Core Viewpoint - The new performance evaluation system linking fund manager compensation to three-year performance benchmarks is expected to lead to changes in stock selection and investment aesthetics among public fund managers, emphasizing high-quality stock selection based on growth, cash flow, valuation, and industry advantages [1][2]. Group 1: Performance Evaluation Changes - The China Securities Regulatory Commission has introduced a new action plan to enhance the quality of public funds, which includes reforming the performance evaluation mechanism for fund companies, emphasizing long-term performance over short-term metrics [2]. - Fund managers whose products underperform the benchmark by more than 10 percentage points over three years will see a significant reduction in their performance-based compensation [1][2]. Group 2: Investment Strategies and Outcomes - Many top-performing fund managers have adopted a concentrated investment strategy, often focusing on one or two sectors, leading to the phenomenon of "three years of no gains, followed by three years of gains" [2][3]. - Examples include a fund manager whose product suffered losses in 2022, 2023, and 2024 but achieved nearly 40% returns in the first five months of 2025 due to a concentrated bet on the humanoid robot sector, resulting in a turnaround in three-year performance [3][4]. Group 3: Risks of Diversification - Fund managers employing a diversified strategy may not necessarily outperform benchmarks, as the market has shown a trend of concentrated opportunities, with only a few sectors thriving while most lag behind [5][6]. - A fund manager using a diversified approach across multiple sectors still faced significant losses over three years, indicating that diversification does not guarantee performance stability in a market characterized by sector-specific booms [6][7]. Group 4: Breaking Investment Bias - To achieve long-term performance, fund managers must break away from traditional investment biases and embrace emerging opportunities, balancing investments across both traditional and new sectors [8][11]. - A successful fund manager highlighted the importance of a diversified approach that is not limited by past industry experience, allowing for a broader perspective on investment opportunities [9][10].

Core Viewpoint - The new performance evaluation system linking fund manager compensation to three-year performance benchmarks is expected to lead to changes in stock selection and investment aesthetics among public fund managers, emphasizing high-quality stock selection based on growth, cash flow, valuation, and industry advantages [1][2] Group 1: Performance Evaluation Changes - The China Securities Regulatory Commission has introduced a new action plan to enhance the performance evaluation system for public funds, focusing on long-term performance and reducing the weight of operational metrics like scale and profit [2] - Fund managers whose products underperform the benchmark by more than 10 percentage points over three years will see a significant decrease in their performance-based compensation [2][3] Group 2: Investment Strategies and Outcomes - Some fund managers have adopted a "betting on a single track" strategy, leading to significant performance fluctuations, exemplified by a fund manager who faced three consecutive years of losses but achieved a nearly 40% return in the first five months of 2025 due to a successful bet on the humanoid robot sector [3][4] - Another fund manager focused solely on the pharmaceutical sector experienced substantial losses over three years but turned around to achieve a 50% return in 2025 as the sector gained momentum [4] Group 3: Challenges of Diversified Strategies - Fund managers employing a diversified strategy have not necessarily outperformed benchmarks, as the market has shown a trend of concentration in certain sectors, leading to more opportunities for those who focus on specific high-performing sectors [5][6] - A fund manager using a diversified approach saw significant losses over three years, with a return of less than 6% in 2025, resulting in a total three-year performance that lagged behind the benchmark [6][7] Group 4: Breaking Investment Biases - To achieve long-term performance, fund managers must balance diversified strategies with an openness to emerging investment opportunities, moving beyond biases formed during their research careers [8][10] - A successful fund manager highlighted the importance of a multi-faceted investment approach, focusing on growth and fundamentals rather than being constrained by past industry experiences, leading to a significant outperformance of benchmarks [9][10]