Original Title: Du Meng of China International Investment & JPMorgan Fund: Embracing the New Future of Investment and Going with the Trend of the Times
Du Meng, Master of Economics from Nanjing University. Entered the securities industry in 2002 as a brokerage researcher. Since October 2007, he joined China International Fund Management Fund and served as an industry expert, fund manager assistant, and general manager assistant. Since July 2011, he has been a fund manager. Since 2016, he has served as the investment director of Shanghai Investment Morgan, managing the equity investment team. Later, he concurrently served as the company’s deputy general manager.
Investment is very similar to life. If you want to attack, it’s difficult to control the retracement; if you want to defend, the periodic rate of return will not be prominent. With regard to how to choose, Du Meng, who has a clear thinking about how to choose, has long understood the balance between certainty and rate of return.
“Rather than entangled in the valuation differences of different industries, it is better to calm down and try to perceive the changes in the industry and grasp the changes in the characteristics of the times.” Du Meng said in an interview with reporters.
Nineteen years after he has invested in Hainan, Du Meng has been flexible between confirmation and prospects, and between performance and valuation.
Get rid of the false and keep the truth, grasp the growth
The A-share market has never lacked the color of the game. In the face of the changes in the era of equity investment, many investors hope to find an equity fund manager who can “step on the rhythm” in the variables. However, the market always tells people in an unpredictable way: never try to predict market trends.
Grass snake gray line, the veins are thousands of miles. For investors, how to proactively grasp economic development trends is the basis for obtaining excess returns. The ancients said: Those who observe the situation will know, the trend will be wise, and those who control the situation will be alone in the world. Du Meng’s investment secret lies in “potential.” “Positive” people are looking for the industry that is most in line with the development trend of the times and the most potential business model in the future. Du Meng hopes to focus on areas that have real innovation capabilities and can promote social progress. Then use the growth logic to find hidden champions in the subdivisions, select high-quality leading companies or company stocks with strong competitiveness, and firmly buy and hold them for a long time.
“Equity investment is actually an investment in the future. Any investment is an investment in an era and an excellent industry in this era. Therefore, we must follow the changes of the times and actively look for the industries that are most in line with the development trend of the times in the next five to ten years. Find a company that can really grow inside.” He said firmly in an interview.
Du Meng’s precise grasp of growth trends comes from his rich investment experience. In his 19 years of working experience, Du Meng has been cultivating in the field of growth stocks, whether he is doing business tracking and research, or managing products, and he has the reputation of “growth investment flag bearer” in the industry.
For Du Meng, growth does not only cover a certain industry. Stock investment invests in companies and should not be limited to certain specific industries. Growth industries or growth investments are not a very narrow range. The concept of growth is broad, not only in the fields of medicine, consumption, and technology, but also in traditional industries such as building materials, light industry, textiles and clothing, and agriculture. There are also many companies with good growth potential.
However, it is hard to know, but hard to do. How to effectively identify whether an investment is “true growth” or “false growth” is a test of the level and ability of fund managers. In his view, there are two types of real growth. One is “industry-style” growth. It is a long-term process for an industry to grow from its inception to growth and then to saturation. When the industry enters the growth phase, a large number of new demands are generated, which will promote the “explosive” growth of the performance of the best companies in the industry; the second type of growth is “corporate”, which may exist in a tradition of stable growth. Industry, but a company in the industry is extremely competitive and efficient, and has a higher cost advantage. It can continuously increase its market share through its own capabilities, or achieve long-term growth through revenue growth strategies.
Conversely, in Du Meng’s view, if the investment is not based on the real development of the industry to choose stocks, but based on hot topics, it belongs to “pseudo growth.” “If you invest based on a theme, it is easy to encounter this so-called pseudo-growth, or it is not called pseudo-growth. It may be speculative.” Du Meng said that the key to judging “pseudo-growth” lies in the industry itself. Whether it is really in the upward growth space, not a concept. In addition, even if you choose the right industry for investment, you don’t necessarily choose the right company. Investment still needs to be implemented in specific companies. Through bottom-up focus to select bull stocks, use growth logic to find hidden champions in various segments, and select high-quality leading companies or companies with strong competitiveness to maximize the selection of the right ones. Probability.
