Original title: The most difficult moment for the scale to drop by 50% has passed. The countdown to the transition period of the new asset management regulations is 8 trillion and the three measures of asset management for securities firms are adaptable.
Statistics from the Securities Association of China show that asset management income of the securities industry in 2017 reached 31 billion yuan. In 2018, due to changes in regulatory policies, securities firms’ asset management revenue fell to 27.5 billion yuan. However, it will rise to 29.96 billion yuan in 2020.
The asset management industry is about to usher in a new stage of development.
In 2018, the implementation of new regulations on asset management brought about tremendous changes, and the prelude to the transformation of the industry was kicked off. Now is the closing year of the transition period of the new asset management regulations. Under the regulatory requirements of “removal of redemption, removal of channels, and deleveraging”, in the past three years, the channel business has fallen precipitously, and the scale of brokerage management has also fallen again and again.
On the one hand, wealth management has entered the golden track, and the scale of public funds has greatly increased; on the other, the scale of securities firms’ asset management has been declining year after year. The latest data from the China Fund Industry Association shows that as of the end of the third quarter of 2021, The planned scale is 8.6 trillion yuan, which has fallen 54% from the peak of 18.8 trillion yuan in 2017.
Under the drastic changes in the industry, the asset management of securities firms has accelerated the transformation of public offerings and strengthened the ability of active management while rectifying and reforming.
According to statistics from the private equity ranking network, as of the end of October 2021, 1163 brokerage asset management products that have been established for 10 months and have recently updated their net worth have achieved an average income of 4.20% this year. Among them, 20 securities firms’ asset management products had revenues of more than 30%, and a total of 6 securities firms’ asset management products had doubled their performance. During the year, 951 brokerage asset management products recorded positive returns, and profitable products accounted for 81.77%.
Entering December, in the final stage of the transition period of the new asset management regulations, what are the contingency strategies of the brokerage asset management institutions? What is the core competitiveness of the future?
The scale has dropped by 50%, and the channel business has become a thing of the past
The severe winter of brokerage asset management has passed.
In May 2012, the brokerage innovation conference was successfully held, the scope of brokerage asset management business was expanded, and product establishment was relaxed as a record-keeping system.
At the same time, the supervision of bank-trust cooperation has become stricter, and the asset management of securities firms has become a channel for bank wealth management and credit funds, and the scale of asset management business of securities firms has grown rapidly.
As of March 2017, the business scale of brokerage asset management once reached a peak of 18.8 trillion yuan.
According to Chen Fu, an analyst at GF Securities, during this period, more than 80% of the securities firm’s asset management remaining entrusted assets were channel businesses. As of 2018, in the private equity asset management business of securities companies and their subsidiaries, a single asset management plan (targeted The asset management plan) has a scale of 11.85 trillion yuan, accounting for 83.5%. It basically provides channel services with lower rates for institutional clients, mainly banks.
In 2018, the new asset management regulations were officially launched, focusing on the implementation of net worth management of non-compliant channels, high leverage, and capital pools in a limited time. Brokers’ asset management is facing tremendous changes, and the pressure drop in channel business has become a severe challenge for brokers’ asset management.
“As soon as the new asset management regulations were issued, all new channel accounts were stopped for the asset management business.” A person in the asset management business of CITIC Securities said that for the existing channel accounts, we are actively communicating with clients to prevent risks. Continuing to carry out rectifications in accordance with the requirements of regulatory agencies, the company’s channel business scale reduction work during the transition period of the new asset management regulations is now nearing completion.
Xiong Zhigang, general manager of China Merchants Securities Asset Management, believes that from a numerical point of view, securities firms’ asset management rectification pressure is heavy, and the rectification effect is also the most significant. The channel business has been reduced by more than 50%. The industry has made arduous efforts to this end.
Along with the decline in scale, the income of securities firms’ asset management business has also experienced a short-term decline. Statistics from the Securities Association of China show that asset management income of the securities industry in 2017 reached 31 billion yuan. In 2018, due to changes in regulatory policies, securities firms’ asset management revenue fell to 27.5 billion yuan. However, it will rise to 29.96 billion yuan in 2020.
A person from a securities company in Shenzhen believes that business income can rebound while the scale of management has fallen sharply, mainly due to the market’s recognition of the active management of the business by the securities company’s asset management institutions.
The transformation of public offerings is accelerating, and the transformation of large collections breaks through the last difficulty
Transformation has been the main theme of brokerage asset management in recent years.
When the channel business withdrew from the market arena, the public placement transformation of the securities firm’s asset management business was also speeding up.
In July 2020, the China Securities Regulatory Commission issued the “Regulations for the Supervision and Management of Publicly Offered Securities Investment Fund Managers (Draft for Comment)” to relax the “one participation, one control” and “one participation, one control and one card” to allow the same entity to control a fund at the same time The company and a public offering licensed institution. This means that some securities companies and their asset managers will have the qualifications to apply for public offering licenses.
The promulgation of the policy has further promoted the transformation of securities companies’ products under public offerings, and promoted securities companies to accelerate the application of public offering licenses.
As a giant in the asset management business, as of November 30, 2021, CITIC Securities has completed the public offering transformation of 16 large aggregate products. In the future, it will continue to promote the transformation of three currency large aggregate products. All reform plans have been reported to the regulatory agency.
