Original title: Supervision focuses on the style drift of public offering funds and some products or contract breaches
The theme fund style drift has always been a chronic disease in the fund industry, and this situation is now improving.
Recently, it has been reported in the market that regulatory authorities have paid special attention to some fund products that have drifted in style, and relevant funds have also adjusted their positions in fund products.
In this regard, reporters from the 21st Century Business Herald learned from many sources that the regulatory authorities are indeed concerned about the problem of the deviation of the fund’s style. “In fact, not only in the recent past, but the supervision began to pay attention to related issues in the first half of the year, especially the products suspected of contract breach.” A source from a fund company in South China said that the fund company is also adjusting internally.
Earlier, 21st Century Business Herald reporters had investigated and reported on the phenomenon of fund style drift (for details, see “Mutual fund style drift trapped in compliance Rashomon: The three categories are “misnamed”,” involving nearly 40% of fund companies and affecting multiple top-tier funds. “). In general, there are three types of funds with style drift in the market, namely, small and medium-cap funds buying large-cap stocks, quantitative funds “false” quantification, and thematic funds whose names are not true. These three types involve nearly 40% of fund companies. There are many top-tier funds including the ICBC Credit Suisse Culture and Sports Industry Fund managed by star fund manager Yuan Fang.
The latest information shows that the problem of theme fund style drift is improving, and existing fund companies have successively submitted applications for product transformation to the supervision, or held a meeting of holders to modify the fund contract in order to expand the scope of investment.
Regulatory concerns about fund style drift
With the extreme differentiation of market styles this year, the misnoming of public fund products has become increasingly fierce.
The latest data show that as of the end of the second quarter, the domestic lithium battery leader Ningde Times has as many as 1362 funds held heavily. Among these funds in the Ningde era, there have been many theme funds that have nothing to do with new energy, including Bauhinia Artificial Intelligence Fund, Boshi Internet Theme Fund, Harvest Culture, Sports and Entertainment Fund, China State-owned Enterprise Reform, Yinhua Internet Theme, and ICBC Credit Suisse’s 118 funds from 40 fund companies including the Beautiful Town Theme Fund.
Not only that, at the end of the second quarter, there is not a heavy stock and cultural and sports-related cultural and sports funds and Shigekura New Energy’s cultural and entertainment funds are not uncommon in the market. Some funds are subject to deviations, and some funds even involve defaults.
Therefore, the situation of contract breach caused by the drift of fund style is the focus of supervision.
Recently, some funds with relatively large style drifts have been reported in the market, which have attracted regulatory attention and require clarification. According to the reporter’s understanding, the supervision has actually begun to pay attention to related matters in the first half of the year, and required fund companies to conduct self-inspection and then make rectifications based on the self-inspection.
The chief inspector of a public offering fund in Shenzhen said: “In fact, the supervisory authorities have been paying more attention to the style drift of funds, but they cannot be generalized. The nature of products involving contract breaches is more serious.”
A person from a head fund company in South China believes that for those fund contracts that are clearly stipulated, if the fund manager does not follow the contract, whether or not they make money for the citizens, it is actually a violation of the industry’s fiduciary obligations. Should be corrected.
Part of the fund or contract breach
According to a source from a fund company, the focus of supervision is on contract breaches caused by style drift.
Judging from the situation this year, themed funds such as entertainment, cultural and sports have become the hardest hit areas for fund style drift and fund contract breaches. Among them, many funds are heavily invested in new energy, such as the ICBC Credit Suisse Culture and Sports Industry Fund managed by Yuan Fang, a top-tier fund manager of the Mesozoic era.
As of the end of the second quarter, the top ten stocks of ICBC Credit Suisse Culture and Sports Industry Fund were CATL, Hikvision, Tsingtao Brewery, Fuyao Glass, WuXi AppTec, Raycus Laser, Gujing Gongjiu, Yili, China Unicom and Wuliangye.
ICBC Credit Suisse Culture and Sports Industry Fund’s prospectus shows that the fund’s investment portfolio ratio is mainly that stock assets account for 80%-95% of the fund’s assets. The investment in stocks within the cultural and sports industries defined by the fund is no less than non-cash assets. 80%.
At the same time, the fund has given a clear scope on the definition of cultural industries. This cultural industry includes three levels: traditional cultural industries, emerging cultural industries, and cultural-related industries.
However, at the end of the second quarter, the fund’s culture, sports, and entertainment industries accounted for only 2.65% of the fund’s net asset value, which was much lower than that of the manufacturing and information transmission, software and information technology services industries. Therefore, a certain fund company in South China The person believes that it is inconsistent with the contract and violates the agreement of the fund contract.
According to industry insiders, the reason why many fund companies tolerate the drift of styles of some fund managers is because some products perform well after the drift of styles and make money for investors. In particular, if some cultural, sports, and education-themed funds insist on investing in cultural, sports, and education companies, they will encounter a drop in net worth and corresponding redemption by investors, then the scale will shrink very quickly, which is what fund companies and fund managers don’t want to see .
“If an investor buys a theme fund, but the actual stock held in the position is misleading, it is a misleading and suspected breach of contract.” Huang Jiangdong, a senior consultant at Guoco Law Firm, believes that this kind of misleading is not a principled error, and it is necessary. Handle properly.
The problem of style drift is improving
On September 10, E Fund issued the “Announcement on the Voting Results of the Meeting of Small and Medium-Cap Shareholders and the Effectiveness of Resolutions.”
According to the announcement, “E Funda small and medium-cap hybrid” was officially changed to “E Funda Premium Selection”, the investment scope was expanded to A shares and Hong Kong stocks, and the fund manager was still Zhang Kun.
Before the contract was changed, the fund’s investment scope stipulated that its investment in small and medium-cap stocks should not be less than 80% of stock assets. However, due to the large scale of management, this fund’s heavy holdings are mostly blue-chip stocks in the market.
After the fund contract is changed, the investment portfolio ratio will be 60%-95% of the stock assets in the fund assets. Among them, stocks listed on the mainland market account for 50%-100% of stock assets, and stocks listed on the Hong Kong market account for 0-50% of stock assets.
In addition, some fund products are applying for product transformation.
China Universal Asset Management’s Environmental Protection Industry Fund applied to be changed to China Universal Asset New Energy Industry Fund. On August 11, the product transformation application received feedback. At the same time, the Southern Modern Education Fund under the Southern Fund’s application was changed to the Southern Industry Smart Selection Fund, which was accepted on August 26.
Fund industry insiders said that for funds with less serious style drift, they may conduct stock exchange swaps, which requires a process.
For some conceptual themes without performance support and derivative conceptual themed funds, industry insiders suggest that fund companies should reduce the issuance of some new products, increase their efforts to change the investment scope of these thematic funds in accordance with the contract, and follow the new voting plan. After the holder passes and changes.
(Author: Li Yu Editor: Zhang Xing)
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