scratchx| Become a "dancing elephant"! China-Europe Fund: Fixed income enters an era of excellence
"the investment and research system for the fixed collection teamScratchxWe hope to be a 'dancing elephant'. Risks are as stable as Mount Tai, opportunities are as flexible as water, and the best is true. " In an interview with a brokerage in China a few days ago, Chen Kaiyang, director of fixed income investment of China Europe Fund, and Lu Xiulei, director of credit research, shared their profound insights into fixed income investment.
They believe that the job is like "dancing on the tip of a knife" and that every move needs to be treated with caution. Especially in the current market, bottom-up credit research ability is particularly important, but also need to take into account the top-down risk control perspective, to achieve "pre-orderly, horizontal to edge, vertical to bottom". The era of barbaric growth in the past has gone forever, based on the present, only by injecting a profound force into every product and pursuing excellence, can we ensure an invincible position in the fierce market competition.
At present, CEIBS funds are opening a new chapter in the area of fixed income. In the face of the new interest rate environment and bond research in the macro context, CEIBS funds have accelerated the pace of team iteration. This is not simply to "integrate" into the new members, but to "reshape" the territory-- to upgrade from the concept, process to the team on the basis of the original strategic layout. As the new team emerges, it also indicates that CEIBS will redefine the fixed income investment strategy and product experience in the new era with more solid research capabilities, innovative scientific and technological methods and keen insight into customer needs.
Reshape the fixed income territory of CEIBS funds
In December 2023, Shao Kai, chairman of the China-Europe Fund fixed income Investment decision Committee and a "veteran" of the asset management industry, appeared at the China-Europe Fund Strategy meeting. This is Shao Kai's first public appearance since joining the China-Europe Fund, and it is also a signal that the new team of China-Europe solid income set sail. Other important members of the "fleet" who jointly build this "fleet" are senior fixed income investment and research experts such as Chen Kaiyang and Lu Xiulei.
In Chen Kaiyang's view, the decision to join the CEIBS fund was well thought out. He believes that even in mature markets such as the US, actively managed products still account for half of the country. This shows that active management can still create alpha for investors in a potential market environment. The CEIBS fund is an investment institution with a significant advantage in active management, which is one of the important reasons why he chose to join.
In Lu Xiulei's view, from the initial lack of buyer's credit rating system to the gradual recognition of the importance of independent credit research, China's fixed income market has undergone multiple changes. Now joining the CEIBS fund, he and his team hope that the CEIBS fixed income system will grow into a "dancing elephant", a flexible investment system that can manage risks steadily and act quickly when opportunities arise.
Lu Xiulei believes that the core of this system is to adhere to the independence of fundamental analysis and effectively map the results of credit research to all kinds of product lines. On this basis, we can combine multi-dimensional analysis such as liquidity, non-market evaluation and ESG evaluation to meet the changing market demand and achieve seamless docking from research to investment. The CEIBS Foundation's solid fundamental research endowment and modern investment and research platform will undoubtedly effectively empower the depth and breadth of credit research.
When it comes to team and concept building, Lu Xiulei prefers to use "reshaping" to describe the process rather than the word "integration". He explained that "integration" may involve compromise between the two sides, while "reshaping" is moving in the right direction and committed to doing something valuable under the guidance of a common goal. In this process, "consistency" is very critical.
From the perspective of customers, the product system to adapt to the new wealth management era must be complete in order to meet the needs of diversified investment allocation. This not only means making up the product line from currency, short-term debt and pure debt to mixed asset strategy, but also puts forward higher requirements for the corresponding team structure. According to Chen Kaiyang, under the China-EU fixed income system, there are two first-level departments, the fixed income Investment Department and the Credit Research Department. Among them, the fixed income Investment Department includes five investment strategy groups to meet the diversified and professional investment needs of the market. At the same time, a research group has been set up to be responsible for the research and support of macro aggregate, meso-industry, derivatives and quantification at home and abroad. As an independent department, the Credit Research Department maintains the objectivity and independence of the research. Its research results not only serve the fixed income Investment Department, but also support the company's rights and interests, multi-assets, special accounts and overseas investment teams.
