part, everyone can understand the starting point behind me. In addition, I also want to say that everyone should not feel that index funds are not good. Let me give an example. Around May 2020, I bought an active fund (Xingquanhe) at the same time out of consideration for the balance of the portfolio. Profit) and an index fund (connected with Huatai-Pineapple Low-Volatility Dividend ETF) and hold it until now, Xie Zhiyu at that time had a certain reputation but was not so popular, as for the unpopular index such as dividend low-volatility Nobody cares. In the past two years, I first watched Xingquan Herun quickly surpass the low dividend volatility and let me slap my thighs, and then watched the income of the low dividend volatility gradually catch up with the profits of Xingquan, which amazes me again and again. By this year The low-wave dividend income has begun to continuously overtake Xingquan Herun. You can experience the feeling of this process in detail…

I think it is because of my slow-moving personality and the difficulty of building trust with fund managers in the process of active fund research that I conduct fast-food research on one fund manager after another and make corresponding buying and selling decisions. Difficulty. As for the extremely excellent historical performance of these dark horse fund managers, given my dislike of chasing the wind, it is difficult to attract me, but it will make me afraid of chasing highs and possibly reverting to the mean…

Whether it is my understanding of fund investment, comparing FOF performance or my own personality factors, it is not enough to convince me to actively explore dark horses and conduct frequent redemption transactions, so I will continue to choose to be a sane person in fund investment. Pi does not demand the breadth of fund coverage but the depth of understanding of fund managers. I believe this method is the most suitable for me and can bring ideal investment returns.

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Disclaimer: The above content is for informational purposes only and does not constitute investment advice. Funds are risky and investment should be cautious.

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