Xu Nannan/Text
In the past two years, public funds have developed rapidly. Since 2020, the overall scale of public funds has increased by more than 10 trillion, reaching 25.27 trillion.
However, there are still problems such as funds making money but basic people not making money, droughts and floods guaranteeing harvests, and style drift.
As more and more younger generation investors pour into the fund circle, the “fan circle” has become more and more obvious. They hope to achieve wealth appreciation through investment fund . But most people realize through the decline that the fund will also owe money.
A person related to a public fund in South China told Caijing.com that with the long-discussed salary reform in the fund industry, it has finally been implemented. In the short term, the industry, companies, and every employee will have to go through a period of discomfort with the reform; but in the long term, this will prompt managers to implement the principle of giving priority to investors' interests more thoroughly and in place. In fact, This is laying a solid foundation for the long-term and steady development of the industry.
Salary Reform System Implementation
html On June 10, China Securities Investment Fund Industry Association released the "Guidelines for Performance Appraisal and Compensation Management of Fund Management Companies" (hereinafter referred to as the "Guidelines").Specifically, the "Guidelines" include 7 chapters and 22 articles in total, covering five aspects including salary structure, salary payment, performance appraisal, internal salary control management, and self-discipline management. The "Guidelines" will come into effect on the date of issuance, and fund management companies should adjust and improve existing performance appraisal and salary management work before December 20, 2022.
The "Guidelines" propose that the performance appraisal and salary management of fund management companies should follow four basic principles: First, the interests of fund shareholders should be given priority and the company's long-term sustainable development should be oriented. Second, it can not only effectively motivate employees and build a high-quality talent team, but also help prevent risks and improve compliance levels. The third is to balance the interests of employees, managers, shareholders and other stakeholders, which will help the company fulfill its social responsibilities and enhance its ability to serve the real economy and national strategies. Fourth, it is in line with my country’s national conditions, policy orientation and the actual development of the fund industry.
Specifically, the "Guidelines" do not directly interfere with the salary levels of fund management companies, but require fund management companies to reasonably determine and timely adjust the basic salary standards and salary structures for different positions. It will be effective from the date of issuance, and fund companies should adjust and improve existing performance appraisal and salary management work before December 20, 2022. According to the "Guidelines", the deferred payment period of performance compensation should not be less than 3 years, and the deferred payment speed should not be faster than the equal proportion. In principle, the amount of deferred payment for key positions such as senior managers and fund managers should be no less than 40%, and performance appraisal indicators should reflect long-term appraisals of more than three years.
The "Guidelines" emphasize that fund management companies should formulate scientific remuneration systems and assessment mechanisms in accordance with the requirements of corporate governance and compliance management , reasonably determine the remuneration structure and levels, and standardize remuneration payment behaviors. Performance appraisals should be consistent with compliance and compliance. Risk management shall be linked, short-term assessments and excessive incentives shall be strictly prohibited, and a mechanism for binding the interests of fund practitioners and fund share holders shall be established.
In addition, employees of fund management companies should implement the company's performance appraisal and salary management requirements in accordance with the company's system and labor contracts, and cooperate with the company in carrying out relevant work.
At the same time, China Fund Management Association stated that fund management companies are encouraged to focus on the long-term healthy development of the industry and the company, strengthen capital accumulation, and consider overall human costs on the premise of strengthening investment in investor education, risk response, information technology, and charitable donations. and distribution of profits to shareholders.
Many brokerages commented that the public fund industry will benefit deeply from the release of the "Guidelines" and accelerate the high-quality development of the public fund industry.
Previously, the China Securities Regulatory Commission issued the "Opinions on Accelerating the High-Quality Development of the Public Fund Industry", which clarified the development direction and strategic positioning of the public fund industry and set the tone for future industry development.
Some people in the industry pointed out that this "Guidelines" will help solve the problem of fund companies and fund managers making money but Christians not making money.
Remuneration is linked to investor returns
The biggest highlight of the release of the "Guidelines" is to deepen the binding of the interests of fund managers and citizens.
The scale of fund management has expanded rapidly in the past two years. Since 2020, the overall scale of public funds has increased by more than 10 trillion, and the total scale has exceeded 25 trillion yuan. However, some of the attendant "disadvantages" have also aroused the vigilance of regulatory authorities.
In April this year, the China Securities Regulatory Commission issued the "Opinions on Accelerating the High-Quality Development of the Public Fund Industry." It is clearly pointed out that the industry still has problems such as insufficient adaptability of professional capabilities, weak cultural construction, and unbalanced structure. It is necessary to reverse over-reliance on "star-making fund managers", limit "style drift", abandon "pseudo-innovation", etc.
As more and more younger generation investors pour into the fund circle, the “fan circle” has become more and more obvious. They are obsessed with star fund managers like star chasers, hoping to increase their wealth by investing in funds.