Chen Kaiyang said that in order to ensure the professionalism and future development of the team, team members have been carefully screened, led by experienced investment directors or research directors of the strategy group with excellent performance, and pay attention to the age and experience structure of the team to select outstanding Mesozoic generation and new generation with great development potential to match the talent echelon of three generations of fund managers. "ScratchxWith a five-to ten-year goal plan, we will set up and strengthen the CEIBS fixed income team step by step. "
CEIBS fixed income investment and research system wants to become a "dancing elephant"
How to make the CEIBS fixed income investment and research system "elephant dance"? In Lu Xiulei's view, we should not only be as stable as Mount Tai when the risk comes, but also be as flexible as water when the opportunity comes, and have the ability to adapt to the trend in different situations.
He is deeply aware that compared with equity investment, assets such as bonds are less liquid, and if something goes wrong, it may bring huge potential losses to the company and seriously affect the company's reputation. Therefore, we should not only build a sound basic market, defend layer upon layer and resist risks in a systematic way, but also dare to "dance on the tip of the knife" in the highly competitive market, and accurately seize the risk-return opportunity with a definite grasp.
In view of these characteristics of fixed income investment, Lu Xiulei asked the team to adopt different postures when attacking and defending. When attacking, we should do fundamental research in a down-to-earth manner to ensure that every step of the investment decision is fully supported by logic and data, while in defense, we should adopt a more cautious attitude and focus on those investments with strong certainty, so as to avoid standing under a dangerous wall and not earning the last BP.
In the long-term fixed income investment career, the fierce competition let Lu Xiulei feel deeply. "Don't expect yourself to be smarter than others. In this market, everyone is smart. If you want to get ahead, you can only rely on diligence, refinement and the ability to lay out in advance. "
In order to further improve the research efficiency, the "fine" division of labor is particularly important. Lu Xiulei believes that focus is the key to success, and every member of the team should focus on his or her own professional field and make the best use of it.
In addition, through the layout in advance and the sensitive grasp of the industry rotation and the evolution of subject credit, the team can make a rapid and accurate response when the market changes.
This long-term professional pursuit and careful grasp of hot spots define the investment style of CEIBS.
Behind all this, it not only requires the excellent ability of the research staff, but also depends on the trust and authorization of the team. Lu Xiulei said that with the support of Shao Kai, members of the fixed collection team of the China Europe Fund are free to put forward their own research ideas and opinions, accept the challenges and arguments of the whole team, and finally draw independent conclusions, forming an atmosphere in which all members participate in the research.
The front is orderly, horizontal to edge, vertical to the end.
When talking about the specific research methods, Lu Xiulei said that bond investment involves complex non-linear decisions. He especially emphasized the importance of research. In his view, the "winner or loser" in bond investment lies in research ability.
To this end, he advocated a bottom-up research method. In his view, although macro factors are also very important, these factors will eventually be reflected in the fundamentals of the enterprise, only in a different way and time rhythm. However, in risk control, we also need top-down thinking to examine the investment direction from the perspective of market transactions. Lu Xiulei believes that the two investment methods are equally important, but the scenarios used are different and should not be confused.
In the face of credit default, Lu Xiu regards credit risk prevention as a part of systematic work. This strict risk control system has two major characteristics, one is pre-orderly, the other is horizontal to the edge, vertical to the end.
Specifically, "pre-order" is the investment management of the whole life cycle of credit debt. That is to fully consider the evolution trend of subject credit and market liquidity, starting from the introduction of bonds into the pool, make a good forecast of cash flow in the next few years, and even the factors and patterns of buying time and subsequent valuation fluctuations should be considered in advance.
The "horizontal to the edge" is a set of credit risk prevention and control index system based on multi-perspective internal evaluation system. It is not limited to the traditional credit rating, but covers the comprehensive assessment of institutional behavior, investment rhythm, liquidity and ESG factors.
