Four Dimensional Review Of Fof Trend Of Pension Target Date: Can Huaxia, Huitianfu And Bocom Maintain Their Advantages?

Sun Yu, a researcher at the 21st Century Capital Research Institute, reports from Beijing

Since the establishment of the first batch of products in the second half of 2018, the target date fof has been operating in the fund market for nearly three years.

As of August 25, 2021, 67 target date fofs have been set up in the market, with more than 11 billion fund issues and more than one million holders.

Although the overall scale of the target date fof is still small compared with the explosive fund with a scale of 10 billion, the target date fof is an indispensable category in terms of public offering to support the construction of the third pillar of pension.

As early as January 28, the China Securities Regulatory Commission (CSRC) proposed at the system working meeting that the policy of individual pension investment in public funds should be implemented as soon as possible, and the environment for medium and long-term funds entering the market should be optimized.

According to the information obtained by the 21st century economic reporter, the policies related to the third pillar of the elderly will also be officially implemented.

This may greatly promote the development of fof.

Which products can support the development needs of financial pension?

The 21st century capital research institute specially launched a series of reports on the research of public pension funds to evaluate key products and analyze the market trend.

According to the data of the 21st Century Capital Research Institute, the top three products of Huaxia Fund, huitianfu and Bank of communications Schroder are listed in the top three after annualized treatment of fund income.

This is the first issue of the series, focusing on the target date fof. The next issue will focus on the target risk fof.

1、 Release trend: target date fof not accelerated

The release of China target date fof started in 2018.

In February of that year, the China Securities Regulatory Commission issued the "guidelines for the securities investment funds for the elderly (for Trial Implementation)". In March, the China Fund Industry Association issued the notice on the registration of fund managers of pension target securities investment funds.

Subsequently, in April, the pension target fund applied for opening, and many fund companies reported their products.

On August 6, the first batch of 14 pension target funds were approved and successively issued and established in September of that year.

According to the data, in 2018, there were 10 target date fofs in the whole market, with a total issuance scale of 208436 million.

In 2019, the target date fof will enter the peak period of issuance. In that year, there are 36 products in the whole market, with a total issuance scale of 308496 million copies.

In 2020, the target date of fof issuance will decrease. In that year, 13 products will be issued in the whole market, with a total issuance scale of 2555.8 billion copies.

Although the public offering fof products will enter the fast track of issuance in 2021, according to the data of the first half of the year, the release of fof on the target date of this year has not been accelerated.

According to wind data, as of June 30, there were eight target date fofs issued by seven fund companies in the market, with a total issuance scale of 50849 million. In addition, Boshi fund and Minsheng Canada Bank fund have 4 and 1 target date fof products respectively in July and August.

For comparison, in the same period of 2019 (as of June 30 of that year), 25 target date fof products were established in the whole market, with a total issuance scale of 257499 million copies. In the same period of 2020, there are six target dates of fof in the whole market, with a total issuance scale of 1.774.1 billion yuan.

Among the eight target dates of fof issued in the first half of this year, only Jianxin Puze Pension Company held more than 100 million shares in 2040, reaching 244.6 million shares.

The distribution scale of the remaining seven products is less than 100 million copies. The issuing shares of Ping An pension in 2045 and Jiashi pension target date in 2045 are only 129.1 million and 104.2 million respectively, which will exceed the "establishment line".

In this regard, Li Zhengzheng, the fund manager of CITIC Prudential, who served as the fund manager of new products of fof with two target dates this year, told the 21st century capital research institute that the issuing rhythm of the target date fof is related to the layout of various public fund companies.

"At the current time node, the target date fof has experienced two or three years of development, the stock products in the market have roughly covered each time period of the target date fof, and some fund companies have basically completed their product layout." Li argued.

"Moreover, regulators are very cautious in approving the issuance of pension fund products. Especially for the first pension target fund product of the fund company, the regulatory level will carefully review the materials and inquire. Therefore, the issuance cycle of some pension fund products will be relatively long. " Li added.

Li Biao, fund manager of huitianfu pension in 2040, said that observing the popularity of pension product issuance can not only look at the target date fund, but some fund companies may prefer to issue target risk funds.

2、 Investment base style: increase share base and enhance equity

As a kind of fof (fund of funds), fund assets are the main allocation varieties of fof on target date.

As of June 30, the market value of 59 target date fofs established before this year accounted for more than 70% of the total assets of the funds.

The target retirement year is the anchor of the asset allocation of the target date fof. With the target date approaching, the fund manager will gradually reduce the allocation proportion of equity assets (stocks, stock funds and hybrid funds), increase the allocation proportion of non equity assets, and shift from the main pursuit of capital appreciation to the main pursuit of current income.

