Fund performance is deeply bound to Christian Democrats' returns
On June 10, the Asset Management Association of China (hereinafter referred to as the "AMC") issued the "Guidelines for Performance Assessment and Remuneration Management of Fund Management Companies" (hereinafter referred to as the "Guidelines"), which provided detailed guidance on compensation structure, compensation payment, performance assessment, Specific requirements are put forward in terms of internal control and management of remuneration.
Industry insiders said that the "Guidelines" further refined the performance appraisal and salary management rules of fund companies, which is conducive to improving the long-term incentive and restraint mechanism of the fund industry, realizing the long-term development of employees and the company, and the long-term interests of fund share holders. Promote the further realization of high-quality development of my country's public fund industry.
Follow four principles
Remuneration system is an important part of corporate governance. Building a scientific and reasonable remuneration system is the basis for maintaining the core competitiveness of the industry, as well as the foundation for maintaining the stable and sustainable development of the industry.
The China Foundation Association stated that in order to standardize the performance appraisal and salary management behavior of fund management companies, improve the long-term incentive and restraint mechanism of the public fund industry, and promote the stable operation and sustainable development of fund management companies, the association will draw lessons from domestic and foreign regulatory experience in accordance with relevant laws and regulations. Based on the actual development of my country's fund industry, the Guidelines have been formulated.
It is worth noting that the "Opinions on Accelerating the Promotion of High-Quality Development of the Public Fund Industry" issued by the China Securities Regulatory Commission on April 26 has pointed out that fund managers should be urged to establish and improve long-term management and fund managers and other core employees. The assessment mechanism includes the level of compliance and risk control, long-term investment performance of more than three years, and the actual profit of investors into the scope of performance assessment, and weakens the assessment proportion of indicators such as scale ranking, short-term performance, income and profit.In addition, the "Measures for the Supervision and Administration of Managers of Publicly Offered Securities Investment Funds" issued by the China Securities Regulatory Commission on May 20 also proposed that efforts should be made to improve the governance of fund management companies and comprehensively build a long-term incentive and restraint mechanism.
Industry insiders pointed out that the "Guidelines" are specific requirements for implementing the "Measures for the Supervision and Administration of Managers of Publicly Offered Securities Investment Funds" and the "Opinions on Accelerating the Promotion of High-quality Development of the Public Offered Fund Industry", which are conducive to improving the long-term incentive and restraint mechanism of the industry and improving the quality of the industry. The ability of the public fund industry to serve the reform and development of the capital market, the wealth management of residents, the real economy and the national strategy.
Specifically, the Guidelines include 7 chapters and a total of 22 articles. The performance appraisal refers to the appraisal and evaluation of the work effect and contribution of its employees by fund management companies to determine employee positions, grades, salaries, Honors and other results; the so-called remuneration refers to various monetary and non-monetary economic remunerations given by fund management companies for the services and contributions provided by their employees.
The "Guidelines" propose that fund management companies should follow four principles for performance appraisal and compensation management: firstly, the interests of fund share holders should be prioritized and the company's long-term sustainable development should be oriented; secondly, it can effectively motivate employees and establish high-quality talents. The third is to balance the interests of employees, managers, shareholders and other stakeholders, which is beneficial for the company to fulfill its social responsibilities and improve its ability to serve the real economy and national strategy. Fourth, it is in line with my country's National conditions, policy orientation and actual development of the fund industry.
Deng Haiqing, chief economist of AVIC Fund, said that the release of the "Guidelines" will help build a long-term incentive and restraint mechanism for fund companies and reverse some of the chaos in the current assessment system.At present, some of the fund companies in the market have abnormal values such as fund grouping, short-term hot-spot speculation, ranking-only theory, "not opening for three years, opening for three years" and other abnormal values are related to the short-sighted incentive and restraint mechanism.The establishment of a long-term incentive mechanism is conducive to avoiding unhealthy tendencies such as excessive pursuit of short-term rankings, amplifying market fluctuations, and short-term gimmicks in fund investment, guiding fund companies and fund managers to focus on investment research and realizing long-term stable growth of entrusted assets.
Lead long-term assessment
In order to allow fund companies and fund managers to put investors' long-term returns at an important position, the Guidelines require fund management companies to determine performance appraisal indicators by combining quantitative and qualitative methods.Performance appraisal indicators shall include economic benefit indicators, compliance risk control indicators and social responsibility indicators.The economic benefit indicators should reflect the long-term assessment of more than 3 years, the actual profitability of investors, investment research and other professional capacity building; the compliance risk control indicators should include the construction of compliance and risk management mechanisms, compliance events or occurrence of major risks Information system security operation, staff integrity; social responsibility indicators should include moral standards, corporate value, customer satisfaction, etc.
The board of directors’ assessment of managers, and the company’s assessment of key positions such as investment research and sales, shall be based on long-term investment performance, investors’ long-term investment returns, compliance and risk management, and professional ethics. Income, short-term performance, etc. as the main basis for remuneration assessment.
