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The Daily Economic News learned that a well-known fund manager of a public offering fund (FOF) has recently resigned in a clean-up operation. On August 10, according to an announcement from Puyin Ansheng Fund, Chen Shuliang, the company's FOF business director, resigned from all nine products under his management and will not be transferred to other positions in the company.

Wind data shows that Chen Shuliang's management scale exceeded 10 billion yuan in the second quarter of 2021, reaching a peak of 13.795 billion yuan in the first quarter of 2022. He was once one of the fund managers with the largest FOF management scale in the industry. He also launched a new fund at the beginning of this year.

What is more noteworthy is that many FOFs have started or completed liquidation this year, and there are still a large number of "mini FOFs" in the market with a scale of less than 200 million yuan or even less than 50 million yuan. Whether they can survive the "three-year test" after their establishment has become a problem that needs to be urgently solved by some products and companies.

Well-known FOF fund manager resigns from 9 products

On August 10, PuRong Anxin Fund announced at one go the change of fund managers for its nine public FOFs, which immediately attracted industry attention.

These nine products were previously managed by Chen Shuliang, the company's FOF business director and well-known FOF fund manager. After this round of concentrated resignation, he currently has no products under management and will no longer transfer to other positions in the company.

The reason why it has attracted attention in the industry is not only because Chen Shuliang has many years of securities industry and investment experience, and has rich investment experience in equities, bonds, QDII, annuities and FOF, and was once the FOF business director of PuRong Ansheng, but also because he was once one of the fund managers with the largest FOF management scale in the entire market.

Public information shows that before joining SPDR Ansheng, Chen Shuliang worked for Fuguo Fund for many years as the general manager of the multi-asset investment department, and he began to devote himself to the research of innovative products represented by FOF in 2014. After joining SPDR Ansheng, he has managed 10 FOF products, and the scale of management exceeded 10 billion yuan at the end of the second quarter of 2021 and reached 13.795 billion yuan at the end of the first quarter of 2022. However, his management scale has begun to decline since then. Although a new product SPDR Ansheng Zhaorui Selected 3-month holding period fund was issued at the beginning of 2024, the latest management scale as of the second quarter of this year was only 3.68 billion yuan.

Judging from the performance of the products he manages, the differentiation is also quite obvious. For example, as a mixed equity FOF, the Puyin Ansheng Ruihe Preferred 3-month Holding A, which he started to manage in July 2022, has a tenure return of -4.03%, ranking first among 111 similar products, but the Puyin Ansheng Taihe Allocation 6-month Holding A, which he started to manage in February of the same year, has a tenure return of -31.63%, ranking in the bottom 20% of similar products; among the debt-biased mixed FOFs, the tenure return of Puyin Ansheng Yihe Stable Pension One-year A is 4.76%, while the Puyin Ansheng Yixiang Stable Pension Target One-year Holding A is -8.53%.

In a public interview at the beginning of this year, Chen Shuliang said that the short-term returns of public funds are mainly driven by style beta and industry beta. Most short-term high-performing fund managers can be classified as "heroes made by the times". There is only an upward equity investment cycle, but no "excellent people and excellent funds" that stay young forever. It is difficult for a single product to transcend styles and cycles. Therefore, from the perspective of investment funds, he pointed out two main paths to obtain returns: one is to select products with the strongest short-term performance; the other is to "accumulate small steps to a thousand miles" and choose products with long-term stable excess returns.

The intensive announcement of multiple products may trigger the termination of fund contracts, and the development of public FOFs has caused concerns

In fact, in addition to Chen Shuliang’s sudden “clearance-style” resignation, there have been a number of FOF products recently announcing possible termination of fund contracts, which has also attracted industry attention.

First, on August 9, Galaxy Fund announced that the "Fund Contract" of its Galaxy Yuening Stable Retirement Target One-Year Holding Mixed Launch (FOF) stipulates that on the corresponding day three years after the effective date of the contract, if the net asset value of the fund is less than 200 million yuan, the fund contract will automatically terminate and be liquidated in accordance with the agreed procedures without the need to convene a meeting of fund shareholders for deliberation, and the term of this "Fund Contract" shall not be extended by convening a meeting of fund shareholders.

On August 10, Bosera Fund also issued a similar announcement. The product is Bosera Pension Target 2035 Three-Year Mixed (FOF). The contract of the fund is effective on August 27, 2021, and the corresponding date three years after the effective date of the fund contract is August 27 this year. If the net asset value of the fund is less than 200 million yuan by the end of August 27, the fund property will be liquidated and terminated in accordance with the contract agreement, without the need to convene a meeting of fund unit holders for voting. At present, the fund has suspended subscription and regular fixed investment business.

On the same day, Southern Fund also issued a warning announcement that the net asset value of its Southern Jingqi Chuhui 3-Month Holding Mixed (FOF) had been lower than 50 million yuan for 40 consecutive working days, which may trigger the termination of the fund contract.

Wind data shows that as of June 30, the latest scales of Galaxy Yuening Stable Retirement Target One-Year Holding Mixed FOF, Bose Retirement Target 2035 Three-Year Mixed (FOF), and Southern Jingqi Chuhui Three-Month Holding Mixed (FOF) were 9 million yuan, 12 million yuan, and 49 million yuan, respectively.

In fact, many pension FOFs have been liquidated this year, and reporters from the Economic Daily have been following up on this. At that time, some public fund managers pointed out that in order to ensure their establishment a few years ago, some public fund FOF products were established in the form of sponsor funds. The consequence of this is that although the establishment threshold is low, the product will face the survival threshold of whether the existing scale can reach 200 million yuan in a few years. "Products that do not meet the conditions will definitely be liquidated in the future."

According to Wind data, 11 public offering FOFs have been liquidated so far this year, and many FOF products have failed to be issued. What is more worrying is that there are still a large number of public offering FOFs with a scale of less than 50 million yuan in the market. It can be said that they are basically on the verge of liquidation. Whether they can keep their listing status depends mainly on the company's will and the cost they are willing to pay (the list of funds is attached at the end of the article).

Changes in the size of public offering FOFs (data from Wind, as of August 9)

Regarding the frequent liquidation and miniaturization of FOFs, many interviewees told reporters from the Economic Daily that the reasons behind this are quite complex, and are related to changes in the market environment, embarrassing performance, and low investor recognition. For example, as of August 9, among the 911 public offering FOFs with performance in the market (calculated separately by shares), 642 products had negative returns during the year, accounting for 70% of the total, and many products had losses of more than 15%. The average rate of return was -3.20%, which does not seem to be in line with the positioning of "stable performance and moderate returns" for such products.

On the other hand, the poor performance of equity assets in the past two years has led to an increase in market risk appetite and an overall reduction in investors' holdings of risky assets, which has also directly affected the size and performance of FOF funds. In addition, public fund executives pointed out that compared with active equity fund managers, there is a gap in the overall level of FOF industry practitioners. Many of them are transferred from other fields and lack a deep fund research background, which is not conducive to the long-term stable development of such products.

"Now is actually a critical period for public FOFs, and market clearing is also normal. On the one hand, fund managers need to strengthen the research capabilities and investment management skills of the FOF team and have good performance to gain recognition from investors; on the other hand, they should continue to improve the market and investors' acceptance of the value of FOFs, and the value of FOF's long-term allocation must be recognized." said the above executive.

List of public offering FOFs with a total scale of less than 50 million yuan (calculated by consolidated shares, data from Wind, as of August 9)

Daily Economic News