InvescoGreat Wall FundDeputy General Manager, General Manager of Quantitative and Index Investment Department Li Haiwei has 19 years of experience at home and abroadsecuritiesfundPractical experience, nearly 15 years of fund management experience, worked in the United StatesMoody、BlackRock,HongkongHaitong Internationaljoined in August 2012InvescoGreat Wall Fund. In the current volatile market environment, Li Haiwei brought his new layout – targeting the currently hot ESG investment. He bluntly said that he saw this direction as early as 4 years ago, and made sufficient preparations in ESG data, quantitative models and other aspects.
In Li Haiwei’s view, ESG is an investment method that conforms to the trend of historical development.per capita in ChinaGDPAfter approaching the level of moderately developed countries, it will naturally pay more and more attention to the quality of economic growth and the happiness of personal life, which will inevitably be reflected in the capital market. At present, the economic transformation and ESG “infrastructure” are gradually improving, which is the moment when ESG investment is worth deploying. Li Haiwei and his team have taken active quantification to participate.
Talking about the market outlook, Li Haiwei said that the volatility of the broad-based index is gradually declining. After the impact factors such as the new crown epidemic and the conflict between Russia and Ukraine gradually eased, it is expected that the market volatility will continue to decrease, and medium and long-term layout opportunities have emerged.For a period of time in the future, as the valuation bubble is squeezed out, more investment will return to its origins, and more attention will be paid toperformanceDue to factors such as stability and cash flow, it is difficult for the market to reproduce the skyrocketing market in a single industry or track stocks in the short term. This will also be more conducive to quantitative investment strategies, and I believe its comparative advantages will gradually emerge.
The “big layout” in the past four years
ESG has become a hot spot in the market layout in recent years, and many institutions have participated in it. Li Haiwei started targeting this theme as early as 2018 and led the team to continue to prepare for it.
“ESG is an investment method that conforms to the trend of historical development. After China’s per capita GDP is close to the level of moderately developed countries, it will naturally pay more and more attention to the quality of economic growth and the happiness of personal life, which will inevitably be reflected in the capital market. Li Haiwei believes that the level of profit growth is not the only and core driving factor for evaluating a listed company. Participation in and promotion of social progress and sustainable development will also become an important factor in evaluating and selecting companies for investment.
“This is exactly the origin of ESG. It involves three core elements: environment, society, and corporate governance.” Li Haiwei further elaborated, “E” means that there may be some short-term cost pressure in environmental protection , but it is beneficial to social development in the medium and long term; “S” pays more attention to the balance of social spillover effects, such as the emphasis on labor protection, protection of women’s groups, employee benefits, etc.; “G” refers to corporate governance, information disclosure quality,Equity incentiveetc.
Spotting this outlet early, Li Haiwei and his team also started to act. According to him,InvescoThe Great Wall Quantitative and Index Investment Department has set up an ESG team. It took more than two years to outline and import many ESG factors, and established a quantitative framework for ESG. It also encountered many challenges, such as ESG basic data sources and ESG concepts. localization innovation, etc.
Li Haiwei said that, benefiting from the implementation of “double carbon” in the past two years, relevant domestic ESG data providers have sprung up, and there are currently more than 200 data providers; the ESG information disclosure of listed companies has also changed from purely voluntary to semi-voluntary. Forced transformation; major research institutions and academic institutions also quickly participated in it, and the team has also carried out research projects in close cooperation with some well-known domestic universities in recent years.
Along the way, Li Haiwei and his team worked steadily, overcoming difficulties one by one, for example, comprehensively considering technical capabilities and platform stability to screen data providers, do data cleaning, sort out and quantify ESG investment research framework, R&D related factors, etc. Natural language NLP way to process, filter, process unstructured, non-digital text information, and so on.
ESG investment from overseas is a “gold mine” worth digging in China. Li Haiwei analyzed that in China’s ESG field, the factors of social responsibility (S) and corporate governance (G) have more obvious excess returns, while the factors of environmental friendliness (E) are relatively flat. This may be because the former two factors are currently The stock price evaluation system that the market attaches great importance to has a higher weight. In addition, from the perspective of factor performance cycle, combined with the current domestic quantitative fund holding cycle of three to six months on average, the positive contribution of ESG factors in this cycle is also relatively stable. Relatively stable excess returns can be generated in the “mid-cycle” of the left and right.
The data also shows that investments in ESG-related concepts have relatively more stable long-term performance. ESG funds in both China and the United States have shown strong defensiveness and obvious allocation value when the market fluctuated sharply in the past few years.
Nuggets ESG with Active Quantification
How to tap into the ESG trend? Li Haiwei adopted the active quantification method that he is best at.He is about to take the helm of Invesco Great Wall ESG quantificationstock fundIt is the stock that meets the ESG requirements as the investment target, and the quantitative multi-factor and ESG factor model is used for investment.
According to reports, so far,Invesco Great Wall FundThere are 600~700 candidate target reserves in the ESG subject database, which can fully meet the needs of broad base coverage and decentralized investment.
