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The rumors of star fund manager Qiu Dongrong's resignation finally came true.

On July 21, Zhonggeng Fund announced that starting from July 19, 2024, Qiu Dongrong will resign as fund manager of five products including Zhonggeng Value Navigator for personal reasons. At the same time, he will no longer serve as deputy general manager of Zhonggeng Fund and other positions, nor will he transfer to other positions in the company.

The announcement shows that after Qiu Dongrong's resignation, four fund managers, Liu Sheng, Chen Tao, Wu Chenggen and Sun Xiao, will take over the five products originally managed by Qiu Dongrong. Among them, Liu Sheng will be the fund manager of Zhonggeng Value Pilot Fund, Chen Tao will be the fund manager of Zhonggeng Small Cap Value Fund, Wu Chenggen will be the fund manager of Zhonggeng Value Smart and Zhonggeng Value Quality, and Sun Xiao will be the fund manager of Zhonggeng Hong Kong Stock Connect Value.

Previously, on May 11, Zhonggeng Fund announced that it had hired Wu Chenggen as the manager of Zhonggeng Value Quality Fund and Liu Sheng as the manager of Zhonggeng Value Pilot Fund. At that time, rumors were rife that Qiu Dongrong was about to leave.

According to the "Registration Rules" revised and issued by the China Securities Association on November 24, 2023, if the product is in the fundraising period, the fund manager is in the closed period of managing an existing public fund product, or the fund manager has managed an existing public fund product for less than one year, no change procedures will be processed. Qiu Dongrong's Zhonggeng Hong Kong Stock Connect 18 Months was established on January 11, 2023 and opened for the first time in July 2024.

On July 4, Zhonggeng Fund issued an announcement that Zhonggeng Hong Kong Stock Connect 18 Months will be converted to open-end operation from July 11, 2024, and the fund name will be changed to "Zhonggeng Hong Kong Stock Connect Value Equity Securities Investment Fund".

From the perspective of fund performance, as of July 19, among the five funds managed by Qiu Dongrong, the one with the highest tenure return is Zhonggeng Value Pilot, which has a return rate of 115.61% since its establishment in December 2018, and a year-to-date return rate of -1.35%. The tenure return rate of his representative fund Zhonggeng Small Cap Value is 100.75%, and the year-to-date return rate is -11.45%.

On July 21, Qiu Dongrong said in his personal circle of friends, "In the past six years, we have experienced a tortuous growth process together. The value investment strategy system based on uncertainty pricing has also experienced constant challenges and continuous evolution. In the face of an uncertain market, we are also constantly moving forward bravely and continuously challenging new sources of excess returns. In terms of marketing and customer service, we always adhere to the fundamental starting point of 'real returns for investors', and hope to improve the returns of holders and reduce investment risks through counter-trend marketing and strict purchase restrictions at high levels."

In a letter to investors, Zhonggeng Fund wrote that short-term changes will not affect the implementation of the fund's investment strategy. The new fund manager will continue to follow the underlying unified low-valuation value investment strategy and combine it with the product's own style positioning, and firmly adhere to "no drift in strategy and no deformation in style."

Public data shows that Zhonggeng Fund was established on November 13, 2015. According to Wind data, as of the end of the second quarter of 2024, Zhonggeng Fund's public fund management scale is 18.972 billion yuan, and all the funds under management are equity funds, with a total of 6 products. At this time, Qiu Dongrong has 5 funds under management, and the scale of Qiu Dongrong's personal managed products is as high as 14.708 billion yuan, accounting for 77.52% of the total scale of Zhonggeng Fund.

It is worth mentioning that according to the latest second quarter report of Qiu Dongrong’s five fund products, the scale of funds under management in the second quarter shrank again by 5.146 billion yuan from 19.854 billion yuan at the end of the first quarter.

Among them, Zhonggeng Value Pilot, Zhonggeng Small Cap Value and Zhonggeng Value Quality One-Year Holding suffered the highest net redemption since their establishment, with net redemption shares of 1.036 billion, 907 million and 642 million respectively. Zhonggeng Value Flexible Allocation also suffered a net redemption of 210 million shares in the second quarter. The above four funds suffered a total of 2.795 billion shares.

As for the specific reason why Qiu Dongrong left, an industry insider told The Paper, "There are all kinds of rumors. Some said he wanted to take a break and spend more time with his children, while others said he might go private next."

There is also a market view that Qiu Dongrong's resignation may be related to the trend of salary restrictions in public funds. An insider of a public fund pointed out that "Zhonggeng Fund, as an individual public fund, will face much less pressure in terms of salary restrictions than bank-based public funds and securities-based public funds, not to mention that Qiu Dongrong himself owns 9.73% of Zhonggeng Fund's shares. However, on the other hand, if Qiu Dongrong continues to serve as a shareholder after his resignation, he can still receive stable dividends and may not be subject to the salary restrictions when he was a fund manager."

In September 2023, the China Securities Regulatory Commission disclosed the "Approval on the Change of Shareholders Holding More than 5% of Zhonggeng Fund Management Co., Ltd.", approving Qiu Dongrong to become a shareholder holding more than 5% of Zhonggeng Fund, and agreeing to change Zhonggeng Fund's registered capital from 200 million yuan to 210.5 million yuan, and Qiu Dongrong subscribed to Zhonggeng Fund's additional 10.5 million yuan in capital according to law. After this change, Qiu Dongrong, as the fourth largest shareholder of Zhonggeng Fund, holds 9.73% of the shares.

If Qiu Dongrong leaves the company, how will this equity be handled? An industry insider told The Paper, "It can only be said that there is no change at the moment."