news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Securities Times reporter Pei Lirui

Since the beginning of this year, the stock market has fluctuated sharply. Some flexible allocation funds have fully utilized the timing advantages of loose position requirements and made major switches in the equity and fixed income positions in the investment portfolio, even with extreme operations of "from empty position to full position" and "from full position to empty position".

However, judging from fund performance, the contribution of timing is not always positive. Some funds maintained positive returns for the year by reducing their positions significantly in the second quarter, but some funds suffered a drop of more than 20% after the extreme operation of "from full position to empty position". At the same time, flexible allocation funds with wide positions are also facing questions about unclear product positioning.

The ultimate switch between full and empty positions

Securities Times reporters found that many flexible allocation funds, including Minsheng Jiayin Quantitative China A, Dongxing Blue Ocean Wealth A, Guolian Antianxin A, and Jiutai Jiusheng Quantitative Pioneer A, have shown significant changes in stock positions, holding styles and other dimensions this year.

For example, Minsheng Jiayin Quantitative China A increased its holdings significantly in the second quarter of this year, achieving the ultimate switch from "empty position to full position". Wind data shows that the fund's stock position was zero at the end of last year and the end of the first quarter of this year, but at the end of the second quarter of this year, the fund's stock position increased significantly to 93.51%, mainly increasing its holdings in many bank stocks such as Qingdao Bank, Bank of Communications, and Industrial Bank.

On the contrary, the stock position of Jiutai Jiusheng Quantitative Pioneer A went from "full position to empty position" in the second quarter of this year. The fund's stock position was zero at the end of the second quarter, but at the end of the first quarter, the fund's stock position was as high as 92.6%, and the stock position has been maintained above 80% for nearly 8 years.

As to why such an extreme operation was suddenly carried out in the second quarter of this year, Meng Yaqiang, the fund manager of Jiutai Jiusheng Quantitative Pioneer A, explained that before June, the fund's overall holdings were small- and medium-cap growth stocks, and the overall allocation was close to the CSI 500 Index. However, after June, based on the quantitative timing model's cautious view of the market, the fund responded to market changes by controlling stock positions.

Similarly, Guolian Antianxin A also changed its stock position from 93.16% to 0.06% in the second quarter of this year. Prior to this, the fund maintained its stock position above 90% for six consecutive quarters.

Some funds are more flexible and have switched positions like a roller coaster in the first half of this year. Wind data shows that Dongxing Blue Ocean Wealth A's stock positions at the end of last year, the end of the first quarter of this year, and the end of the second quarter of this year were 90.85%, 9.99%, and 84.30%, respectively. Not only did the stock positions fluctuate greatly, but the positions also experienced a switch from energy industry to financial consumption and back to energy industry. As of the end of the second quarter, the fund's top three holdings were Sinopec, Tangshan Port, and Panjiang Shares, which were completely different from Phoenix Media, China Media, and Industrial and Commercial Bank of China at the end of the first quarter.

Reverse timing may be more effective

So, how is the timing effect of these flexible allocation funds that increase or decrease their holdings significantly?

Wind data shows that in the second quarter of this year, the stock positions of 15 flexible allocation funds in the entire market changed by more than 50 percentage points. Among these 15 funds, three funds have achieved positive performance so far this year, and four funds have fallen by less than 10% this year. However, three flexible allocation funds still have a decline of more than 20% after substantial adjustments.

In particular, this year's A-shares have been fluctuating and correcting since late May in the second quarter. Among the funds that significantly reduced their holdings in the second quarter, Guolian Antianxin A and Great Wall Jiuyi Flexible Allocation A have achieved positive returns of 0.25% and 2.04% respectively this year; but similarly, Jiutai Jiusheng Quantitative Pioneer A, which significantly cut its positions in the second quarter and whose positions had been reduced to zero at the end of the quarter, has suffered a 21.73% decline this year, including an 11.5% decline in the first half of the year. This means that the fund may have increased its holdings again in the third quarter, resulting in a decline of more than 10% since the third quarter.

On the contrary, Dongxing Blue Ocean Wealth A, which also frequently chose the timing and even significantly increased its holdings in the second quarter, has achieved a positive return of 1.05% this year. The increases and decreases in the first and second quarters were 4.64% and -0.86% respectively.

It is worth mentioning that the fund manager of the fund, Sima Yimaimaiti, is the general manager of the fixed income department of Dongxing Fund, and his fund industry is mainly bond funds or "fixed income +" funds. In the second quarter report of his only flexible allocation fund, he said that in the second quarter, he would continue to maintain the proportion of bond holdings, pay more attention to the timing in the equity market's volatile correction stage, and use the timing to dynamically adjust the equity position according to the market evolution.

Compared with the above two funds, Dongxing Blue Ocean Wealth A may have more characteristics of reverse timing and left-side trading. Huaxi Securities once pointed out in a research report on fund timing that the fund's trading model has a strong linear relationship with trading stock selection and band timing returns. Looking back, the timing returns of left-side trading funds are higher than stock selection returns, while the stock selection returns of right-side trading funds are significantly higher.

But overall, it is still difficult to summarize the contribution of timing to fund returns from the performance of the above funds. "For most fund managers, stock selection is the easiest, style judgment is the second, and timing is the most difficult, especially this year when the industry rotation is too fast, timing is even more difficult to operate." A fund manager who manages a flexible allocation fund said in an interview with a reporter.

Unclear product positioning

For investors, flexible allocation funds with wide-ranging positions present another problem - unclear product positioning.

Flexible allocation funds are a secondary classification of hybrid funds. The market usually positions funds with "flexible allocation" in their product names and a stock position between 0-95% in the product prospectus as "flexible allocation hybrid funds". The stock position of this type of fund has a wider adjustment range, leaving fund managers with ample room for position adjustment.

However, due to the large adjustable range of stock positions, this type of fund is also difficult for investors to grasp, and investors' expectations of the product are at odds with the actual situation. For example, an investor buys a flexible allocation fund with the goal of obtaining high returns and the mentality of buying an equity fund, but the fund manager significantly reduces the equity position at a certain point in the future and allocates more bond targets. "Not only that, the performance benchmarks of flexible allocation funds are different, and the positions fluctuate greatly. When classifying and rating, how to classify this type of fund has always been controversial, and there is no unified standard." A fund evaluation person said.

This is also the main reason why no flexible allocation funds have been approved since 2022. The above-mentioned fund evaluator said that supervision encourages products with clear fund styles and clear risk-return characteristics. The clarity of style here does not refer to the classification of industry themes, but the classification of positions, that is, what type of assets the fund mainly invests in. "From the perspective of fund evaluation, clearer classification will also help to screen out excellent products of the same style. After all, the risks and expected returns of different assets are quite different."

As for the existing flexible allocation funds, fund companies are also clarifying the risk-return characteristics of the products to investors through fees and other means. Since last year, many flexible allocation funds have adjusted their management fee rates. Products with low long-term stock positions have generally reduced their management fee rates to around 0.6%, while products with high stock positions have remained at 1.2%.