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Author: Xu Feng, Editor: Xiao Shimei

Recently, Cathay Fund issued an announcement on senior management changes. After the position of general manager was vacant for 4 months, Li Sheng was appointed as the new general manager and Chairman Zhou Xiangyong will no longer serve as acting general manager.

As one of the "old ten" in the industry and the first public fund in China, Guotai Fund has a first-mover advantage, but it cannot hide the fact that the ranking of its equity products has declined, which is precisely an important test that the new coach will face in the future.

[New leadership team in place]

2024 is the year of management change for Cathay Fund. Before the change of general manager, Cathay Fund had just undergone a position adjustment of the chairman.

In September 2023, the former chairman Qiu Jun resigned due to work transfer. Zhou Xiangyong, the then general manager, took over as acting chairman and was officially "promoted" in March 2024.

Zhou Xiangyong is a veteran of Cathay Fund and a veteran in the financial industry. He joined Cathay Fund as early as 2011 and has served as the company's assistant general manager, deputy general manager and general manager. He has made an indelible contribution to the development of Cathay Fund.

Especially after Zhou Xiangyong was promoted to general manager in 2016,The overall size of Cathay Fund soared rapidly.In 2016, the scale was only 77.103 billion, but by the first half of 2024 it had reached 655.629 billion, an increase of more than 7 times.

Li Sheng, the new general manager of Cathay Fund, is also a veteran in the financial industry with 28 years of experience in the financial industry. He comes from the major shareholder China Construction Bank Investment and has worked in the head office of China Construction Bank. He has served as the head of the public market investment department of China Construction Bank Investment, general manager of the financial market investment department, and general manager of China Construction Investment (Hong Kong) Co., Ltd. He has rich experience in the investment field.

It is worth mentioning that Chairman Zhou Xiangyong also had an investment background in major shareholder China Construction Bank.

At present, two core executives of Guotai Fund have been in place. Judging from the current situation of Guotai Fund,Boosting the weak points of equity funds may be an important task for Li Sheng’s future work.

Although the total size of Guotai Fund is constantly rising, it is mainly supported by fixed income and index products. According to Wind data, as of June 2024, the total size of Guotai Fund is 655.629 billion, ranking 15th among public funds. Among them, the two major non-equity funds, money market and bond funds, totaled 494.819 billion, accounting for 75.47% of the total size.

However, the scale of equity products of Cathay Fund accounts for a relatively small proportion, and there is an obvious "bias" phenomenon.

【Ranking dropped】

In the first half of 2024, the scale of Guotai Fund's stock and mixed equity funds totaled 139.34 billion, accounting for 21.25% of the total fund scale. Among them, most of the stock funds are passive funds that track sectors and broad-based indexes, with a scale of 112.891 billion.

As for the more representative hybrid equity products,The scale is only 26.449 billion, accounting for only 4.03% of the total fund scale.

Looking back at the growth history of Cathay Fund, the watershed year when the gap in size between equity and non-equity funds widened was 2017.

In 2017 and before, Guotai Fund mainly focused on equity funds. In that year, the scale of mixed funds alone reached 54.98 billion, accounting for half of the total fund scale of 100.532 billion. The combined scale of mixed funds and stock funds accounted for 79.23%.

In 2017, Chen Yongsheng once again served as the chairman of Guotai Fund.Focus on the fixed income sector and pay more attention to scale growth.

From 2017 to the first half of 2024, the scale of Guotai Fund's money market funds increased from 11.173 billion to 314.589 billion, an increase of more than 27 times; the bond funds increased from 7.87 billion to 180.23 billion, an increase of 21.9 times.

In contrast, the scale of Cathay Fund's mixed funds reached a historical peak of 66.121 billion during the booming stock market in 2021, but dropped sharply to 26.449 billion in the first half of 2024, which is equivalent to a 40% discount, and even halved compared to 2017.

Regarding the change in Cathay Fund's business strategy,It is a rescue measure to comply with industry trends and cope with the decline in rankings.

After 2014, with the strong rise of money market funds, domestic fund companies have been working hard to expand their scale. However, at that time, Cathay Fund was still mainly based on equity funds and failed to keep up with the pace of the industry, resulting in a significant lag in ranking.

According to Wind data, in 2017, the scale of Guotai Fund's mixed funds ranked 11th in the industry, but its overall scale ranking slipped to 28th.

Relying on the efforts of non-equity funds, Cathay Fund gradually recovered to the 15th place in the first half of 2024, but it still failed to return to the top ten, and there is still a gap of more than 250 billion in scale from the tenth place Huatai Fund.