Performance is the most powerful evidence. After the precipitation of time, Du Meng’s representative work-Shanghai Investment Morgan Emerging Power Hybrid A management has been more than 10 years, and the record is outstanding. According to data from Galaxy Securities, as of the end of December 2021, the return rate of CIC JP Morgan Emerging Dynamics Hybrid Fund (Class A) in the past ten years is as high as 747.26%, ranking 3/242 among similar partial-equity funds, and the annualized return rate in the past ten years Up to 23.82%. At the same time, the fund has ranked within the top 10% of its peers in the past 3, 5, and 10 years.
Based on industrial transformation, grasping the trend of the times
Peter Drucker said that people tend to overestimate the changes that a company has made in one year, but underestimate the changes that a company has made in five years. When Musk first proposed rocket recovery, countless people laughed at its whimsical. When Tesla’s first electric car was born, who would believe that green license plates would shuttle through the streets. Just as a horse-drawn carriage cannot withstand the advent of the era of automobile civilization, we are currently experiencing a new and transformative era. Therefore, investment needs to comb the market investment context, grasp the investment main line of the times, and focus on researching potential industries and leading companies that support economic growth. Can get twice the result with half the effort.
Looking to the future, Du Meng believes that the next cycle of China’s economy will be the energy cycle. Under the guidance of the “dual carbon” goal, the adjustment of the energy structure will contribute the main momentum to China’s future economic growth. This is an industry trend that must be grasped.
Looking ahead, Du Meng is relatively optimistic about the market in 2022 and believes that the structural market is expected to continue and market opportunities will be relatively balanced. Du Meng said that currently, A shares have shifted from a transactional market to an allocation market. Equity investment has become an important part of household assets, and the allocation ratio is expected to continue to increase. At the same time, the current major international indexes, including MSCI, have increased the inclusion weight of A shares. In the long run, continued inflow of foreign capital will become a trend. In the next five to ten years, the domestic equity market will become one of the most attractive large-scale assets at home and abroad.
Under the tone of “steady growth”, Du Meng is confident in the recovery of the macro economy this year. At the same time, after nearly a year of adjustment, the overall market valuation correction has been largely completed. For stock investment, the first quarter of this year may be a better time for the layout.
“We believe that the market opportunities this year will be better than last year, especially at the beginning of the year. Although the market is still volatile and sentiment is relatively low, there is not much room for downside at present, and new opportunities are being brewed.” Du Meng said, “It is expected this year. PPI will peak around the middle of the year due to the decline in upstream commodity prices. In 2021, many listed manufacturing companies will be cost-suppressed due to the soaring upstream asset prices. This year, these suppressing factors, energy shortage factors, All may gradually ease. Therefore, we are cautious about cyclical assets this year, but as far as the entire market is concerned, a large number of listed manufacturing companies have opportunities for performance improvement.”
New energy prosperity leads
On the top of the mountain, you can see the river rushing; on the peaks, you feel the long wind. Du Meng “favored” industries and companies with strong growth and high prosperity, such as new energy, photovoltaic, semiconductor and other industries.
From the perspective of prosperity, Du Meng believes that new energy is still the industry’s leading direction in this year’s prosperity. On the one hand, the current penetration rate of the new energy vehicle industry is still very low, and it is expected that the performance growth rate this year may still exceed 100%. With batteries superimposed on energy storage, output growth may more than double. On the other hand, the photovoltaic industry is expected to grow at 50%-60% this year. “These two industries are expected to continue to be the leading industries for A-share performance growth this year. From the perspective of A-share history, there is not much risk in the leading industries.” Du Meng said.
In addition, from the perspective of valuation, Du Meng believes that most of the new energy vehicles and photovoltaic stocks are not too high for this year. “Although there was a lot of increase last year, it was actually not a valuation increase. Most of the increase came from performance growth. As the new energy industry has a lot of room for growth, we expect that there will still be a relatively good return on investment this year. Note that this year may not show a crushing increase relative to other industries in the entire market like last year.”
In addition to the new energy sector, Du Meng also said that after the previous adjustments, there are also many attractive opportunities in consumption and medicine, but at present, it may not be an opportunity for the industry as a whole, but from the bottom of individual stocks. Opportunities are dominated. In addition, traditional industries such as building materials and light industry can also find investment opportunities from the bottom up if their prosperity recovers.
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