“Six of CICC’s eight large collection products have been remodeled and operated with reference to public offerings, and the other two are expected to be remodeled before the end of the year.” The relevant person in charge of CICC’s asset management department told a reporter from 21st Century Business Herald. As the first batch of securities firms in the market to carry out the operation of large-scale collective products in accordance with the normative operation of public offering funds, CICC refers to the system construction, risk control and compliance norms, system construction, information disclosure, personnel norms, and product design of the normative operation of public offering funds in large-scale collective products. Active layout and optimization have been carried out in other aspects.
In fact, as the new asset management regulations enter the countdown, the transformation of large-scale public offerings has entered the final stage.
On December 3, the “Guotai Junan Cash Manager” official contract came into effect, and the registration was changed to “Guotai Junan Cash Manager Money Market Fund”.
Previously, Shanghai Guotai Junan Asset Management issued the “Announcement on the Change of the Registration of Guotai Junan Cash Manager Money Market Fund and the Change of Legal Documents” on its official website.
The changes include product name, investment scope, investment ratio, investment strategy, management fee rate, etc., added “sales service fee” and “mandatory redemption fee”, deleted “performance reward”, adjusted the principle of income distribution and plan, performance Comparison benchmarks, huge withdrawals, self-owned fund compensation clauses, valuation methods, net value disclosure and termination clauses, etc., and corresponding amendments to the fund contract and related legal documents.
It is worth mentioning that in November this year, Huatai Asset Management’s margin product “Huatai Zijin Tiantianfa” currency fund was also formally established, open for redemption and new customers.
Industry insiders believe that with the change of the first batch of brokerage deposit products such as Guojun Asset Management Cash Manager and Huatai Zijin Tiantianfa as public offering funds, the large-scale transformation of brokerage asset management has come to an end.
Strengthen the ability of active management, 80% of the products have achieved positive returns
After the new regulations on asset management, the scale of brokerage asset management channel business has dropped sharply, and the scale of active management products has continued to grow.
Chen Fu, an analyst at GF Securities, said that from the perspective of the continuation of reasonable wealth products, the scale has maintained a continuous growth trend. From the perspective of the proportion of structure, the overall bond type and currency type are mainly used, but the proportion of stock type and mixed type has increased in recent years. Significantly.
According to private equity ranking data, as of the end of October, 1163 asset management products of securities firms that have been established for 10 months and have recently updated their net worth have achieved an average income of 4.20% this year. During the year, 951 brokerage asset management products recorded positive returns, and profitable products accounted for 81.77%.
In terms of strategies, among the eight major strategic products of brokerage asset management, event-driven strategies have an average return of 22.58%, and macro strategies have an average return of 13.64% during the year, ranking second among the eight major strategies. The fund of funds has an average return of 4.58% during the year, which is among the eight major strategies. Ranked third.
The active management capabilities of brokerage asset management have been recognized by the market, and many strategic funds under brokerage asset management companies have achieved good returns.
From the perspective of equity investment, CICC Asset Management, which has a wide range of business, has a large collection of CICC Xinrui with a return rate of 42% as of the end of November this year, ranking in the top 10% of the publicly offered common stock funds in the entire market; CICC Fortress stock type The performance of pension products this year is 37%, ranking in the top 5% of equity pension products. In addition, CICC’s fixed-income investment and asset allocation strategies have performed steadily, while its cross-border business has significantly outperformed the index and products with the same strategy in the market, gaining customer recognition.
In this regard, the relevant person in charge of the asset management department of CICC stated that in the context of asset management transformation, CICC’s asset management business adheres to active management, and has increased resource investment, digital transformation, and customer coverage. Therefore, the risk-adjusted return performance is good.
The fixed-income collection products deployed by CITIC Securities Asset Management, while achieving good returns, have very well controlled drawdowns. For example, its fixed-income + strategic product CITIC Securities has increased the annualized income of the 18-month collective asset management plan. The rate was 7.7%, and the maximum retracement during the period was only -0.76%.
How to differentiate the future core competitiveness?
Regarding the future opportunities for securities firms’ asset management, Ping An Securities stated that the core of the asset management business in the future is still to do large-scale, improve product returns and stability, so as to establish and consolidate the brand of asset management institutions.
The specific strength lies in the investment capacity, consolidating the investment research and investment decision system, relying on technology to accelerate the research and development, iteration, and output of investment strategies; in addition, it is also possible to create stable income products through multi-asset and multi-strategy configuration, and use more The strategy of variety and multiple tools smooths fluctuations and strives to increase customer revenue.
“The core ability of securities firm asset management should build a business line based on net worth-based active management products, and create a differentiated financial product system with securities firms’ characteristics.” A person in the asset management business of a securities firm in Shenzhen said that there is still a lot of pressure in the development of the industry. After all, more than a dozen brokerage firms have public offering licenses, and only Dongfanghong Asset Management really came out.
The relevant person in charge of the Asset Management Department of CICC believes that compared with the long-term operations of large fund companies in the public offering and retail fields, securities firms’ asset management are still inadequate in terms of investment and research capacity building and long-term performance accumulation. However, from the perspective of the long-term development of the industry, by taking the public offering track as a strategic focus, insisting on resource investment and persistent accumulation, brokerage asset management has the conditions and confidence to speed up catching up.
“How to make up for the shortcomings of the retail business, from serving high-net-worth customers to serving the majority of small and medium-sized investors, is the most important issue for the asset management of securities firms.” In the past, asset management of securities firms in the future needed to form their own competitiveness, strengthen active management capabilities, do a good job in risk management, and safeguard the interests of investors.”
(Author: Li Yu Editor: Wu Yanling)
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