Core Viewpoint - The article emphasizes the importance of setting a reasonable and scientific performance benchmark for public funds, particularly in the context of the growing scale of the CSI 300 index. It discusses how active equity funds can consistently outperform benchmarks by managing style and industry deviations effectively [1][17]. Group 1: Benchmark and Performance - The CSI 300 index serves as the primary benchmark, composed of various style factors. Active fund managers primarily focus on quality, prosperity, and momentum factors, while dividend and low valuation factors can lead to underperformance when they are strong [1][17]. - The difficulty of beating benchmarks is a common challenge for asset management institutions globally, with only about 50% of active equity funds in A-shares outperforming their benchmarks over the past 20 years [17][18]. Group 2: Style and Industry Deviation - Controlling style deviation is more critical than controlling industry deviation for fund managers aiming to outperform benchmarks. Excessive deviation can significantly impact performance negatively [3][22]. - Successful fund managers tend to exhibit smaller deviations in style and industry, maintaining a balanced approach regardless of market conditions [5][24]. Group 3: Stock Selection and Market Timing - Stock selection is more impactful on performance than industry selection, with a focus on identifying high-potential stocks rather than frequently rotating industries [26]. - Market timing is debated among fund managers, with evidence suggesting that while many lack timing ability, strategic timing can enhance returns during volatile periods [12][34]. Group 4: Risk Management and Strategy - A U-shaped risk convexity strategy is proposed to enhance the risk-return profile of portfolios, emphasizing the importance of managing volatility in equity assets [27][28]. - The relationship between volatility and returns is highlighted, with low volatility stocks often yielding better returns in the A-share market, contrary to the general belief that higher volatility equates to higher returns [9][29]. Group 5: Future Considerations - The article suggests that in the absence of clear industry trends, public funds must balance their strategies to achieve stable excess returns by leveraging combination management approaches [20][21].

Group 1 - The core viewpoint of the article highlights a structural recovery in the primary market driven by policy incentives and market vitality since 2025, with a notable increase in merger and acquisition transactions and a surge in Hong Kong IPOs in the first half of the year, providing new exit channels [1] - The fundraising data is also showing a rebound trend, although Limited Partners (LPs) are raising their expectations regarding General Partners (GPs) in terms of project control, performance certainty, and clarity of exit paths [1][4] - FOFWEEKLY has compiled a report titled "Fund Exit and Performance Benchmark Research," which systematically reviews the evolution of exit methods and analyzes the changing demands and preferences of LPs based on in-depth industry observations [1][4] Group 2 - The research discusses the changes in the scale and methods of exits for Private Equity (PE) and Venture Capital (VC) funds in recent years, breaking down performance metrics of hundreds of PE and VC funds across various dimensions such as year, scale, and industry to form industry benchmarks [4] - The online event will focus on the current state of the primary market and case studies, as well as the changes and challenges faced by state-owned LPs and financial LPs, along with their evolving demands [5][9]

Summary of Conference Call Notes Industry Overview - The conference call discusses the domestic public equity fund industry in China, focusing on the performance and management of actively managed equity funds under new regulatory guidelines [1][4][5]. Key Points and Arguments 1. **Performance Issues of Active Equity Funds** - Active equity funds have high annualized tracking error, with a median range of 10% to 15%, indicating poor stability [1][5]. - As of the end of 2024 and May 2025, the proportion of fund managers underperforming their benchmarks by 10% over three years is 66% and 54%, respectively, leading to significant risks of performance-related pay declines [1][5]. 2. **Mismatch in Investment Style** - The underperformance of active equity funds is attributed to a mismatch between market preferences for dividend value and the growth-oriented focus of active management [1][8]. - Long-term, the differences in excess returns due to style deviations are diminishing [10]. 3. **Need for Benchmark Adjustment** - Fund managers are encouraged to adjust performance benchmarks to better align with fund characteristics, such as changing from the CSI 300 to a growth index, which could significantly reduce portfolio deviation and enhance performance stability [1][11]. 4. **Regulatory Emphasis on Performance Benchmarks** - The China Securities Regulatory Commission (CSRC) emphasizes the importance of performance benchmarks in its action plan for high-quality development of public funds, including guidelines for setting, modifying, and disclosing benchmarks [3]. 5. **Current Benchmarking Practices** - The current benchmarking practices in the domestic public equity fund industry are criticized for being overly concentrated on the CSI 300 and CSI 800 indices, which fails to effectively differentiate product tracks [1][4][7]. 6. **Strategies for Improving Tracking Accuracy** - Two main strategies are proposed to address the poor tracking of benchmarks: adjusting performance benchmarks to reflect actual investment strategies and optimizing portfolio management to better track established benchmarks [6][13]. 7. **Impact of Market Conditions on Performance** - The performance of active equity funds is highly variable, performing well in bull markets but lagging significantly in bear markets [5][8]. - Style deviations may yield short-term excess returns but can lead to increased risks and potential losses in bear markets [9][10]. 8. **Optimizing Fund Management Approaches** - Fund managers can enhance performance by combining active management with index tracking, which has shown better results in terms of excess return probability and annualized returns [2][12][15]. - Specific optimization methods include constraining industry and market capitalization deviations and selecting optimal stock weights [13][15]. Other Important Content - The call highlights the need for a more nuanced understanding of performance benchmarks and their implications for fund management and investor outcomes [4][12]. - The discussion also touches on the importance of aligning fund strategies with market conditions and investor expectations to improve overall fund performance [16].