Although the overall ranking of Cathay Fund is recovering, the ranking of mixed funds has dropped sharply to 32nd place, which is mainly related to the sluggish net value performance of the company's equity products.

Poor performance of net worth

As the leader of the top ten fund companies, Guotai Fund "gets up early but arrives late", and its equity products do not have many outstanding features.

According to data from Oriental Wealth, as early as 2007, when the fund industry was developing rapidly, Guotai Fund's mixed fund ranking had fallen to 24th place. Although its ranking has rebounded since then, it has always been outside the top ten.

In recent years, in a relatively weak stock market environment, the performance of Guotai Fund's equity products has been unsatisfactory. According to Wind data, as of August 14, the comprehensive return rate of Guotai Fund's mixed products in the past three years was -24.25%, slightly outperforming the market, while the return rate since the beginning of the year was -10.55%, underperforming the industry's average return rate of -9.45%.

In terms of trading style, the current fund industry generally has the phenomenon of "creating stars", but Guotai Fund has clearly stated that it does not create stars and pays more attention to long-term returns. But the problem is,The net asset value performance of the main fund managers of Cathay Fund is also lackluster.

Take Cheng Zhou, the top fund manager of Cathay Fund, for example. As a veteran of Cathay Fund, he joined Cathay Fund as early as 2004 and has been a fund manager for 16 years since he started his career in 2008.

According to Wind data, as of August 14, the net value of its largest product, Cathay Juxin Value Advantage A, has fallen by 47.55% in the past three years, and the product yield from the beginning of the year to date is -22.01%, both of which are significantly underperforming the CSI 300.

Cheng Zhou mainly adopts a growth-oriented style, and is more inclined to the fields of information technology, medical services, etc. In terms of specific operations, there are situations where positions are built at high positions and losses are not stopped in time.

For example, Real Madrid Technology, which was established in the fourth quarter of 2021, had a stock price at a historical high at that time and is still the third largest holding of the fund. The holding increased from 10.7043 million shares at the time of establishment to 13.485 million shares in the first half of 2024. During this period, the stock price fell by 53.9% from the highest price of 19.5 yuan to the closing price of 8.99 yuan at the end of the second quarter. The same operation also appeared in Yuandong Bio, Longking Environmental Protection, Sotong Development and other heavy holdings.

The high fund turnover rate is also a major reason for the low net value. As early as mid-2020, the turnover rate of Cathay Juxin Value Advantage A reached 361.35%. Although it has declined since then, it was still 167.68% in the first half of this year.

In addition, another equity fund manager, Xu Zhibiao, mainly manages two funds, Cathay Healthcare A and Cathay Golden Eagle Growth, whose yields have fallen by more than 45% in the past three years, significantly underperforming the market.

It should be noted that Cathay Healthcare A also has a style drift problem. The fund is mainly based on medical and health themes, but among the top ten holdings in the first half of 2024, there are more than four non-medical health stocks, and even at the end of 2023, there are only two medical and health-related holdings. The other holdings are mostly in the automotive parts, consumer and information technology industries.

At the same time, Xu Zhibiao also had problems such as building positions at high positions and not stopping profits and losses in time. As he preferred to hold stocks for the long term,Many holdings have gone on a "roller coaster" ride due to holding the stocks for too long.

Specifically, still taking Cathay Healthcare A as an example, Xu Zhibiao built a high position in Yaowang Technology at the end of 2020, and then held it all the way until the first quarter of 2023 when the stock price fell significantly and then liquidated it. Another example is Kangdelai, which built a high position in the first quarter of 2020, did not choose to liquidate in 2021 when the stock price rose sharply, but chose to exit after the stock price fell sharply in the third quarter of 2023. Other similar operations include Biyinlefen and Laobaixing.

In addition, there is a "one-to-many" situation among equity fund managers of Guotai Fund. For example, Cheng Zhou manages 10 funds, while Xu Zhibiao and Wang Yang manage as many as 6 funds.

Too many funds under management means that the management energy of a single fund is dispersed.This poses a great test to the fund manager's operational management capabilities.Among them, many of Cheng Zhou's managed funds have the phenomenon of "cloning" of heavily-weighted stocks. This also indirectly reflects the company's lack of talent in equity fund managers.

For Cathay Fund, which does not create stars and does not have the halo of star fund managers, it needs to establish a more complete investment research and risk control system in terms of institutions. However, judging from the performance of its current equity products, Cathay Fund still has a lot to do in the future.

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.