• News
• 2024-07-19

Market Surge: Private Equity Rejoices and Laments

Shenzhen He Mu Investment's Chairman, Li Maolin, has been in high spirits recently. Since late September, the A-share and Hong Kong stock markets have seen a sharp rebound, and Li Maolin has seized the leading sectors of this round, achieving significant returns. On the other hand, another private fund manager, Chen Ning (a pseudonym), has been feeling a bit lonely due to maintaining a low position before the holiday, resulting in a "missed opportunity" during this round of market gains, with the net value of the product showing little performance. There are also private funds that, due to their products being close to the warning line, dared not increase their positions and thus missed the market trend.

Information from third-party institutions shows that, due to the suddenness of the market trend, some private funds with lighter positions before the National Day holiday were unable to react in time and failed to increase their positions promptly. The latest information indicates that there are still private funds that suffered losses in September.

Some private funds have a good grasp of the stock market rise,

while others with light positions dare not rashly increase their holdings.

From September 18th to the end of September, the A-share market experienced a rapid upward trend, with the Shanghai Composite Index rising by 23.39%. Entering October, the market opened significantly higher and then experienced a correction, but the Shanghai Composite Index still rose by 19% since September 18th. During this period, the overall stock private funds also achieved good returns, but the benefits for private funds with different positions varied significantly, especially some products that only dared to maintain a very low position due to issues like warning lines, missing the upward market trend.

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Xie Shiqi, a researcher at Ge Shang Fund, said that compared to individual investors, institutional investors are more rational. Most private funds have not made significant changes in their investments. Private funds with higher positions in the early stage enjoyed the valuation repair of this wave, mostly managed by value and contrarian strategy managers. There are also private funds with not high positions in the early stage, mostly adopting a small increase in positions and observation method to keep up with the market rebound as much as possible.

Wang Yuehui, a wealth financial planner at Pai Pai Network, also said that in this wave of market trend, private funds with heavy positions in A-shares and Hong Kong stocks, such as quantitative index increase private funds and subjective long private funds that are fully positioned due to low market valuation, have seized the opportunity, and the net value growth is considerable.

Wang Yuehui analyzed that the reasons for private funds "missing the opportunity" vary. Some private funds heavily allocate dollar assets or gold, bonds, and lightly allocate or do not allocate A-shares and Hong Kong stocks; some private funds are timing style, facing sudden policy benefits, they are temporarily unable to react, and when they see a sharp rise, they dare not enter the market to chase high; some private funds hold mainly dividend stocks, which do not keep up with this wave of index trend.

Among the interviewed private funds, He Mu Investment, Ming Shi Partner Fund, and Zi Ge Investment have better grasped the opportunity of the rise. Li Maolin said that because he has always been fully positioned and quickly switched to financial stocks with greater elasticity, he has achieved good returns. Zhang Yanzhe, the fund manager of Ming Shi Partner Fund, said that he has better grasped this wave of rise, and his mentality has not fluctuated too much after the rise. Currently, he is focusing on and thinking about where the investment opportunities are mainly concentrated after the subsequent market trend differentiation. Zi Ge Investment said that after seeing the introduction of positive macro policies, it immediately increased its position to the maximum.

There are also private funds that, although fully positioned, hold varieties that lack performance in this round of market rise. A Shanghai stock strategy billion private fund said that it has always been fully positioned, but the targets of this sharp rise do not fully match its holdings, so it has not fully kept up with the market's rise. However, it will not change its investment philosophy because of the market's sharp rise and fall.Billion-yuan private equity performance generally rises in September

Some private equity products still suffer losses

The latest data shows that most equity (stock) private equity funds have performed well in September, but some private equity funds have incurred losses.

Wang Yuehui said that the performance of equity private equity products has been very different in the past one or two weeks. In the last week of September, private equity products with high A-share positions have all achieved considerable returns, including quantitative index enhancement products and fully loaded subjective long products, while private equity products with low positions have seen little increase in net value.

According to statistics from Ge Shang Fund, from September 20th to 30th, the average increase of 261 stock long strategy products managed by private equity managers with a scale of more than 1 billion yuan was 15.62%, while the increase of the Shanghai-Shenzhen 300 Index during the same period was 25.52%. From the perspective of product performance, among the billion-yuan private equity funds, two have performed particularly well, with an increase of nearly 50%, but the performance of the vast majority of managers has not outperformed the index. Some managers have set up early warning stop-loss lines, and the market decline in previous years has led to very low positions at present, thus missing this round of market conditions.

Data from Private Equity Ranking Network shows that due to the sharp rebound in this round, subjective long strategy private equity could not increase positions in time, and its performance was significantly worse than that of quantitative long strategy. However, the September return rate of subjective long strategy private equity was 13.48%, and the return for this year has also turned positive, reaching 1.24%. Among the 269 billion-yuan private equity products with performance display, the average return rate in September was 11.75%, of which 223 products achieved positive returns, accounting for 82.90%; 103 products achieved a return rate of 20% or more, accounting for 38.29%.