GuShiio.com ① The pace of medium-and long-term funds entering the market is accelerating, and the five major constraints on public offering discussions still need to be resolved;
② How to improve the medium-and long-term capital market entry policy? Various suggestions on public offering;
③ Attract medium-and long-term funds into the market, what can public offerings do?
Cailian News Agency, February 27 (Reporter Yan Jun and Lin Jian)The implementation of the “Implementation Plan on Promoting Medium and Long-term Funds into the Market” has been implemented, and a series of specific measures have been proposed to start a new journey of high-quality development in the capital market.
From the perspective of institutional design, the “Plan” breaks through the problem of blocking medium-and long-term funds entering the market, and clarifies specific arrangements for steadily increasing the scale and proportion of medium-and long-term funds investing in A-shares.
First, the circulating market value of A shares held by public funds will increase by at least 10% every year in the next three years;
Second, 30% of the annual new premiums of commercial insurance funds will be used to invest in A-shares starting from 2025.”This also means that at least hundreds of billions of yuan of long-term funds will be added to A-shares every year”, injecting long-term stability into the capital market.”Source of living water”.
Medium-and long-term funds entering the market will bring large-scale incremental funds to the market in the short term; in the long term, improve the market’s capital structure, enhance market resilience and risk resistance, promote the formation of a market atmosphere for value investment, and consolidate the recovery of A-shares. Good trend.
Focusing on medium-and long-term funds entering the market and breaking through the blocking points for medium-and long-term funds entering the market is a top priority. What are the main factors currently restricting medium-and long-term funds from entering the market? What specific measures do fund companies have to attract medium-and long-term funds such as pensions and insurance funds? And what suggestions do you have on improving the market entry of medium and long-term funds? Reporters from the Financial Union conducted research in the industry, and many fund companies gave suggestions and thoughts in real names or anonymity.
Five major factors hinder the pace of medium-and long-term funds entering the market
Guiding medium-and long-term funds into the market is an important aspect of promoting the long-term healthy development of the capital market. From the perspective of fund companies, five major factors affect and restrict the enthusiasm of medium-and long-term funds to enter the market.
Factor one is that the performance assessment of institutional investors is relatively short-term.
Yang Delong, chief economist of Qianhai Open Source Fund, said that the supervision has repeatedly mentioned lengthening the assessment period for investment managers and hopes that the extension of the assessment period can be implemented conscientiously.”Previously, the assessment period was too short, and some institutions conducted assessments on a quarterly or even monthly basis. Medium and long-term funds dare not enter the market easily, fearing that market fluctuations may affect short-term performance, thus affecting the personal assessment of investment managers.”
This point has also been recognized by the industry. Some fund companies have stated that institutional investors such as public funds and insurance funds generally have annual assessment pressure, and the annual assessment weight is too high, while the long-term performance (3-5 years) performance indicator weight is too low, resulting in short-term performance orientation that suppresses long-term investment attributes.
“There is great pressure on market peer rankings, which may lead to short-term investment behavior.” In the eyes of investment managers, under the pressure of elimination and assessment, they cannot withstand large fluctuations and retractions. Due to poor performance, there are not a few fund managers who have been downgraded to researchers.
Factor two, stock market cyclical fluctuations and short-term institutional investment lead to short-term operations in disguise.
Some fund companies said that the short-term nature of institutional investment is correlated with cyclical fluctuations in the stock market, which is mutually causal, encouraging short-term fluctuations in disguise and making long-term investment more difficult.
“It is difficult to obtain excess returns in the A-share market, and stable funds enter the market cautiously.” Some fund companies pointed out that for long-term funds that pursue stable returns such as insurance funds and social security funds, equity investment is considered to be a revenue-enhancing direction for large-scale asset allocation. However, in recent years, volatility in the equity market has increased, and rotation among A-share sectors has intensified, making it more difficult for long-term funds to obtain excess returns.
Factor three is to improve the investability of the capital market and improve the overall quality of listed companies.
Yang Delong said that allowing investors to make money by investing in A-shares is the most important factor in attracting and retaining medium-and long-term funds, because medium-and long-term funds enter the market in the hope of obtaining long-term good returns. Only by improving the quality of overall listed companies and introducing more good companies that represent the direction of economic transformation can we attract medium-and long-term funds to remain in the capital market.
Agricultural Bank of China Financial Management Fund also believes that long-term funds need to consider more risk and return when entering the market. If the capital market can provide long-term and stable returns, it will help solve the blockage of medium-and long-term funds entering the market. Long-term and stable returns are first based on the continued improvement of the real economy. The securities market can use the real economy ROE as an anchor for relatively reasonable pricing. To achieve this goal, a set of clear, reasonable and relatively stable rules need to be established to stabilize investors. Underlying expectations.
