Institutional Customized Fund Trap: Small And Medium-Sized Institutions Brandish License Bonus Innovation Business "Public" And "Unfair"

This trend is becoming more and more obvious now that the institutional outsourcing funds use public funds to lay out the equity market.

The 21st century economic report reporters have found that recently, there have been a number of initiated active equity funds in the public offering fund market, all of which are institutional customized public offering fund products, with only 1-3 accounts. These funds even said frankly that "they will not be publicly sold to individual investors".

In the past, institutional outsourcing funds were basically fixed income products, but now they are turning to equity products, which is closely related to the issuance boom of public funds since this year.

There are still some hidden risks behind the rise of institutional customized public offering funds.

A public fund source's obscure remarks revealed the "gray attribute" of the product itself: "it is not easy to admit that it is an institutional customized product, and in some cases, this kind of product is still controversial."

On the other hand, public funds and private funds will benefit from the development of public and private funds A slight "squeeze" has been formed, and this "innovation" is eroding the interests of investors.

From the perspective of industry development, institutional clients generally demand absolute return strategy, while most common public offering funds practice relative return strategy. If the two strategies are put into the same basket, which strategy is preferred? Especially for some small and medium-sized fund companies, the customized funds come from related parties and even shareholders, so the hidden conflict of interest is more obvious.

Photo by Gan Jun

The rise of customized equity funds

On October 13, Jingshun Great Wall Taibao opened its hybrid sponsored securities investment fund for three months on a regular basis.

The public offering of fund units by more than 50% of the public fund investors, or the fund units held by more than one individual investor may constitute a public fund.

Prior to this, there are eight such customized fund products this year. It includes Dongfang hongdingyuan 3-month regular open-ended hybrid initiating fund, harvest value discovery three-month regular hybrid initiating fund, China EU advantage growth three-month regular open-ended hybrid sponsored fund, Guolian Anxin blue chip dividend one-year regular open-ended hybrid starter fund, SDIC Rui Yingang stock connect six-month regular open-ended equity sponsored fund, and China post value It is preferred to open and flexibly allocate hybrid sponsored funds on a regular basis in one year, Taiping Zhixuan regular open equity sponsored funds in one year, and Shanxi securities Yusheng open flexible allocation hybrid sponsored funds on a regular basis in one year.

For example, Dongfang hongdingyuan regularly opens the hybrid sponsored fund for three months. The fund contract also clearly states that "the fund will not be publicly sold to individual investors". In the end, the number of effective subscribers of the fund was 3, and the scale of raising was 1.01 billion yuan; the value of China Post preferred to open and flexibly allocate one year, while only one of the hybrid sponsored funds subscribed, with the raising scale of 12 million yuan.

From the monthly data, from June to September, the number of newly issued institutional outsourcing customized equity funds is increasing.

In terms of the types of fund companies, there are not only old-fashioned institutions such as SSE asset management and Harvest Fund, but also small and medium-sized public offering institutions such as China Post Fund, Guolian security fund, and UBS fund of SDIC.

"It is difficult for small and medium-sized institutions to survive. Especially since this year, the gold absorption effect of star fund companies and star fund managers has been highlighted, and the fund explosion has been increasing, which has squeezed the survival space of small and medium-sized institutions. And relying on the customized fund to make the final struggle and strive for a breakthrough in scale is also a choice. " "Not only small and medium-sized institutions, but also some fund companies under pressure of scale also have such impulse," said a public fund source in Beijing

In fact, as early as 2016, the blowout of outsourcing funds has become an important scale variable of public funds in that year.

At that time, a large number of outsourcing funds poured into the public offering market, and the annual number of new funds issued exceeded 1000 for the first time, creating the boom of hot money funds in that year.

And the outsourcing fund has also brought obvious improvement to the fund company's management scale. Some fund companies realized the continuous rise of scale and rank with the help of outsourcing customized fund at the end of the year.

For example, ICBC Credit Suisse fund, which is a banking department, issued a number of 10 billion fund explosion funds in 2016. Of course, it cannot do without the help of bank outsourcing funds.

Pitfalls of institutional customization

It is worth noting that, compared with the previous outsourcing customized funds through special account products, the current several newly established outsourcing customized active equity funds show that the outsourcing customized products are changing from special account to public offering.

But this brings a question worth thinking about. When the boundary between the special account and public offering is no longer clear, how to achieve risk isolation? How to prevent the transfer of interests?

Since the China Securities Regulatory Commission (CSRC) launched the pilot project of special account financing business of fund management companies in November 2007, there are clear norms for the special account business. In view of the problems such as the transfer of interests, there are also risk isolation requirements. For example, how to ensure that different portfolios managed by the same fund company are treated fairly, protect the legitimate rights and interests of investors, require fund companies to treat different portfolios fairly in investment management, and prohibit the transfer of interests between different portfolios.

"At present, institutional customized funds have changed the special account products into public offering products. Since customized products of operating agencies are absolute return strategies, when customized products are implemented through public offering products, the absolute return strategies of institutional customers and the relative return strategies of public holders will operate in the same investment research system, so how to ensure fairness? How to avoid the transfer of interests? These are the key points that need to be clarified. " According to an interview with a large public offering fund in Beijing.

On the other hand, the public does not enjoy the preferential rate of the public fund through the customized products.

"Haohao'er has become an institutional client. Where is the word" public "of public funds To be frank with the above organizations.

As a matter of fact, the sponsored fund was originally a kind of product to deal with the market downturn cycle and fund issuing difficulty, so it enjoyed a lot of preferential policies.

"At present, all of these funds have become the" channel "for the popularity of customized institutional funds and become the licensing bonus. Such arbitrage also violates the" public "character of public funds According to the person.

However, some people from public funds also pointed out in an interview that "outsourcing customized funds are not for individual investors, and they are also afraid that the investment experience of individual investors will be too poor after they buy them. Because institutions account for a large proportion of fund shares, it may bring the risk of centralized redemption. "

"It's no harm to exclude individual investors through sponsored funds. On the contrary, it's customized products. If individual investors are not careful and institutions hold them at the same time, there will be unfairness." Ping An Securities Fund research team executive general manager Jia Zhi said.

From this point of view, outsourcing customization to avoid individual investors is a kind of protection for investors, but on the other hand, outsourcing customization can be carried out directly through a special account, which needs to avoid the premise of individual investors, just because of outsourcing "public fundraising".

As a matter of fact, earlier regulatory provisions have required that the fund raising application documents should state whether it is an "outsourcing customized" fund; in addition, the fund company should submit a series of commitment letters, including that the investment decision-making power will not be affected by institutional investors, that it will not provide extra information to institutional investors, disclose the possible adverse effects of institutional redemption of fund shares in regular reports, and Protect the legitimate rights and interests of small and medium-sized investors.