"Longitudinal to bottom" means that the adjustment of the grade is not achieved overnight, but a pressure drop strategy of combining strength and softness. In terms of specific operation, in the early stage, according to the situation of risk, the duration, scale and concentration of bonds should be adjusted step by step; in the later stage, it is necessary to consider the action of transaction takeover or compulsory treatment, at this time, the duration of the bonds in hand is short, the proportion of positions is low, the scale is small, and the impact on the portfolio is very limited. The implementation of this strategy is based on an in-depth understanding of the bond market and a rigorous risk management process, and the stability of the portfolio can be maintained as far as possible even in the case of market instability.
Solid harvest ushered in the era of excellence and excellence.
As the bond market enters the era of low interest rates, fixed income investment is also facing transformation. In this regard, Chen Kaiyang stressed that bond investment should pay attention to the "people's nature" of wealth management. For the wealth management industry, "people's character" is to help clients earn money and enhance the sense of achievement of holding. This requires bond investment to strengthen the management of volatility and withdrawal, and strive to reduce the pullback as much as possible on the premise of achieving the target return. At the same time, in the face of low interest rate environment, the solid collection team also needs to broaden the source of basic assets. In addition to the traditional pure debt strategy, the demand for mixed asset strategy arises at the historic moment in the era of low interest rates. At present, there are three mainstream mixed asset strategies in the market: + stocks (such as dividend stocks), + other assets (such as gold), and + overseas assets (such as QDII). In addition, we can also consider treasury bond futures and other derivatives strategies to increase returns and reduce the pullback.
In the face of the current level of credit spreads, Lu Xiulei said that in the market environment of reduced absolute returns, investors turned to relative gains. In this case, although coupons are still the core element, investors do face greater challenges, especially in risk monitoring and prevention, duration setting and so on.
He summed up his thinking on current investment decisions in two sentences, that is, "long-term layout wins" and "those who seek the overall situation win". "as far as credit research is concerned, long-term vision and industry-wide research must be emphasized," Lu said. "only by relying on this ability can we respond quickly and make correct decisions when potential risks come in the future, and then earn a profit from the risks."
Chen Kaiyang said that in addition to focusing more on the deep internal logic of the medium and long term in the macro policy research, the current investment strategy should also adjust the portfolio duration and asset structure more flexibly in the short term to adapt to the interest rate environment of low interest rates and relatively high fluctuations. This puts forward higher requirements for the fixed income investment team, not only to have solid macroeconomic and market analysis ability, but also to have accurate duration grasp and timing trading ability.
"the era of barbaric growth is over, and then there is the era of excellence." In Chen Kaiyang's view, the goal of the CEIBS fund collection team is to inject the greatest energy into each product and try its best to achieve the best of its kind. After all, in the current market, only the absolute "boutique" can survive.
According to the statistics of China Merchants Bank, by the end of 2022, the total amount of personal investable assets of Chinese residents has reached 278 trillion yuan; by the end of 2024, the total amount of individual investable assets is expected to exceed 300 trillion yuan. As a result, the demand for wealth management in China is still huge. In the face of the market trend of increased uncertainty in the future, Chen Kaiyang still believes that the development space of the solid collection market is still huge. At the same time, he pointed out that China's current stage of economic development and the external environment it is facing means that interest rates will not fall to a very low level similar to that of Japan, and that exchange rate factors and insufficient actual demand are the main influencing factors of current short-term interest rates. Wealth management strategies must be flexible to adapt to these external pressures and development characteristics.
Specifically, there are still three opportunities to seize in the future: First, low interest rates do not necessarily mean low volatility. There are still a large number of trading opportunities in the bond market. By flexibly using various derivatives, there are still opportunities to obtain alpha or lower volatility and retracement; Secondly, when low interest rates fluctuate and fluctuate, fully professional defense can also bring relatively high excess returns. At present, the main members of the China-Europe fixed income team have experienced more than three rounds of bull-bear cycle switching, and have accumulated rich defensive experience in this regard; finally, with the high-quality development of China's economy and the continued and in-depth advancement of new quality productivity, new momentum growth With the accelerated pace, risk-free interest rates may still rise in stages, and new allocation opportunities will also be provided at that time.
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