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Text/Wang Yuanyuan, Sun Yan, Zhang Xiaoyu

Many public funds have relied on bond funds to maintain their performance in the past two years. Among them, public funds that are good at fixed income have reaped the market dividends, while public funds that were previously good at stocks have begun to more actively deploy fixed income product lines.

In 2022, Shao Jiamin joined China Universal Asset Management and began to build China Universal Asset Management's fixed income team by introducing new members and building their own team. He also accelerated the iteration of China Universal Asset Management's fixed income business through comprehensive upgrades in team management, system support, business layout, etc. Earlier, Shao Jiamin worked in a number of securities, fund, and insurance asset management companies.

As Huatai-PineBridge's chief fixed income officer, Shao Jiamin said that a very important part of his job now is "setting rules", including investment research team operation and management rules, investment research system training rules, investment research process rules, trading rules, and so on.

Shao Jiamin said that unlike stock investment, fixed income (bond) investment pays more attention to team division of labor. Good team division of labor and cooperation can basically guarantee the performance of the team's fixed income products.

"Good rules are very important, especially as China's public offering industry is developing rapidly. There is still a lot of room for accumulation of rules. We hope to use good rules, build a good team and bring good products through continuous improvement," said Shao Jiamin.

"21st Century": It is very difficult to make excess returns and stand out in the market through bond investment. How do you think about this issue?

Shao Jiamin：When it comes to investment, we must first have a basic view and configuration, which comes from macro judgment. For example, at present, the market assets are relatively scarce, corporate ROE is under pressure, and everyone generally believes that interest rates are going down. However, under the same judgment, different fund managers' actions vary greatly, and their performance also varies greatly.

My idea is to do some reverse operations. If default issues are excluded, bonds are only about interest rates. In institutional games, we can do some reverse operations, and the magnitude of the reverse operations can be larger than that of stocks. It is also critical to make arrangements in advance: for example, the biggest fear of credit bonds is that the risks are unknown, but for products whose risks have been fully disclosed, we can do some reverse investments.

The second point is to break through yourself. I used to manage social security funds. The competition in the social security track is very fierce. Fund managers are basically the stronger players in each company. They must dare to act when it is time to act. A very critical factor for investment is judgment and courage, which is also related to the state of the fund manager: it is difficult to imagine that a very unconfident fund manager who has just suffered a heavy blow dares to act hard, so we will pay close attention to the state of the fund manager.

The third point is daily intensive cultivation, including intensive cultivation of capital costs, interest rate differential trading, etc. For example, in the bond market, active bonds often have lower yields and higher prices, while old bonds have lower prices and higher yields. However, active bonds and old bonds will be converted, and it is possible to obtain excess returns in this process. Therefore, we must constantly look for some excess opportunities.

It is very difficult to cultivate carefully. On the one hand, the overall volatility of investment targets was not very high in the past. However, since this year, the market's swing opportunities have mainly appeared in 30-year or ultra-long-term bonds, and there are not many swing opportunities below 10 years. To achieve excess returns, you have to invest in 30-year bonds, but their volatility is close to some high-dividend stocks. With the increasing market competition, you can only invest in products with high volatility to have the opportunity to obtain the difference, but considering the holding experience of investors, you must control the volatility.

On the other hand, the opportunity for excess returns is often in the opposite direction of the market trend: when everyone is adding positions, there will often be a short-term top, and vice versa. I have always emphasized that fund managers must do a good job at the beginning of the year, so that they dare to sell at high levels. From the perspective of fixed income funds, funds that performed well in the first quarter will basically not perform too badly throughout the year; and funds that performed poorly in the first quarter will find it difficult to catch up throughout the year. After all, fund managers are reluctant to make contrarian investments when performance lags behind.

"21st Century": What goals does Huatai-PineBridge want to achieve in building its fixed income team?

Shao Jiamin：I started working in fixed income relatively early, and gradually crossed over to fixed income +. For someone like me working in fixed income +, it is relatively difficult to be like someone who started out as a researcher. When I first started, I researched listed companies. Our earliest research was credit research, which was different from the perspective of stocks. Sometimes young people would come up and ask whether the company would go bankrupt. This kind of straightforward question is more about the stability of the company and the reliability of the target.

After I arrived at China Universal, I observed the characteristics of China Universal closely. There are several points: First, China Universal is a company that excels in active equity business. Equity-based companies have advantages in investment research, richer investment research resources, and stronger active management capabilities. Second, China Universal is a relatively market-oriented institution, making progress in all aspects without any particular bias. This year, our fixed income + performance is very good, giving the market a new understanding. Third, China Universal is slightly conservative in its overall credit risk preference, because investors are very concerned about defaults, and many institutional and e-commerce channel investors are very concerned about volatility and brands.

In the past few years, the industry's fixed income + products have had some shortcomings: first, there has been a certain amount of retracement, second, there has been high volatility, and third, the overall style is not clear. China Universal's fixed income team is also guided by solving these three problems, formulating countermeasures and improving capabilities.

