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Author: Xu Feng, Editor: Xiao Shimei

Another star fund manager officially announced his resignation!

Recently, Zhonggeng Fund announced that its fund manager Qiu Dongrong will resign from his positions as fund manager and deputy general manager due to personal reasons, confirming previous rumors of his resignation.

As the absolute "number one" of Zhonggeng Fund, it is inevitable that the company will enter a short-term period of pain after Qiu Dongrong leaves.

[The “pillar” left]

The reason why Qiu Dongrong's resignation attracted great attention was, on the one hand, his halo as a star fund manager, and on the other hand, he has always been the mainstay of Zhonggeng Fund.

As a veteran with 16 years of experience in the industry, Qiu Dongrong started working in investment management as early as 2008. He has served as fund manager of HSBC Jinxin, director of the equity investment department and assistant to the general manager. At the end of 2018, he became the fund manager of Zhonggeng Fund and has served as the company's chief investment officer and deputy general manager.

Looking back at Qiu Dongrong's career as a fund manager, his overall performance is commendable. During his tenure, the annualized returns of the five funds he managed, except for the relatively new Zhonggeng Hong Kong Stock Connect Value, were all above 10%.

According to Wind data, as of July 31, Qiu Dongrong's signature Zhonggeng Value Leader had a return of 8.85% in the past three years, significantly outperforming the CSI 300's -10.25%. The annualized return of 15.14% during his tenure ranked 59th among 600 similar funds.

At the same time, the Zhonggeng Value Quality One-Year Holding Fund, which was established in early 2021, has achieved a total return rate of 42.87% during its three and a half years of operation, ranking sixth among 1,516 similar funds. It is not easy to achieve such results in such a market environment.

Looking further back, during Qiu Dongrong's tenure at HSBC Jinxin Fund, the HSBC Jinxin Large Cap A fund he managed had a total return of 193.86%, with an annualized return of 34.73%, ranking first among similar funds.

As a small and medium-sized fund, Zhonggeng Fund has also grown in size like a rocket, thanks to Qiu Dongrong's outstanding performance. From 894 million at the end of 2018, it has reached a peak of 41.356 billion in the first quarter of 2023, a dark horse in the public offering of tens of billions of yuan.

As Qiu Dongrong became a top player in the industry, he naturally became the mainstay of Zhonggeng Fund. As of the first half of 2024, the total size of Qiu Dongrong's managed funds was 14.708 billion, accounting for 77.52% of the company's overall size. Zhonggeng Fund currently has a total of 6 funds, 5 of which were once managed by Qiu Dongrong.

It is worth noting that Qiu Dongrong is also the fourth largest shareholder of Zhonggeng Fund, holding 9.73% of the shares. Qiu Dongrong's departure will have a self-evident impact on the company in the short term.

[No successor]

There is no doubt that the superficial problem of Zhonggeng Fund is its over-reliance on Qiu Dongrong, and the "one to many" phenomenon is also very obvious, which may also reflect the company's insufficient talent pool from the side.

After Qiu Dongrong left office, Zhonggeng Fund will first face the pressure of net value growth. During Qiu Dongrong's era, Zhonggeng Fund's mid- and long-term net value performance can also be described as "amazing".

According to Wind data, as of July 31, Zhonggeng Fund's hybrid funds achieved a comprehensive return of 6.56% in the past three years, far exceeding the average return of -29.05% of similar funds, ranking first among all 156 funds. The comprehensive return in the past five years was 82.87%, ranking second in the industry.

Although Zhonggeng Fund announced that the fund's short-term operations will not change much, the performance of other fund managers is exactly what investors are worried about.

In addition to Qiu Dongrong, there are 4 remaining fund managers in Zhonggeng Fund, but they are all new generation fund managers with a relatively short investment period in Zhonggeng Fund. Except for Wu Chenggen and Chen Tao who started their posts in 2020 and 2021, Sun Xiao and Liu Sheng took office after May 2024 respectively. Both of them were researchers before and had no experience in fund management.

Among them, Liu Sheng joined Zhonggeng Fund in July 2018, and served as researcher, director of research department and other positions. He took over Zhonggeng Value Navigation in May 2024.

