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The Unsustainability of Public Fund Managers' "Super Boy" Development Model

2007/8/13 8:29:07

Attention Everyone

Use this URL http://v35.blog.sina.com.cn/u/1215172700, everything works normally. It seems Sina's new version indeed needs more improvement. The text below is kept for reference — let's see if any computer experts have better suggestions.

Today, the list of all articles that originally showed only 13 pages was somehow changed back to 32 pages by someone, displaying basically all articles again. The same goes for other categories, but Political Economy still doesn't show. This ID's computer skills don't even qualify as beginner level, and I don't want to figure out what's going on. Hopefully it's just Sina's new system needing improvement. Does anyone know how to make the most frequently used Political Economy section display articles again?

For public mutual funds with countless fans and exploding sales, discussing the unsustainability of their development model might seem like unnecessary worry. But the fact that the turnover rate of public fund managers has reached a staggering 40% this year has unmistakably demonstrated the unsustainability of the current "Super Boy" development model for fund managers.

On the surface, public fund managers jump ship due to personal compensation and performance pressure. As everyone knows, public funds only collect management fees, and compared to the profit-sharing model of private funds, their incentive mechanism in distribution is clearly inferior. However, the management-fee-only model means guaranteed income rain or shine. The profit-sharing model may flourish temporarily in a bull market, but in a bear market, it triggers countless legal and economic disputes — ultimately not a sustainable approach.

Of course, some might argue that the profit-sharing model can more directly reflect the quality of fund managers, allowing excellent fund managers to achieve greater development, and therefore public funds could also try adopting a similar model. However, in the management-fee-only model, the size of managed capital has the same merit-rewarding and incompetence-eliminating significance as the profit share in the profit-sharing model. Moreover, public funds enjoy an inherent institutional advantage — being legally able to raise money from the public, their capital scale has an incomparable advantage over private funds. At least under the current economic, legal, and social structure, the management-fee-only model is the necessary price for obtaining this fundraising advantage. Not only can public funds not adopt the profit-sharing model, but even sunshine-ized private funds can only adopt the management-fee-only model.

The scope of fundraising is usually positively correlated with the distribution ratio. For example, private equity funds, whose fundraising scope falls between public and private funds that primarily target the secondary market, generally adopt a comprehensive distribution model combining management fees with relatively lower profit sharing. If management fees are already being collected, then a distribution model like private funds where the highest profit share can reach 50% based on returns is impractical. The unchangeability of public funds' management-fee-only model determines that their internal distribution mechanism cannot undergo major substantial changes either. Therefore, attempting to make public funds sustainably develop by privatizing their distribution methods is impractical.

Due to the enormous temptation of individual gain, star-caliber talent will inevitably gravitate toward private funds with high-ratio distribution incentives. For public funds, the "Super Boy" model for fund managers will form a vicious cycle. Driven by personal interests, more people will treat public funds as platforms for accumulating personal resources. Once they obtain the personal resources they hoped for from this platform, leaving becomes their inevitable choice. The dual fund manager system now being adopted is actually even worse — it essentially doubles the number of people on this springboard, and these people, from a long-term perspective, are all parasites eating away at public funds from within.

To break this vicious cycle, one must not cultivate "Super Boy" style fund managers, but instead rely on collective, team-based strength. What should be elevated to star status is not the individual, but the team. To form such a virtuous cycle means making talented people proud to be part of a star team. This is somewhat similar to building a "think tank" brand — whether a think tank is excellent never depends on how many "Super Boys" it contains, but on its tradition, style, and the team's comprehensive research capability. A more colloquial example: regardless of how many "Super Boys" Peking University and Tsinghua University have produced, the reputation of these institutions still towers above all "Super Boys."

Therefore, for public funds, they should downplay individual fund manager branding, highlight team style, and gradually develop their own characteristics and traditions. A good fund, one capable of sustainable development, should take the path of building a financial "think tank" brand. Additionally, regarding personal economic interests, appropriate equity innovation in fund management companies to increase the core team's shareholding ratio is also necessary.

Finally, let me briefly discuss the market trend for August. In July, the market held above the May moving average and broke through the 1/2 line of the 4159 point level, which has now moved up to 4174 points, while the May moving average has also moved up to around 4170 points. Furthermore, the halfway point of July's long bullish candlestick is at 4136 points. Therefore, the area around 4150 has become the most critical level for determining whether the medium-term market can maintain its strength. As long as the market can firmly stand above this level, it will maintain the ability to expand upward space; otherwise, it will trigger deterioration of the weekly indicators and at least fall back into a new period of major volatility.

However, even if the market maintains its strength, this month one must pay attention to the monthly K-line upper shadow's destructive potential from excessive surges. August is a critical time for macro policies to sort out their direction, and changes in this regard will play a decisive role in market trends. Additionally, overseas market movements will also impact the domestic market. In a globalized world, no stock market can exist in isolation. On individual stocks, the rally in first and second-tier constituent stocks will continue, but one should watch out for short-term volatility risk after excessive gains. Once earnings risks are released, second and third-tier thematic stocks will find renewed momentum for activity.