First of all, regarding the return target, we now include more absolute return elements in the assessment of fund managers.

Secondly, we are considering implementing regularization for the retracement: on the one hand, we think that any stock that we are optimistic about should not be held too heavily, and the same is true for bonds, especially credit bonds, which are differentiated. The upper limit of the stock position ratio of "fixed income +" products is 20%, 40%, etc. At present, we have also set up three levels accordingly, which need to meet different processes: when the proportion of individual stocks exceeds 2%, the fund manager needs to explain the investment logic at the meeting, when it exceeds 3%, a report needs to be written, and when it exceeds 4%, approval is required. On the other hand, it is better to have some hedging in terms of industry style, not all the same. For example, in the first half of this year, technology stocks and high dividend stocks rose one day and fell the next day. If both are allocated a little, the net value may be relatively stable.

Finally, let me talk about the style. I think it is largely because fund managers set their goals too high and may use drift to achieve their goals. In fact, in most cases, people have a high opinion of themselves. If they set too high a goal, it will be difficult for them to accept failure and they will make mistakes in judgment. Therefore, we believe that it is critical for fund managers to set reasonable goals for themselves, which means that the scale and goals should be reasonable.

"21st Century": How to formulate good rules and build an excellent team?

Shao Jiamin：To formulate rules, one first needs to have a deep understanding of the business and the overall situation. Second, one needs to have experience in formulating rules. Third, the text must be clear and concise.

I think that good rules are firstly more detailed and secondly have indicators that can be implemented in the system. But at the same time, just having rules is meaningless and must be combined with system control.

We pay more attention to the fund manager responsibility system. Fund managers have a certain degree of autonomy, of course, the premise is that they can be independent. Independence is reflected in the following points: First, there must be a certain amount of time to accumulate, and the wisdom accumulated from social experience is needed. Second, the judgment of things is not extreme or stubborn - if you can't judge the things around you, let alone judge listed companies. Third, you must have strong communication skills, including communication with colleagues, customers, listed companies, and the media. A good fund manager must be good at writing and expression.

Regarding the appointment of heads of different groups or business teams. We must first avoid the situation of "simply being promoted to an official position after being well-educated": in this industry, to be a team leader, one must have excellent performance, otherwise it will be difficult to lead the team. However, managing people and managing portfolios are two different logics, so we designed two routes: one is the technical route, and the other is the management route - the focus of management is to consider whether the work standards are reasonable, whether the rules are followed, and how to optimize the work, rather than whether the stocks are right or wrong - so for a fund manager to be promoted, it is not only your investment ability that matters, but also your ability to manage people.

The responsibilities of management can be summarized in eight words: optimize execution and provide continuous feedback.

First, the market changes very quickly, and execution needs to be constantly optimized. Second, continuous feedback is required. If there is any need for feedback during the execution process, feedback must be given, rather than just doing it blindly. This is the function of managers.

Finally, it is about the understanding of the role of the business leader, that is, my role. Building a good team includes several aspects: First, where the team members come from: China Universal emphasizes on cultivating talents by itself, and also recruits talents from outside. Self-cultivation means finding good and smart students to cultivate, which requires a training system and a reasonable elimination mechanism.

Second, the reputation of the team must be good. Our market is not big, so it is easy to find out about leadership characteristics and management styles. China Universal advocates that different teams have division of labor, but the business should be appropriately cross-functional: there should be no competition, but there should not be too much competition between teams. In terms of atmosphere, first of all, moderate efforts are required, and excessive efforts may have negative effects; secondly, the team should have an upward atmosphere and superb business level.

In addition, the role of the investment research committee should be brought into play. The investment research committee should also formulate rules, track the implementation of the rules, intervene appropriately, and constantly adjust the rules. In terms of the division of labor between investment research and investment research, we believe that researchers should take more responsibility. In the past, everyone believed that researchers only needed to do a good job of technical analysis, and then fund managers would make judgments. In fact, when researchers promote, they must choose the right time and be good at sales. Fund managers should also evaluate researchers objectively and reasonably, and both parties should respect each other.

Leaders in the same industry have also said: If the head of the investment team regards himself as a superior leader, it will be difficult for the investment research team to develop well. Therefore, the head of investment should regard himself as a member of the team and give full respect to fund managers and researchers. This is also the culture of China Universal. I am currently managing fixed income + products such as China Universal Stable Income and China Universal Double Profit Enhancement. On the one hand, I can feel the market as closely as the fund managers, and on the other hand, I also hope to set an example for the team.

"21st Century": What is the next direction for the investment research team?

Shao Jiamin：We still lack some well-known fund managers in fixed income. Of course, China Universal has made it clear that we do not train star fund managers. Fund managers are generally young now, but I think it is necessary to recruit some backbone fund managers who have influence in the market. We are taking the two paths of internal training and external recruitment.

