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China News Service, July 22 (Zhou Yihang) On the 21st, Zhonggeng Fund Management Co., Ltd. (hereinafter referred to as Zhonggeng Fund) announced that Qiu Dongrong has resigned from the position of fund manager of five products including Zhonggeng Value Navigator due to personal reasons, and will no longer serve as deputy general manager of Zhonggeng Fund.

On the 21st, Qiu Dongrong also posted three updates on WeChat Moments to express his gratitude to holders and partners. As of the end of the second quarter of 2024, Qiu Dongrong's management scale accounted for more than 70% of the total management scale of Zhonggeng Fund. The impact of Qiu Dongrong's resignation on Zhonggeng Fund remains to be seen.

　The destination after leaving the company is yet to be announced

In April this year, news that Qiu Dongrong might resign was circulating in the industry. At that time, Zhonggeng Fund responded to the rumor to China Business Network and stated that if there were any further arrangements, an announcement would be issued in a timely manner.

Now, the rumor of Qiu Dongrong's resignation has come true. According to the announcement, the fund manager team independently cultivated by Zhonggeng Fund will jointly manage Zhonggeng Fund's low-valuation value strategy product line, and four fund managers Liu Sheng, Chen Tao, Wu Chenggen and Sun Xiao will take over the five products originally managed by Qiu Dongrong.

At the same time as announcing Qiu Dongrong's resignation, Zhonggeng Fund also published an open letter on its WeChat official account, stating that although the fund managers of related products have changed, the company has remained unchanged in its unwavering development direction, consistent original intention, evolving investment strategy system, and proactive investment team. Qiu Dongrong also forwarded the open letter to his personal circle of friends and expressed his gratitude to all parties including holders, partners, companies, and colleagues.

On the evening of the 21st, Qiu Dongrong posted another message on WeChat Moments:“The excess returns of active equity investment should not be based on the fragile ‘individual heroism’ of star fund managers, but should be based on ‘a value strategy system with strong adaptability and vitality’ + ‘excellent talents and efficient organization’ + ‘good mechanism, transparent culture, and efficient corporate governance (gene)’. The competitive advantage and continuous creativity established in this way are the fundamental source of continuous excess returns.”

Regarding Qiu Dongrong's resignation, Zhonggeng Fund expressed its sincere gratitude to Qiu Dongrong for his outstanding contributions during his tenure and for his valuable efforts in the construction and improvement of Zhonggeng Fund's low-valuation value investment strategy system.As for Qiu Dongrong's next destination, a person related to Zhonggeng Fund told China Business Network that it is not clear at the moment and time will give the answer.

The scale of management shrank by 5.1 billion yuan

After Qiu Dongrong left, the fund he had previously managed, Zhonggeng Value Navigator, was handed over to Liu Sheng, Zhonggeng Small Cap Value was managed by Chen Tao, Zhonggeng Value Agility and Zhonggeng Value Quality One-Year Holding were managed by Wu Chenggen, and Zhonggeng Hong Kong Stock Connect Value was managed by Sun Xiao.

It is worth noting that on May 11 this year, Zhonggeng Fund issued an announcement to hire Liu Sheng and Qiu Dongrong to jointly manage Zhonggeng Value Pilot, and Wu Chenggen and Qiu Dongrong to jointly manage Zhonggeng Value Quality One-Year Holding. This move was also interpreted by the outside world as "preparing for Qiu Dongrong's future resignation."

In terms of product performance, as of July 19, the five products managed by Qiu Dongrong all reported negative annual returns, with the annual returns of Zhonggeng Value Leader, Zhonggeng Small Cap Value, Zhonggeng Value Smart, Zhonggeng Value Quality One-Year Holding and Zhonggeng Hong Kong Stock Connect Value being -1.35%, -11.45%, -10.54%, -0.56% and -7.11%, respectively.

　　Wind data shows that among the five products managed by Qiu Dongrong, except for the Zhonggeng Hong Kong Stock Connect Value which is currently in a closed period and cannot be redeemed, the other four funds have experienced large net redemptions of more than 18%.

As of the end of the second quarter of this year, the total number of shares of Zhonggeng Value Pilot was 2.258 billion, and the redemption rate was 31.42% compared with 3.293 billion at the end of the first quarter; the total number of shares of Zhonggeng Small Cap Value was 1.167 billion, and the redemption rate was 43.7% compared with 2.073 billion at the end of the first quarter; the total number of shares of Zhonggeng Value Smart was 938 million, and the redemption rate was 18.29% compared with 1.148 billion at the end of the first quarter; the total number of shares of Zhonggeng Value Quality was 2.733 billion at the end of the second quarter, and the redemption rate was 19.02% compared with 3.375 billion at the end of the first quarter. According to the data disclosed in the quarterly report, there is no single investor holding more than 20% of the fund shares in the above products managed by Qiu Dongrong.

As of the end of the second quarter of 2024, the total scale of the above five funds was 14.708 billion yuan, a decrease of 5.146 billion yuan compared with 19.854 billion yuan at the end of the first quarter, a month-on-month decrease of approximately 25.92%.

What impact will it have on the company?

Wind data shows that as of the end of the second quarter of this year, the management scale of Zhonggeng Fund was 18.972 billion yuan, and the management scale of Qiu Dongrong before he stepped down accounted for 77.52% of the total management scale of Zhonggeng Fund. Its importance is self-evident.

Judging from the resumes of the four fund managers who took over the management of these five products, Liu Sheng has served as a researcher at Taiping Asset Management Co., Ltd. and HSBC Jinxin Fund Management Co., Ltd. After joining Zhonggeng Fund in July 2018, he is currently the director of the research department of the company's investment department; Chen Tao has served as a researcher at Taikang Asset, a senior analyst at Huachuang Securities, a senior researcher at Zhejiang Merchants Fund, and an investment manager at HSBC Jinxin Fund. He is currently the fund manager of Zhonggeng Fund; Wu Chenggen has served as a trust assistant and investment manager at AVIC Trust. After joining Zhonggeng Fund in January 2019, he is currently the fund manager of the company's investment department; Sun Xiao joined Zhonggeng Fund in May 2023. Prior to that, he served as an investment analyst at Beijing Xuehu Yinshan Investment Consulting Co., Ltd., an investment analyst at the Beijing branch of Xuehu (Tianjin) Enterprise Management Consulting Co., Ltd., and an investment manager at Shanghai Desong Enterprise Management Consulting Co., Ltd.

"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 to firmly achieve 'strategy does not drift, style remains unchanged'." Zhonggeng Fund stated in an open letter that although the current fund manager team has different circles of competence based on the underlying unified low-valuation value investment strategy system, what they have in common is that they have a deep understanding of value investment and strategy systems. They are a tiered fund manager team that is highly compatible with the low-valuation value investment strategy system.

　　In response to the phenomenon of the company's declining management scale, Zhonggeng Fund told China Business Network that on the road to deepening value, the company strives to achieve "unity of knowledge and action" and "restraint". It does not issue products based on scale, does not issue homogeneous products, does not suppress the track for short-term profits or rankings, but instead pays more attention to medium- and long-term sustainable returns.

(For more reporting clues, please contact the author Zhou Yihang: [email protected]) (China News Service APP)

(The views in this article are for reference only and do not constitute investment advice. Investment is risky and you should be cautious when entering the market.)

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Editors: Xue Yufei and Li Zhongyuan