The Agricultural Bank of China Fund further pointed out that since 2024, the regulatory authorities have successively issued policies that are conducive to the deepening development of the capital market, laying a solid foundation for the continued development of the capital market. We believe that a series of measures will be conducive to the active entry of long-term funds into the market by continuing to “eliminate the weak and retain the strong” of listed companies to ensure the quality of listed companies; and increasing the proportion of institutional investors to form a relatively rational investment atmosphere.
In addition, Yang Delong also suggested that severe penalties be used to crack down on illegal activities, especially financial fraud, fraudulent issuance and other behaviors that harm the interests of investors, so that medium-and long-term funds dare to enter the market.
Factor four is the habit of allocating long-term funds such as insurance funds to the equity market at a low level.
Medium-and long-term funds such as insurance funds have always had low risk appetite, preferring debt-based, dividends and other products. In August 2024, insurance funds recommended that ETFs be included in insurance OCI accounts. The current investment scope of OCI accounts is “other debt investment + other equity instrument investment”. Other bond investments include fixed income products such as treasury bonds, financial bonds, corporate bonds, interbank certificates of deposit, and ultra-short financing. Other equity aspects mainly refer to stocks., does not include ETFs.
Some industry insiders pointed out that the inclusion of ETFs in OCI accounts will also help the equity market for medium and long-term funds such as insurance funds.
In addition, some public offerings pointed out that some funds, such as bank wealth management funds, are large in scale, but their investment styles are relatively conservative, have low tolerance for short-term fluctuations, and have a low proportion of equity investment. Therefore, it is possible to appropriately encourage the increase in the allocation of bank wealth management investment public funds into the capital market.
Factor five is to increase coordination among various policy departments.
The medium-and long-term capital market entry plan is jointly launched by multiple departments, which shows the complexity of this work. Some fund companies said that in the past, multi-department supervision was decentralized and there were many investment restrictions, so cross-department policy coordination needed to be strengthened. At the same time, some fund companies believe that tax incentives for long-term capital investment gains are limited, which reduces enthusiasm for entering the market.
In addition, some fund companies have also given suggestions in aspects such as increasing the transparency of credit services, announcing the proportion of quantitative transactions, transparency of strategies, strengthening opening up to the outside world, and attracting foreign investment.
Public funds advise on improving medium-and long-term capital market entry policies
There are many participants in the capital market and complex operating mechanisms. Therefore, the system needs to promote the creation of a good market ecology that is conducive to the healthy development of the capital market in the medium and long term.
How to continue to create an institutional environment that is more conducive to medium-and long-term funds entering the market? China Merchants Fund pointed out that the following three aspects can be considered specifically:
First, continue to support the National Social Security Fund, Basic Pension Insurance Fund, and Annuity Fund to expand the scope of investment in the capital market and improve the corresponding investment system;
The second is to enrich the personal pension product system and encourage industry institutions to develop various fund products with lock-in periods and serve the life cycle of investors;
The third is to cultivate professional investment concepts, facilitate the investment operation and management of professional institutions, and encourage individual investors to hand over medium-and long-term idle funds to institutional investors for management; increase high-level financial opening up to the outside world, continue to improve cross-border investment and financing facilitation, and attract More foreign financial institutions and long-term capital come to China to develop business.
“On the one hand, we must effectively extend the assessment cycle for assessing investment managers through policy guidance, so that investment managers can pay more attention to long-term investment returns without worrying about short-term fluctuations. Only in this way can we produce China’s version of Berkshire Hathaway. On the other hand, it is necessary to guide pensions to increase the proportion of investment in the equity market. The actual proportion of pensions and insurance funds invested in the capital market is currently low, and will be gradually increased to the upper limit in the future.” Yang Delong said.
Wu Wei, deputy director of the asset allocation department of Shanghai Bank Fund, also pointed out that it is necessary to improve the medium and long-term fund assessment mechanism, appropriately relax the allocation ratio of equity assets, and improve the supporting ecology of the capital market.
From the perspective of market ecological construction, Puyin AXA Fund believes that there are three measures that can be strengthened: First, further improve the basic institutional environment of the A-share market and enhance investment attractiveness. Such as further strengthening the governance of listed companies, optimizing the dividend mechanism of listed companies, enriching derivative investment tools, and improving risk hedging mechanisms. The second is to increase product innovation efforts to encourage the diversified allocation of medium-and long-term funds, and actively promote the development of various innovative products such as publicly offered REITs, commodity ETFs, and cross-border QDII funds. The third is to further cultivate a long-term investment culture, guide institutional investors to further improve the long-term assessment mechanism, and enhance asset allocation concepts.