Take the first batch of approved Southern pension fund in 2035 in 2018 as an example. Before 2024, the proportion of equity assets of the fund is 35% - 60%, which will drop to 25% - 50% in 2024-2027; From 2028 to 2031, it will drop to 15% - 40%; From 2032 to 2035, it will drop to 5% - 30%; It will be adjusted to 0-30% from 2036.

According to the statistics of the top 10 heavy positions of fof on the target date of this year, the 21st Century Capital Research Institute found that the most allocated types in the first quarter were flexible allocation funds (144 times entered the top 10 heavy positions, the same later), partial stock mixed funds (106 times), common stock funds (74 times), mixed bond secondary funds (58 times) and medium and long-term pure bond funds (45 times).

In the second quarter, QDII flexible allocation funds (6 times in the first quarter) disappeared from the list of top 10 heavy positions of fof on the target date, and the number of medium and long-term pure debt funds also dropped to 38.

At the same time, the number of passive index funds and common stock funds in the top 10 heavy positions increased 11 times and 17 times respectively.

In this regard, Li Biao said that when the short-term trend market, industry beta is relatively large, the return of passive index funds is often better.

"Therefore, fof can seize short-term (2-3 months) phased and trading opportunities through the allocation of passive index funds." Li Biao said.

As of the end of the second quarter of this year, ICBC Credit Suisse culture and sports industry a was the most popular fund of fof on the target date. It appeared in the top ten positions of fof for 12 times, and 3 fofs bought it into the largest position.

ICBC Credit Suisse sports industry a is a stock fund with the growth style of the large market, and the current fund manager is Yuan Fang. In the first quarter of this year, the fund has obtained the target date fof heavy position, and in the current quarter, 10 fofs bought the top 10 positions.

Another large market growth style of e-fund anying returns, the number of times it appeared in the top 10 positions of fof in the second quarter also increased, from 7 times in the first quarter to 10 times. The current fund manager of the fund is Zhang Qinghua.

In addition, e-fund's reassuring feedback (9 times entering the top 10 heavy positions, the same later), 10-year Treasury Bond ETF (8 times), Cinda Australia Bank new energy industry (8 times), national debt ETF (7 times), securities ETF (7 times), Wells Fargo value advantage (6 times), ICBC Credit Suisse double interest a (6 times) and ICBC Credit Suisse new finance a (6 times) were also favored by the target date fof in the second quarter.

The above-mentioned multi position funds are excellent funds this year.

Observing the performance ranking of similar funds (wind investment type secondary classification) in the first half of the year, ICBC Credit Suisse sports industry a ranked the top 34.38%, e-fund's anying return ranked top 0.32%, e-fund's comfort feedback ranked top 22.89%, Cinda Australia Bank's new energy industry ranked top 12.13%, Wells Fargo value advantage ranked top 8.33%, and ICBC Credit Suisse new finance a ranked top 13.05%.

3、 Stock position: fof tends to abandon bank stocks

In addition to the allocation of fund assets, as of the end of the second quarter, there were 33 fofs with a total of 55.93% of the target date directly allocated equity assets.

Among them, the stock market value of ABC pension in 2035, Yinhua pension in 2035 and Yinhua pension in 2040 accounted for more than 20% of the total fund assets.

The positions of 12 other target date fof shares under ABC Huili fund, Nanfang fund, ICBC Credit Suisse fund, AXA Pudong Bank, Penghua Fund and Huaxia Fund also held more than 10% of the shares.

Li Biao told the 21st century capital research institute that generally speaking, there are two considerations for fof to allocate stock assets.

"First, in order to obtain new qualification, a certain amount of stocks are required for the bottom position, and most of the pension fof allocation stocks are for this purpose. Second, it is not ruled out that individual fof fund managers may allocate stocks to better execute short-term transactions or increase returns. " Li Biao said.

Li Zhengzheng holds a similar view on this issue.

"When the public offering fof is in a moderate scale, whether there is risk return for new fof. As a result, if fof uses new sales as an auxiliary / enhancement strategy, it will generally allocate stocks. If the fund is too small, it may not choose this strategy. Moreover, some fof fund managers are stock investors, and this kind of people will also allocate some stocks. " Li argued.

Analysis of fof stock positions, the first quarter of this year fof preferred bank stocks.

40% of the top 10 stocks with the largest positions on the list were bank stocks, including Bank of Ningbo (002142.sz, 8 times on the list, the same later), China Merchants Bank (600036.sh, 8 times), Industrial Bank (601166.sh, 6 times) and Ping An Bank (00000 1.sz, 5 times).

In the second quarter, the shares of bank stocks in the top ten positions of fof on the target date decreased significantly.

Only Ping An Bank and Ningbo bank entered the top 10 of the fof heavy positions.

Dongfang fortune (300059. SZ) became the preferred target of the second quarter target date fof.