Long-term investment performance refers to the investment income of the last 3 years or more.Fund management companies shall comprehensively consider the risks and returns based on investment objectives, investment scope, investment strategies, etc., and in combination with performance comparison benchmarks.Relevant assessments should avoid using a single indicator, and should weaken relative rankings.If the fund manager has managed the fund for less than 3 years, the impact of the fund's investment performance in the assessment may be weakened by appropriately reducing the relevant performance weight.
Wang Yifeng, chief analyst of the financial industry of Everbright Securities, said that at present, most fund companies in the market have a one-year assessment mechanism. This "Guide" clearly takes the long-term investment performance of funds as the core assessment indicator, which is conducive to motivating fund managers to focus on long-term performance returns. Improve the long-term return of the fund.
"Long-term investment performance assessment is conducive to improving the stability of fund performance, reducing volatility, and improving the experience of making money for Christian Democrats. In the future, the return on long-term investment of Christian Democrats will be more objective. However, the specific details of long-term assessment should be further clarified. It is recommended to further standardize the phenomenon of fund style drift and high turnover rate, and include it in the assessment deduction items." Deng Haiqing said.
Chen Li, chief economist of Chuancai Securities, said that for investment, medium and long-term value investment is the main direction advocated. Similarly, the assessment of compensation and incentives should also focus more on long-term nature. The remuneration structure of the fund puts forward relevant requirements in a targeted manner, which will guide fund managers to adhere to the concept of long-term investment and value investment, and effectively play the role of "stabilizer" and "ballast stone" in the capital market.
Further protect investors' income
In recent years, "funds make money and Christians don't make money" has become a stubborn problem that affects the high-quality development of public funds.The "Guidelines" put forward requirements such as deferred payment of performance compensation and self-purchasing of the company's funds, which deeply binds the interests of fund managers and foundations. Investors' returns are expected to be further guaranteed, and investors' trust in public funds will also follow. promote.
The "Guidelines" propose that fund management companies should establish and implement a performance-based compensation deferred payment system, and clarify the scope, duration and proportion of applicable personnel.The deferred payment period and deferred payment amount of performance-based compensation shall be consistent with the long-term interests and business risks of fund share holders, and the deferred payment period shall not be less than 3 years.
At the same time, the scope of personnel applicable to the performance-based compensation deferred payment system includes but is not limited to the chairman of the board, senior management personnel, heads of major business departments, heads of branches and core business personnel.Among them, the amount of deferred payment for key positions such as senior managers and fund managers shall not be less than 40% in principle.
In this regard, Deng Haiqing believes that some fund products in the market have good short-term or periodic performance, but poor long-term performance. Fund managers are more "gambling" and do not pay attention to long-term stable investment returns. Fundamental's investment experience is not good. .Clarifying the deferred payment of performance-based compensation will help avoid excessive pursuit of short-term performance and short-term rewards by investment and research personnel, amplify long-term risks or leave risks to the future, and reduce the frequent turnover of fund managers and executives.
It is worth noting that, in the context of the rapid development of private equity funds, more and more fund managers have chosen to "run privately" in recent years. This has caused great shocks, and the frequent replacement of fund managers has exacerbated the phenomenon of product "style drift" from the side, which has caused damage to the interests of investors.
As of the end of May, more than 100 public fund managers had left this year.In order to solve the problems of frequent changes in fund managers and the continuous loss of talents, the "Measures for the Supervision and Administration of Managers of Publicly Offered Securities Investment Funds" previously issued by the China Securities Regulatory Commission and its supporting rules have made it clear that managers of public funds have established a silent period system for employees to resign. Fund managers and other major investment and research personnel shall not engage in non-public fund investment management and other work within one year after leaving the company.
Industry insiders said that the deferred payment requirements for performance-based compensation proposed in the Guidelines, combined with the previously proposed 1-year silent period for fund managers to “go for private purposes” means that the cost of job-hopping for fund managers will increase significantly. The stability of the talent team in the public fund industry plays an important role in safeguarding the interests of investors.
In addition, the "Guidelines" also put forward performance-based compensation requirements for fund company executives and fund managers.Specifically, senior managers and heads of major business departments should purchase no less than 20% of the performance compensation for the year in the public funds managed by the company, of which the purchase of equity funds should not be less than 50%, but the company has no equity funds, etc. The fund manager shall purchase no less than 30% of the performance compensation of the current year to purchase the public funds managed by the company, and shall give priority to the purchase of the public funds managed by himself, except that the funds under his management cannot be purchased due to reasons such as the closed period.A fund manager who is also a senior executive and the person in charge of a major business department shall meet the above requirements at the same time.
Chen Li believes that the "Guidelines" put forward a rigid requirement for fund managers to "co-invest" in their own fund products, which further binds the interests of fund managers and Christian Democrats and can better restrain the behavior of fund practitioners. , and will also strengthen the protection of the interests of fund holders and realize the sharing of risks between the two.
【Editor: Wang Yu】