Core Viewpoint - The article discusses the competitive landscape of public funds in China, particularly focusing on the introduction of floating fee rate funds and the challenges faced by actively managed equity funds in outperforming benchmarks [1][2][16]. Group 1: Floating Fee Rate Funds - The first batch of 26 floating fee rate funds was quickly approved and reached a fundraising cap of 20 billion within a short period, indicating strong market interest [1]. - The fee structure of these funds is asymmetric, where higher management fees are charged when performance exceeds benchmarks, while lower fees apply when performance lags, aiming to align the interests of fund managers and investors [2][24]. - Despite the innovative fee structure, the average management fee for actively managed equity funds remains at 1.2%, as many investors do not hold funds for more than a year, limiting the potential for higher fees [5][29]. Group 2: Performance Challenges - A significant portion of investors (41%) hold funds for less than a year, which complicates the ability of fund managers to achieve the performance needed to charge higher fees [4][5]. - In the past year, only 24% of actively managed equity funds outperformed their benchmarks by 6 percentage points, highlighting the difficulty in consistently achieving superior returns [7][11]. - Over the past three years, only 259 actively managed equity funds have exceeded benchmark returns by 6%, while 2004 funds have underperformed by 3% or more, indicating a challenging environment for fund managers [11][14]. Group 3: Regulatory Context - The introduction of floating fee rate funds is part of a regulatory push to reduce the risk of significant underperformance relative to benchmarks, rather than merely to increase management fees [16][22]. - The regulatory framework aims to strengthen the binding nature of performance benchmarks and reduce the prevalence of style drift among fund managers, ensuring that funds are more aligned with their stated objectives [21][22]. Group 4: Market Sentiment and Historical Context - The market sentiment towards floating fee rate funds is cautious, as previous attempts to implement similar structures faced challenges and regulatory scrutiny [27][28]. - The article notes that while there is renewed interest in floating fee rate funds, they have not yet reached the marketing heights seen with other fund types, such as the A500 index funds [27][28].

Group 1: Report Core Information - The report analyzes the industry deviation of the full holdings of active public - offering fund products in 2024, with a total of 4403 funds and a net asset value of about 2.88 trillion yuan [3][8] - On May 7, 2025, the CSRC issued the "Action Plan for Promoting the High - quality Development of Public - offering Funds", with two key points related to performance benchmarks [3][8] Group 2: Product Performance Benchmark - Nearly 70% of active equity products use the three major broad - based indexes (CSI 300, CSI 800, and CSI 500) as performance benchmarks, and the proportion is similar in terms of product scale [3][10] - About 18% of products use industry indexes as benchmarks, with products using medicine, consumption, emerging, and energy as benchmarks accounting for about 3% each [3][10] - In 2024, 14.0% of active products in terms of quantity and 16.3% in terms of scale used Hang Seng Index, Hong Kong Composite Index, and Hang Seng Composite Index as performance benchmarks [3][14] Group 3: Industry Allocation Deviation - Banks, non - bank finance, public utilities, food and beverages, computers, etc. are relatively under - allocated industries, with financial and dividend assets having a high degree of under - allocation [3][17] - Industries with an over - allocation margin close to or exceeding 1 percentage point include basic chemicals, social services, light manufacturing, etc., with electronics having an over - allocation of 4.9 percentage points [3][17] - In terms of absolute amount, banks and non - bank finance are under - allocated by about 190 billion yuan each compared to the performance benchmark, while electronics is over - allocated by nearly 140 billion yuan [3][18] - After excluding products with industry indexes as benchmarks, banks and non - bank finance are under - allocated by over 8 percentage points, and electronics is over - allocated by 5.8 percentage points. Banks and non - bank finance are under - allocated by about 180 - 200 billion yuan, and electronics is over - allocated by about 130 billion yuan [3][24]

Core Viewpoint - The recent collective surge in the financial sector has drawn attention to the role of public funds in driving this trend, particularly in relation to performance benchmarks and quantitative trading strategies [2][4][10]. Group 1: Public Funds and Performance Benchmarks - The surge in the financial sector is largely attributed to public funds adjusting their portfolios to meet performance benchmarks, as indicated by the "Action Plan for Promoting the High-Quality Development of Public Funds" [6][8]. - Public funds have a significantly lower allocation in the banking sector, approximately 3.49%, compared to a 9.99 percentage point underweight relative to the CSI 300 index [7]. - There is a prevailing sentiment among fund managers that focusing too much on benchmarks may undermine the purpose of actively managed funds, which are intended to seek higher returns [8][9]. Group 2: Quantitative Trading Influence - The financial sector's rally was not solely due to public funds but was also influenced by quantitative trading strategies, particularly following rumors about foreign capital easing financial access [10][11]. - Quantitative strategies often utilize alternative factors, such as sentiment analysis from social media and news, to gauge market interest in specific sectors, which may have contributed to the trading activity in the financial sector [11][12]. - Observations indicate that quantitative strategies tend to favor the broader financial sector, aligning with the recent trading patterns [13]. Group 3: Insurance Capital's Role - While insurance capital was speculated to be a driving force behind the financial sector's rise due to regulatory changes, it has been confirmed that insurance firms maintained a steady investment pace without significant reallocation [15][16]. - Insurance firms have been consistently investing in high-dividend assets like bank stocks, but this activity was not linked to the recent surge in the financial sector [15].