Teamwork seen as key to success for funds
Fullgoal's chief executive says investors should consider how companies risk their money instead of placing their faith in star managers
Dou Yuming, the chief executive of Fullgoal Fund Management, believes successful investment strategies are the result of team efforts rather than the wizardry of a star manager.
"The tactic of chasing star fund managers has proved unsuccessful for investors," Dou said. "Indeed, it's the investment team, or to be precise, their decision-making process, their attitude towards risk control and the sustainability of their performances, that should be considered."
Millions of retail investors on the mainland have placed their faith in iconic fund managers whose Midas touch, they hoped, could generate heady gains. But Dou, who has a master's degree in business administration from US-based Tulane University, cautioned against this approach.
The 44-year-old took charge of Shanghai-based Fullgoal in 2008 and began introducing quantitative investment - an investing technique that uses computers to find predictable patterns in financial data - to the company.
"As a new investment style and theme, quantitative investment helps mutual fund firms broaden their product lines," Dou said. "It's one of the major innovations in the industry."
At the end of last year, Fullgoal had funds worth 75.5 billion yuan (HK$94.8 billion) under management, up 21.4 per cent from a year earlier. It was ranked No13 among the country's 70 mutual fund companies by assets under management.
Beijing has been encouraging institutional buying to set a healthy tone for the market. But the industry, with assets of nearly three trillion yuan, has suffered a huge brain drain in the past few years as hundreds of fund managers jumped ship to hedge funds, which offered them better pay perks.
"We were doing our job to prevent capable managers from leaving because of the pay," Dou said. "More importantly, we need to give hope to our employees, convincing them of the company's rosy prospects."
According to data provider Wind Information, fund managers' turnover rate at Fullgoal has stood at 28 per cent in the past three years, 13 percentage points lower than the industry average.
In the belief that some high-profile managers are astute in finding diamond-in-the-rough stocks, many mainland investors typically flock to subscribe shares of the funds the popular managers operate. But Dou, named chief executive of the year for China's mutual fund sector by Asia Asset Management magazine last year, contended that some of the funds' stellar performance could not be sustained in the long term.
His statement echoed findings by Galaxy Securities that showed the five-year performance of A-share mutual funds had almost nothing to do with those who managed them.
"No one dares claim that it can permanently make better investments than others," Dou said.
He said Fullgoal aimed to launch 10 more funds this year, adding that a bull market had taken shape. "After a long bear run, the market is likely to be volatile in the near future and we can't rule out the possibility of a sudden sharp fall," he said. "But signs are emerging that the market is gradually turning into a bullish mode."
The mainland market was among the world's worst performers in the past three years, but prospects of economic recovery, stimulus measures to be taken by the new leadership and improved corporate earnings could trigger a turnaround.