How to screen ESG investment targets? Li Haiwei said that there are currently two mainstream methods of doing ESG in the world: one is to “exclude” companies that do not meet ESG standards or reduce the weight of the negative list; The company’s weight has risen. Invesco Great Wall will use the two together, both exclusion and weighting.
“Regular supervision and punishment lists, environmental protection, public opinion, corporate governance risk events, etc. will be included in the negative list. If there is any change in the secondary market, in addition to the quantitative team, we will also combine the company’s research department.researchTo learn more about the situation of enterprises, and then evaluate and filter them. Li Haiwei said that the positive list is to use the multi-factor investment framework to overweight some varieties with the potential for excess returns in line with the ESG concept, such asintellectual propertyProtect,shareholderProtection,executiveincentives etc.
However, any imported product has a process of localization.Li Haiwei said that the definition of ESG in China and overseas is slightly different, mainly considering the localization process, institutional acceptance and performance.Liquorcoal and other industries, China has its own standards.
“Compared with the index enhancement strategy, the active quantitative strategy uses a quantitative model to actively select stocks in the whole market. The stock pool is not limited to the underlying index. The stock selection range is relatively larger and the operation space is more flexible.” Li Haiwei said that in terms of risk control Quantification also has advantages.
According to Li Haiwei, in terms of anti-risk capability, ESG funds as a whole are more defensive, and it is not easy to step on risk events. This is related to the extensive use of “negative lists” in ESG strategies to remove potentially risky companies. In addition, from the perspective of Alpha, the overall performance of ESG factors is not inferior to traditional quantification factors.
In the context of the increasing number of “black swan” events, the advantages of quantitative investment are also very obvious. Li Haiwei said that their quantitative team has a special person to continuously track the “black swan” event; at the same time, due to the scattered quantitative holdings, the allocation ratio of a single stock is low, so even if a “black swan” event occurs in a single company, the impact on the fund will not be affected. smaller.According to him, he will try his best to prevent risks from the perspective of risk control.Big DataIn other ways, the risk points of the market are dynamically tracked and processed.
“Comparatively speaking, our ESG strategy will be more balanced, and the turnover rate will be relatively low, which is also in line with the medium and long-term development route of the country and the industry and the ESG concept. Therefore, in the medium and long term, this strategy will Alpha is also relatively stable.” Li Haiwei said.
A-shares have reached the right time for medium and long-term layout
Since the beginning of this year, there has been a relatively obvious adjustment in the A-share market, and the “golden track” that was once sought after by the market has also been seriously damaged. Li Haiwei, who has been deeply involved in quantitative investment, also has his own views on A shares.
“This year, the A-share market has indeed experienced a relatively unexpected decline. The Federal Reserve has entered a cycle of raising interest rates. Under this round of economic cycle in China, there are uncertainties and pressures in the macro economy, and the impact of incidental factors such as the Russian-Ukrainian conflict and the Shanghai epidemic has hit the market. As a result, the market is very worried about the downside risk of the economy and the growth of enterprises, and the investment risk appetite is rapidly decreasing.” Li Haiwei said that the volatility of the index in the first half of the year rose rapidly, and the volatility of the broad-based index is gradually declining. Some influencing factors After the gradual easing, the market also gradually rebounded.
Li Haiwei said that he is relatively cautious and optimistic about the market outlook. At present, it is a process of shock and grinding, and there may be ups and downs in the short term. In the medium term, market confidence has gradually stabilized, and the allocation value has gradually emerged. However, if you want to continue to perform in the future, the core should pay attention Wide credit implementation situation. In 2022, the macroeconomic pressure will be relatively large, and the market needs to see the implementation and effect of relevant policies before it is possible to take it to the next level. The U.S. stock market is facing the possibility of raising interest rates in June, or it may fluctuate. After that, the high point of impact brought by overseas factors is likely to pass. In the medium and long term, the current layout is a more appropriate time.
Talking about the promising track, Li Haiwei said that he will focus on the investment opportunities brought by “steady growth” in the short term, and he is optimistic about oversold rebounds and reversal of difficulties, such as aviation, transportation, tourism, etc.; he is optimistic in the medium and long term.new energyand other sectors with strong growth potential.Future product layoutMeetingPay attention to industries with long-term development and stable excess returns.
Li Haiwei is also relatively optimistic about the future performance of quantitative strategies. On the one hand, as the market valuation bubble is squeezed out, investment thinking has gradually returned to the origin of investment, and performance stability and cash flow have been paid more and more attention. A relatively rational market is more beneficial to quantitative investment; on the other hand, it is less likely that a single industry or style of track stocks will skyrocket in the short term, and the investment width is better than before, which is also beneficial for quantitative investment.
In Li Haiwei’s view, the comparative advantage of quantitative investment will gradually be revealed in the future. Since the beginning of this year, the performance of most quantitative funds in the whole market has been relatively stable, which is the embodiment of this advantage. In this context, Li Haiwei said that the quantitative model will be dynamically adjusted in combination with the evolution of the macro-level and risk appetite.
(Article source: China Fund News)
(Original title: Li Haiwei, Deputy General Manager of Invesco Great Wall Fund, General Manager of Quantitative and Index Investment Department: Confidence in bottoming out of market shocks has gradually stabilized)
(Editor in charge: 43)