Translated by Andrew Vanburen from a Chinese-language piece in the Securities Daily
WANG YAWEI is perhaps the best known face at China’s largest fund management firm – China AMC.
The 300 billion yuan-strong fund with over 13 million investors welcomed Wang into its doors back in 1998.
He has more often than not beat the benchmark Shanghai Composite – the index which tracks both A-shares and B-shares in Mainland China.
But China AMC’s star fund manager has recently hit a rough patch.
The two funds Mr. Wang takes charge of – both operating under the China AMC flagship – are only providing combined returns of 5.4% so far this year, far below the 9.6% year-to-date rise for the Shanghai Composite.
As for Mr. Wang’s parent firm, China AMC overall has been doing a bit better at around 7% since January 1, which puts the fund squarely in the middle of the pack.
As of Monday, a total of 559 A-share listed firms had already reported full-year 2011 financial results.
So did Wang have many of the “upside surprises” among this early-reporting lot in his portfolios?
At least 12 funds managed by 10 “star managers” like Mr. Wang have built their reputations in part by the ability to gauge a given firm’s full-year performance judged solely by its first half results, and they have been leaning on this strategy for at least the past three years.
Mr. Wang’s peers in this category include well-known names in the fund sector like Cathay’s Deng Shifeng and Zheng Wei, Invesco Great Wall’s Wang Penghui as well as Fullgoal’s Yu Jiangyong and Sun Qingrui of Bocom.
It also includes Deng Yongming of the Changsheng Select Trend Fund, who along with the rest, failed to perform among the top-ten fund managers in terms of returns on investment since the calendar flipped to 2012.
So why the poor performance of the “star managers” in Mainland China’s fund universe this year?
Is it a natural evolution to hungrier, smaller competitors that we are witnessing?
Or perhaps the current team of stars is simply reaching retirement age and they naturally are ratcheting down their daily schedules a notch or two?
Of the 559 reporting firms to date, 14 are known to be heavily held by China AMC’s Wang.
Furthermore, it is noteworthy that none of these 14 counters partly under Wang’s watch -- by dint of his fund’s stakeholding – have been either featured or promoted last year by the two funds which Wang helms.
Nor do they fit the characteristics and requirements of a typical counter heavily bought by the several funds in China AMC’s family of investment products.
Yet they are generally overperforming.
Of the 14 listed firms in question, nine alone are focused on real estate development, which says a lot about Wang’s take on the property sector of late.
Also, he is high on machinery play Jiangsu Shentong Valve (SZA: 002438), which has risen a staggering 43% year-to-date.
In fact, of the 14 stocks he is known to have invested his fund’s money in, five have already added over 20% in value on the year.
Therefore, as his overall performance since January 1 has struggled at around a 5.4% aggregate ROI, one can only guess that other than these 14 overperformers in his portfolio, Wang has made some less than stellar investment choices in 2012.
This puts the two funds under Wang’s leadership at positions 206 and 207 nationwide among 429 tracked funds in terms of ROI rates so far this year.
Mr. Wang's fund claims on its website to invest in “undervalued A-shares with good prospects.”
He must be doing something right despite his recent setbacks because a typical example of his Select Fund’s darling picks is Anhui Sierte Fertilizer (SZA: 002538), which recently jumped 21% in just two weeks.
Wang has also been all-aboard the property express.
Last year, he increased the proportion of real-estate shares in fund to 19% from 13%, while cutting holdings of banks and insurers to 20% from 24%.
In a separate piece in Friday’s edition of the China Economic Times, a reporter named Kang Bo interviewed an unnamed spokesperson with China AMC to find out what was behind the recent troubles apparently affecting the asset management company’s star fund manager – Wang Yawei.
“We are aware that there have been rumors circulating about that Mr. Wang’s success has been assisted by insider information to one degree or another. Furthermore, some are suggesting that the recent underperformance of some of his theme stocks is somehow related to these rumors.
“I would outright reject any truth to all this. The market regulator is no fool and if anyone at China AMC was committing such practices, the bourse watchdog would have immediately found them out and put a stop to it.”
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