The fund industry's compensation reforms have drawn attention recently. According to new regulations from the Asset Management Association of China, if a fund manager's product underperforms its benchmark by more than 10 percentage points over three years with negative fund profitability, their performance-based pay must be reduced by at least 30%. Additionally, fund companies must assess managers overseeing multiple products based on weighted factors such as fund size and management tenure, excluding funds managed for less than a year from evaluation.
Wind data shows that as of December 11, among 9,429 funds with three-year performance records, 1,625 underperformed their benchmarks by over 10 percentage points, with 55 lagging by more than 50 percentage points. GF High-End Manufacturing A, Founder Fubon Innovation Power A, and China Securities Low-Carbon Growth A were the worst performers, trailing their benchmarks by -81.11%, -73.54%, and -69.12%, respectively.
China Securities Low-Carbon Growth A, launched on December 13, 2021, has been managed by Zhou Ziguang since inception. Over three years, its net value lagged the benchmark by 69.12%, with total assets under management (AUM) at 542 million yuan. Zhou also manages China Securities IoT A and China Securities Smart Living A, which underperformed their benchmarks by 65.51% and 54.26%, respectively, bringing his total AUM to 841 million yuan.
Zhou's three funds exhibit thematic focus and consistent style in their holdings, but individual stock performance varies significantly. For example, China Securities Low-Carbon Growth A's top ten holdings mostly declined over the past three months, with Kotech Power dropping -24.96% and Weichai Heavy Machinery falling -23.15%. However, some holdings like Sungrow Power and Deye Technology gained over 20%, reflecting high volatility in growth-sector picks.
Similarly, China Securities Smart Living A saw notable declines in stocks such as Sinan Navigation and Zongshen Power.
In Q3 reports, Zhou expressed optimism about A-shares in Q4 but cautioned that leadership might rotate, with overvalued stocks facing correction risks. He emphasized adhering to thematic boundaries, maintaining a growth-oriented strategy, and enhancing flexibility to "reduce cyclical volatility while capturing growth."
Zhou Ziguang, a master's degree holder, entered the securities industry on January 22, 2010, with 8.55 years of investment experience. He has managed six funds and currently oversees three. However, his long-term performance gaps are stark. China Securities Low-Carbon Growth A returned -52.39% over three years and -47.08% since inception, despite occasional gains like 26.97% in the past six months. Its worst six-month stretch saw a -41.47% return, highlighting high portfolio volatility.
With the new pay rules in effect, managers like Zhou, who oversee multiple underperforming products, face significant pay cuts. Balancing growth strategies with risk control and benchmark outperformance will be a critical challenge moving forward.
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