Honeycomb Fund gives considerations on the capital side and the market side: on the capital side, we can refer to foreign experience, increase policy support for personal pensions, and enrich investment channels and tools for long-term funds, so that we can hedge risks for long-term investments. On the capital market side, we will continue to improve the quality of listed companies, strengthen the supply of high-quality listed companies and feedback on dividend repurchase, and actively repay investors.
Honeycomb Fund also pointed out that it is necessary to strictly supervise and protect the rights of investors, strengthen the coordination and unity of policies of various departments, further improve price weakness, consolidate corporate profits, improve the future investment return and value of enterprises from the root causes, and enhance the long-term investment of medium-and long-term funds. Investment confidence.
In addition, there are suggestions for public funds to consider flexibly expanding the annual limit of personal pensions or grading limits, and the pension account opening unit can complete corresponding appropriateness assessments on investors, so that capable qualified investors can have a way to achieve higher investment in personal pensions.
How can public funds attract medium-and long-term capital layout?
How to attract medium-and long-term funds to enter the market? In addition to building a good capital market ecosystem, what can public offerings do?
Wanjia Fund said that we should first put the interests of investors first, adhere to long-term doctrine, and continuously deepen the construction of investment and research capabilities. Only with good long-term returns can we adapt to medium-and long-term funds.
China Merchants Fund also pointed out that in order to enhance the inherent stability of the capital market in the future, public funds can contribute professional strength in the following aspects, further strengthen investment research capabilities, enhance value discovery capabilities, and improve product performance with professional investment capabilities, thereby better Guide long-term funds such as pensions to continue to enter the market, optimize the investor structure, and improve market stability.
“By improving the long-term assessment mechanism, emphasizing multi-dimensional assessment indicators such as risk management, and taking into account the short-term return of the fund and the long-term preservation and appreciation goals, we truly reflect the long-term investment concept.” Golden Eagle Fund pointed out.
China Merchants Fund stated that it will improve the long-term evaluation mechanism and long-term assessment mechanism, weaken the consideration of short-term performance and scale, restrict behaviors such as “style drift” and “high turnover rate” to gain short-term trading gains, and continuously guide long-term investment and value investment.
Focusing on the pension business, Wanjia Fund introduced that the company attaches great importance to the development of the pension business and continues to strengthen investment in pension financial resources. The company has earlier deployed experienced professionals to carry out research in pension-related fields, actively participated in the construction of the personal pension system, participated in research on personal pension policy-related topics organized by regulatory authorities, and established a Pensions Department to conduct related business preparations.
As a wholly foreign-owned public offering, Morgan Asset Management told the Financial News Agency reporter that Morgan Asset Management has always believed in the power of proactive investment in Alpha and the power of long-term allocation. In terms of assessment and incentives, the company insists on guiding long-term investment concepts and encouraging clear and stable investment styles. The company inspects and evaluates investment talents through multi-dimensional, cross-cyclical performance and risk control indicators, and fully mobilizes the enthusiasm and creativity of the investment research team.
In terms of product development, Morgan Asset Management introduced that it is committed to combining global wisdom with local experience and actively exploring various solutions to attract medium-and long-term funds. For example, we should give full play to the important role of indexed investment in attracting medium-and long-term funds to enter the market, add Y shares for personal pension investment fund business, actively respond to the nationwide roll-out of the personal pension system, and explore a dividend mechanism for special products.
Caitong Fund also has differentiated competitive advantages in terms of products. The company introduced that on the one hand, it will give full play to its first-mover advantage in the fixed-value field, continue to deepen its fixed-value characteristic businesses, and have successively launched strategies such as fixed-value quantitative hedging and fixed-value quantitative long positions in the market. Product line to further consolidate its leading position. On the other hand, we will deepen the layout of diversified product lines for public offering accounts and build a good new pattern in which multiple product lines of fixed increase, equity, fixed income, quantification and combination go hand in hand to provide customers with products with different risk-return characteristics and meet customers in a one-stop manner. Diversified investment needs of customers.
In addition, in the view of Golden Eagle Fund, strengthening investor education and publicity is also the responsibility of public offerings. It organizes and participates in various investment education activities through various channels to help investors fully understand risks and establish rational investment concepts, which can be used in the medium and long term. View the short-term fluctuations of the market rationally and strive to enhance the people’s sense of gain.