When the tide goes out, you realize who is swimming naked. The fandom of funds also reflects the current pain point of the public fund industry - "Funds make money while the public does not."
The 2022 fund "high school entrance examination" is getting closer and closer. The Noah Innovation Drive managed by Cai Songsong of Noah Fund has fallen by more than 36% since 2022, leading the decline in the entire market. The other two products managed by Cai Songsong, Nuoan Growth Mix, Nuoan and Xin Flexible Configuration Mix, also performed poorly during the year and were also at the bottom of the rankings. Among them, the maximum drawdown of the Noon Growth Hybrid Fund, a tens-billion product managed by Cai Songsong, exceeded 50%. As of June 12, only one of the 15 active equity fund managers with a management scale of more than 20 billion had positive returns for the year, with a retracement of more than 40% from the previous high.
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The "Guidelines" require that fund managers should spend no less than 30% of the current year's performance remuneration to purchase public funds managed by the company, and should give priority to purchasing public funds managed by themselves. However, they cannot purchase due to reasons such as the fund they manage is in a closed period. Except. If a fund manager is also a senior manager and the person in charge of a major business department, he shall meet the aforementioned requirements at the same time. The financial review of
Finance Network noted that since the beginning of the year, public funds have launched multiple rounds of "self-purchase waves", and the amount of self-purchase has exceeded the same period last year. According to wind data, as of June 16, 75 funds have made 175 self-purchases during the year, with a total net subscription amount of 2.616 billion yuan. Compared with 57 funds, 143 times and 1.704 billion yuan in the same period of 2021, they have increased by 31.58% year-on-year respectively. ,9.7%,53.52%.
The "Guidelines" also have a relatively detailed description of the long-term assessment. The economic benefit indicator should reflect the long-term assessment situation of more than 3 years, the actual profitability of investors, investment research and other professional capacity building conditions. At the executive level, the board of directors' assessment of managers and the company's assessment of key positions such as investment research and sales should be based on long-term investment performance, investors' long-term investment returns, compliance and risk management, professional ethics, etc., and must not be combined Scale ranking, management fee income, short-term performance, etc. are the main basis for salary assessment.
"This is naturally conducive to the stability of the public fund industry," said a person related to a public fund in South China. He also pointed out that talent is the most valuable resource in the industry, and it also helps fund managers to work deeply within their own circles of competence and continuously improve their ability to stably output alpha.
The loss of star fund managers is accelerating.
The reform of public offering compensation has been launched. This year, star fund managers have left their jobs and "went private" more and more frequently. As of the end of May, more than 100 public fund managers had resigned this year, setting a new high since 2015. Among them, a group of star fund managers such as Dong Chengfei, Lin Sen, Zhou Yingbo , Cui Ying, and Ge Chen collectively "went private" and became the focus of market attention.
However, the continuous violent fluctuations in the A stock market this year have made private equity stocks feel even more pressure. Wind data shows that as of June 16, 665 "public offering" fund managers have had performance updates. The average return this year has been -7.71%, and the performance difference between the first and last is more than 100%. Only 46 products have achieved positive returns, which is not enough. 7%. The financial review of
Finance Network noticed that some fund managers quickly turned around and "went private" after becoming famous based on their short-term performance.
For example, Ren Zesong, the former "big brother in public financing" joined Shanghai Jiyuan Asset after "running private", but his products experienced a considerable decline during the year. Among them, the income of Jiyuan-Xiangrui No. 1 and Jiyuan-Yufeng No. 1 during the year fell by 55.70% and 54.97% respectively.
In order to solve the problem of frequent changes in fund managers and the continuous loss of talents, the China Securities Regulatory Commission has previously issued the "Supervision and Management Measures for Publicly Offered Securities Investment Fund Managers" and its supporting rules. It has been clarified that public fund managers shall establish a quiet period system for employee resignations. , Fund managers and other major investment research personnel are not allowed to engage in non-public fund investment management and other work within one year after leaving the company. Rong Hao, a partner of wealth management at
private equity ranking network, told Caijing.com that from the perspective of institutional constraints, fund practitioners and share holders are required to form an interest binding mechanism, which will avoid current problems to a certain extent. However, It is currently unknown whether it will cause other unknown impacts, but overall, necessary improvements have been made on the management side. Investment itself is volatile and uncertain. To completely change the situation of "funds making money but citizens not making money" requires the joint efforts of all aspects of the industry.
The implementation of the system may shorten the decision-making time in the short term for industry personnel who have to make decisions about whether to stay or leave. Often these people already have relatively clear ideas about the future; at present, they are still public-funded institutions With more “resources” in hand, the rate of public-private flows will reach a balance in the long run.