Among the 33 fofs that directly allocate stock assets, 13 of them have bought Dongfang fortune (300059. SZ) as the largest heavy position. Betaine (300957. SZ, 5 times) and Ningde times (300750. SZ, 5 times) entered the top 10 fof positions.

4、 List: Ping An products won the first place, industrial and Commercial Bank of China took the bottom

From February to March this year, a shares experienced a round of decline of nearly 10%.

When the market began to rebound, "Ning portfolio" with high growth, long track and high prosperity replaced "Mao index" and became the most favored core asset in the market.

Some new energy vehicles, pharmaceutical services, science and technology and other emerging industry assets target date fof in the second quarter, achieved good earnings in the current quarter.

According to the data, as of August 25, the weighted average return of 32 fofs established before this year with a scale of more than 100 million yuan was 4.9267%, 12.5785%, 18.6919% and - 11.5157%, respectively.

Ping An pension 2035 (including two graded funds), China Europe foresight pension in 2035 (including two graded funds) and Jiashi pension (2040) have ranked among the top five of 32 funds in terms of return (i.e. the growth rate of net value of recovery unit).

Penghua pension in 2035 (year to date yield of 0.0856%), Huaan pension in 2030 (0.4343%), ABC pension in 2035 (0.6355%), Xingye pension in 2035a (0.9238%) and ICBC pension in 2050 (1.6944%) ranked the top five in terms of return since this year.

This year's yield champion Ping An pension 2035a was established on June 20, 2019. The current fund managers are Zhang Wenjun and Gao Ying.

Zhang Wenjun and Gao Ying said in the second quarter report that the core part of the fund is still balanced varieties, and the matching degree of valuation and growth is considered.

In the second quarter, the position concentration of Ping An pension 2035a decreased from 56.64% to 53.90%.

By analyzing Ping An pension's position in the second quarter of 2035, we can find that the positive contribution of a number of common stock and partial stock hybrid funds is high.

For example, for its heavy positions in new energy industry (the tenth largest position), harvest intelligent automobile (the fifth largest position) and ICBC Credit Suisse beautiful town theme a (the third largest heavy position), the net value growth rates of right recovery units in the second quarter were 32.2647%, 31.1924% and 15.6163%, respectively, and the largest withdrawal of the range was

-8109%, - 6.0220% and - 4.4838%.

In the second quarter, the top two companies with annualized returns since its establishment (as of August 25): Huaxia pension 2045 A and huitianfu pension 20405.

In 2045, the annualized return rate of a in three years of China's pension system is 26.7296%.

The fund was established on April 9, 2019, with a current scale of 1.241 billion yuan. The current fund managers are Xu Liming and Li Huawen.

The two fund managers pointed out in the announcement that at the beginning of the second quarter, the consumer sector, which had been greatly adjusted in the previous quarter, rebounded rapidly. In the late quarter, the growth sector and new energy vehicle related sectors performed strongly.

Therefore, in the early second quarter of 2045, a of Huaxia pension group tends to hold positions in the consumer sector, while holding a part of the undervalued cyclical plate. At the end of the quarter, the fund realized part of the income of the cyclical plate, increasing the proportion of growth stocks and new energy vehicles.

In terms of position, in the second quarter of 2045, Huaxia pension adjusted its position by a large margin, with 6 "new faces" in the top ten positions.

The single quarter yields of Huaxia innovation Frontier (large market growth stock type), Qianhai open source clean energy a (large market balanced and flexible allocation type) and Huitian Fuan xinzhixuan (large market growth flexible configuration type) with 29.72% additional positions were 27.76%, 17.77% and 21.88%, respectively, with the maximum withdrawal of - 5.04%

-39%, - 5.32%, with high positive contribution.

The annualized return of huitianfu pension in 2040 is 26.2388%.

In the second quarter, Cathay Pacific Smart car a (up 15.43%) and huitianfu healthcare a (26.09%) increased their positions in 2040, as well as the newly purchased Hengyue core selection a and e-fund innovation driven, which provided high positive performance contributions.

The yields of the four funds in the second quarter were 37.56%, 22.15%, 32.62% and 30.04% respectively, and the maximum withdrawal rates were - 7.39%, - 7.03%

-20% and - 6. 50%.

Li Biao further explained to the 21st century capital research institute the idea of warehouse adjustment.

"Since March this year, the original core asset valuation of the market has declined, and the prosperity of new energy, science and technology, medical and other tracks has been up. While the valuations are relatively matched, there is also a long logic. Moreover, the above track's individual stock profits can also be fully reflected in the recent financial report. For these reasons, fof chooses to reduce its core assets sought after by the market in the past, and appropriately increase its position in high-end manufacturing and emerging industry assets. This adjustment is natural. " Li Biao said.

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