Sun Xiao has been engaged in securities research since 2018. In May 2023, he joined Zhonggeng Fund as a Hong Kong stock researcher. After Qiu Dongrong left, he became the manager of Zhonggeng Hong Kong Stock Connect Value Fund. Taking over a fund product with a scale of 1.7 billion just one year after joining the company further tested the investment ability of this new generation of fund managers.

It should be noted that among the four fund managers, only Chen Tao has managed fund products individually. The Zhonggeng Value Flexible Allocation managed by Wu Chenggen is also jointly managed with Qiu Dongrong, and was managed individually by Qiu Dongrong before June 2020.

From the perspective of Zhonggeng Value Pioneer managed by Chen Tao, the net value performance is also relatively mediocre. According to Wind data, as of July 31, the fund's return rate in the past year was -29.74%, and the return rate from the beginning of the year to date has fallen by 16%, both of which are significantly lower than the Shanghai and Shenzhen 300.

Therefore, it is now a question whether the new generation of fund managers of Zhonggeng Fund can maintain its previous leading performance and create new situations in the future.

Don’t put all your eggs in one basket

At present, there is a clear 28th division and a halo effect of star fund managers in the fund industry. It is an indisputable fact that leading companies have attracted more attention from investors by relying on their scale and brand strength and gathering many excellent fund managers.

Star managers have created a huge siphoning effect based on their past brilliant performance. In order to survive better, small and medium-sized funds rely on star fund managers as a good way to break through. Especially for "individual" public funds, star fund managers directly determine the ceiling of the company's performance and scale.

For Zhonggeng Fund, this phenomenon is undoubtedly more prominent.

In recent years, the scale of Zhonggeng Fund has also benefited from the support of Qiu Dongrong's newly issued funds, including Zhonggeng Value Quality One-Year Holding and Zhonggeng Hong Kong Stock Connect Value, which were issued after 2021. Among them, Zhonggeng Hong Kong Stock Connect Value, which was issued in early 2023, was still a popular fund in the past, reaching the 2 billion fundraising limit in less than one day. The current scale of the two funds still exceeds 5.5 billion.

After the news of Qiu Dongrong's resignation, the size of the funds under his management has shrunk significantly, decreasing by more than 5 billion in the second quarter of 2024 compared with the first quarter. Some investors chose to redeem out of caution.

In addition to Zhonggeng Fund, it is not uncommon for other leading companies to rely on star fund managers, such as Liu Yanchun of Invesco Great Wall, Xie Zhiyu of Xingquan Fund, Zhu Shaoxing of Fuwu Fund, and Li Xiaoxing of Yinhua Fund.

From another perspective, although star fund managers make great contributions to fund companies, it is undeniable that the major trend in the industry is for fund companies to continuously reduce their dependence on star fund managers.

Ordinary investors are taught not to put all their eggs in one basket when investing, and the same applies to fund managers.

At the same time, the regulatory authorities have also noticed this problem. In April 2022, the China Securities Regulatory Commission issued the "Opinions on Accelerating the High-Quality Development of the Public Fund Industry", which pointed out that it is necessary to accumulate and inherit investment and research capabilities and reverse the development model that relies too much on "star fund managers". It is intended to guide the establishment of a healthy and long-term industry ecology.

At present, many fund companies are working to downplay the star fund manager effect, and the new generation of fund managers they have cultivated are also beginning to emerge, such as Qiao Qian and Xu Liuming of Xingquan Fund, Wang Yuanyuan of Fuguo Fund, and Zhai Xiangdong of China Merchants Fund.

However, compared with the leading fund companies, small and medium-sized fund companies are more urgent in talent training and building investment research systems.

Especially when a heavyweight figure like Qiu Dongrong leaves, how to respond in advance, how to minimize the potential impact on scale and performance, and how to better communicate with investors are all issues that the company needs to consider.

More importantly, if the successor fund manager fails to achieve decent results, the fund company may face the risk of a significant decline in size. If you want to make up for the loss by then, it will be too late.

Disclaimer

The content of this article related to listed companies is the author’s personal analysis and judgment based on the information disclosed by listed companies in accordance with their legal obligations (including but not limited to interim announcements, regular reports and official interactive platforms, etc.); the information or opinions in the article do not constitute any investment or other business advice, and Market Value Observation shall not bear any responsibility for any actions arising from the adoption of this article.