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Southern Fund issued a dismissal announcement for a fund manager worth tens of billions of yuan, involving Chief Investment Officer Mao Wei.

According to the announcement, Mao Wei has resigned from all five fund products under his management, including Southern Growth Pioneer, Southern Information Innovation and other products. At the same time, Mao Wei will no longer be transferred to other positions in Southern Fund after his departure. Mao Wei was previously a versatile fund manager who had managed multiple industry theme funds such as pharmaceuticals, semiconductors, military industry, and consumption.

When explaining the reasons for the "collapse of the growth sector" this year, Mao Wei believes that investors have had a higher tolerance for growth stocks in the past, and in the future they should pay attention to the quality of company growth. Industries that are promising in the future include electronics in the technology sector, which, as the main carriers, have low valuations and possess more structural opportunities.

Mao Wei resigns from all funds under management

On August 24, Southern Fund issued a dismissal announcement, and Mao Wei, the fund manager and chief investment officer with a management scale of 10 billion, resigned from all five fund products he managed, including Southern Growth Pioneer, Southern High-Quality Selection, Southern Information Innovation, Southern Junxin, and Southern Prosperity Driven Fund. The five funds previously managed by Mao Wei were jointly managed with other fund managers. After his resignation, the original fund managers of these products will continue to serve as fund managers of the relevant products.

Mao Wei has a background in insurance investment and joined Southern Fund in 2009. He has served as an insurance and financial industry researcher in the research department, assistant director, deputy director, executive director and director of the research department. He is currently the general manager of the equity research department, a member of the domestic equity investment decision-making committee, and the company's chief investment officer.

During his tenure as a fund manager, Mao Wei was involved in fund manager positions for almost all industry track theme funds. His tenure return during his tenure as a manager of a pharmaceutical theme fund was 44% (2 years), and his tenure return during his tenure as a manager of a military theme fund was 68% (2 years). During his tenure as a manager of a consumer theme fund, he achieved a tenure return of 93% (1.5 years). His highest tenure return in the past came from a technology theme fund, with a tenure return of 175% from May 2019 to January 2022.

Mao Wei's resignation may be related to the performance pressure of the current fund he manages. As the largest equity fund he manages, Southern Growth Pioneer has become the fund with the largest return loss during his tenure, losing 44% in four years. The yield of this product has not turned positive in 2024, and the net value of the fund is currently less than 0.6 yuan.

According to the announcement of Southern Fund, Mao Wei will not be transferred to other positions after leaving office.

This year, there are fewer Hong Kong stocks in operation

Against the backdrop of relatively scarce opportunities in the growth track of the A-share market, Mao Wei, who prefers growth, may face performance pressure from his underweighting of the Hong Kong stock market.

According to the second quarter report disclosed by the Southern Growth Pioneer Fund previously managed by Mao Wei, the top ten stocks mainly refer to the new energy and semiconductor sectors of A-shares. There are no Hong Kong-listed companies among the top ten stocks. Among all fund positions, the Hong Kong stock positions allocated as of the end of June this year were less than 9%.

Unlike Mao Wei, the Southern Xingrun Value Fund managed by Shi Bo, the chief investment officer of Southern Fund, has a 20% Hong Kong stock position. In fact, many star fund managers who prefer growth have hedged the risks of the A-share growth track by increasing their Hong Kong stock positions this year. The Hong Kong stock position of the E Fund Quality Enterprise Fund managed by Zhang Kun of E Fund even exceeds 40%, making the relevant fund a quasi-Hong Kong stock theme product.

Hong Kong stock products even bring performance ranking advantages to relevant fund managers. One Hong Kong stock theme fund managed by Shi Bo has entered the forefront of the entire market in terms of performance ranking. As for why we should attach importance to investment in the Hong Kong stock market, Shi Bo believes that the Hong Kong stock market is jointly determined by China's economic fundamentals and global liquidity. Based on this framework, although there are still certain uncertainties in the future, the Hong Kong stock market is full of opportunities, including the general direction of interest rate cuts. The repeated expectations of overseas liquidity in the future may cause disturbances to asset prices. As long as the general direction does not change, overseas liquidity will not cause a big impact on the market. Expectations for economic growth will become the key to influencing future market trends. China's manufacturing PMI returned to above the boom-bust line from March to April, triggering market discussions about marginal improvements in the economy. The manufacturing PMI once again entered below the boom-bust line. It can be seen that economic recovery is not achieved overnight. Although there are still differences, the current Hong Kong stock market is in a valuation trough, and the proportion of overseas funds allocated is also low, which has largely reflected concerns about future economic growth. The rebound of Hong Kong stocks is largely a reflection of overseas funds increasing their allocation to the Hong Kong stock market.

Why growth stocks collapsed

In a recent fund quarterly report, Mao Wei analyzed his views on the current market.

Mao Wei believes that this year, the growth style of the large-cap growth industry has begun to unfold. At the same time, due to the market volatility at the beginning of the year, the investment rhythm of small-cap growth is more difficult to grasp. Due to the reduced cost-effectiveness of the large-cap value, the style will not be as obvious as in 2023. There are two main directions that are optimistic about. One is the innovation and growth direction of global technology, and the other is the direction of exports that are relatively unaffected. At the same time, due to the downward trend of risk-free rates, large-cap value stocks such as high dividends and low valuations will still maintain strong relative returns against the background of the collapse of the growth sector. In terms of industry, we return to the essence of investment. In the past, investors had a high tolerance for growth stocks, and in the future, we should pay attention to the quality of company growth. The optimistic industries include electronics in the technology direction. As the main carrier, the valuation itself is not high and there are more structural opportunities.

Mao Wei said that the current growth momentum of the domestic growth sector is still technological innovation and export, while overseas technology restrictions and export restrictions on my country's technology industry are the biggest risk points, especially in the fields of AI and semiconductors. Technology restrictions and trade terms restrictions in the field of new energy will cause short-term fluctuations in the already fragile EPS. In terms of investment operations, on the one hand, fund managers will adhere to the investment framework. As the economic cycle and industrial cycle enter the end of the downward trend, the number of high-prosperity sectors will increase. On the other hand, actively looking for investment opportunities in the new normal outside the industrial cycle, will continue to invest along the industrial trend and growth, maintain a high overall position, and significantly reduce the turnover rate. From a long-term perspective, China's high-quality growth companies are deployed, the weight of thematic investment is reduced, and the stock selection criteria are used for prosperity growth and quality growth.