Second, we need to go deeper and lay a solid foundation. For a fund company, researchers, traders, and fund managers are our basic assets, and these basic assets need to be further strengthened, including strengthening combat effectiveness, self-learning ability, communication ability, and the ability to formulate rules.

Third, facing the future, we must improve our international capabilities. China's bond market is relatively isolated from foreign markets, but I believe that it will be more closely connected in the future.

Fourth, the awareness of compliance and risk control. The awareness of compliance risk can be raised to the level of politics and people, and it should be lowered to obey the guidance of supervision. We should also pay attention to risk prevention. This industry is relatively young as a whole, and new people are constantly joining. We should strengthen education in this regard.

"21st Century": Have you considered how to use new technologies such as AI to empower investment research?

Shao Jiamin:Currently, AI technology can assist in information collection, processing, and rule summarization, including primary quantitative research.

China Universal also established a data science team this year: the team members were originally in the risk control department, but are now under the research department. They mainly profile fund managers by tracking their behavior.

The first level of work is about performance attribution. How was the performance generated? Is it sustainable?

The second level of work is about style. It is necessary to analyze the consistency between investment reality and the fund manager's self-description or self-cognition, and also to examine the reasons for the fund manager's style change and the corresponding process. In the past two years, the industry has paid more and more attention to the issue of clear style, and I think this will become more and more important in the future.

The third level of work is about courage, observing the fund manager's reverse operations and other behaviors, and also observing the fund manager's personal status, including whether the pressure is too great.

Through these efforts, we can judge the style of the fund manager and the market in which it is easy to make money, so that the fund manager can manage the appropriate portfolio. We can also recommend the fund manager to the right clients and achieve a match between the fund manager, the account and the client.

Risk Warning: Funds are risky and investment should be cautious. This material is only a promotional material and does not serve as any legal document. Investment is risky. The fund manager promises to manage and use fund assets in accordance with the principles of honesty, good faith and diligence, but does not guarantee that the fund will make a profit or guarantee a minimum return. When purchasing a fund, investors should read the "Fund Contract", "Recruitment Instructions", "Fund Product Information Summary" and other legal documents in detail to understand the specific situation of the fund. The performance of other funds of the fund manager and the past performance of its investment personnel do not indicate its future performance. Among the above funds, China Universal Double-Yield Enhanced Bond A is a product of lower risk level (R2), suitable for investors who are stable (C2) and above after the customer's risk tolerance level assessment; China Universal Stable Income Mixed A is a product of medium risk level (R3), suitable for investors who are balanced (C3) and above after the customer's risk tolerance level assessment. For details on the customer-product risk level matching rules, please refer to China Universal's official website. When subscribing to a sales agency, the risk rating rules of the sales agency shall prevail. Any securities research reports or comments involved in this promotional material shall not be forwarded in any form without the prior written permission of the issuing institution. The views or opinions of the relevant research reports are for reference only and do not constitute any investment advice or consultation, or any express or implied guarantee or commitment. Readers should read or refer to the relevant views and opinions carefully.The performance of the funds managed by Shao Jiamin is as follows: Huatai Stable Income Mixed A was established on July 23, 2020, and is jointly managed with Xu Yiheng and Li An. The successive fund managers are Zhao Pengfei (July 23, 2020-August 3, 2021), Xu Yiheng (August 5, 2020 to present), Liu Weilin (August 3, 2021-July 14, 2023), Shao Jiamin (July 14, 2023 to present), and Li An (November 2, 2023 to present). The performance and benchmark of each year since its establishment are (%): 2.58/1.46, -2.06/0.24, -6.16/-3.15, -4.97/-0.64, 5.89%/2.42%; Huatai Double-Yield Enhanced Bond A was established on December 3, 2013, and is jointly managed with Ding Yunbo. The successive fund managers are Zhao Pengfei (July 23, 2020-August 3, 2021), Xu Yiheng (August 5, 2020 to present), Liu Weilin (August 3, 2021-July 14, 2023), Shao Jiamin (July 14, 2023 to present), and Li An (November 2, 2023 to present). The performance and benchmark of each year since its establishment are (%): 2.58/1.46, -2.06/0.24, -6.16/-3.15, -4.97/-0.64, 5.89%/2.42%; The managers are Zeng Gang (2013/12/3-2020/9/18), Zheng Huilian (2017/12/12-2020/2/26), Xu Guang (2020/7/8-2024/5/9), Li Chao (2022/5/25-2024/4/3), Shao Jiamin (2024/1/17 to present), and Ding Yunbo (2024/3/20 to present). The performance and benchmark of each year since its establishment are (%): 9.25/5.72, 14.12/4.87, 1.92/4.26, 4.74/4.25, 1.79/4.25, 9.98/4.25, 9.3/4.25, -3.03/4.25, -1.37/4.25, -2.23/4.25, 3.31%/2.11%. The above data comes from the annual report of each year and the second quarter report of 2024, as of 2024/6/30.