Diversified Allocation & A-Share Recovery: Advisor's Capital In/Out

Under the ups and downs of the market, diversified allocation investment advisory portfolios have fully felt the cold or heat from investors: some are eager to leave to embrace A-shares, some are relatively calm or even increase their positions, and some start looking for new investment directions after making a profit from a significant increase.

Some investment advisory investors can't sit still

Since the beginning of this year, market volatility has increased, and diversified allocation investment advisory strategies with certain profitability and relatively controllable drawdowns have won the favor of investors. However, a sharp rise in A-shares since late September has made some investors restless.

Data from Tiantian Fund shows that from September 25 to October 25, while the Shanghai Composite Index rose by more than 15% and the stock fund index rose by more than 18%, the return on investment of some well-known diversified allocation portfolios was less than 5% during the same period.

"For some aggressive investors, if a trading limit can earn 10 points, why hold a diversified allocation investment advisory for a year to possibly earn 10%?" A fund influencer managing a diversified allocation portfolio told a reporter from Shanghai Securities News that there has indeed been some capital outflow in the recent market surge. Moreover, during the National Day holiday, the impulsive emotions of these investors reached a peak, and those days were also the busiest for investment advisory user inquiries.

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At the same time, the influencer told the reporter that there are other types of investors holding diversified allocation portfolios. These investors have previously suffered losses in equity investments and have a more mature investment mentality, and they are more "able to hold" asset allocation model investment advisory portfolios. In addition, in this rebound market, once some investors' purchased funds break even, the habit of "breaking even and redeeming" will also lead them to have new allocation needs. Overall, the scale of the diversified allocation portfolios managed by him has not decreased but increased recently.

Data provided by Zhong Ou Wealth also shows that the diversified allocation investment advisory portfolio "Enjoy Diversified Small Goals" Phase 6, which ended on October 23 on the platform, had a fundraising scale three times larger than the previous Phase 4 and Phase 5, and the repeat purchase rate of old customers reached 50%.

Diversified allocation will not become outdated

Will the investment advisory strategy of diversified allocation lose its appeal after A-shares warm up? Most fund investment advisors believe that diversified allocation will not become outdated. No matter what market stage you are in, the best way to achieve long-term stable returns is to do a good job in asset allocation.

Xingye Global Fund has calculated the annualized return and maximum drawdown level of different proportions of stock and bond assets matched within 10 years, and the results show that the higher the proportion of equity assets, the higher the annualized return, and the larger the maximum drawdown. If the proportion of stock assets reaches 100%, the annualized return is 10.06%, but the maximum drawdown is also as high as 46.06%."Previously, some retail investors made significant bets on products in the pharmaceutical, consumer, and new energy sectors, and then they were stuck for three years. Therefore, I often remind users that in the long run, do not bet on a single market, a single strategy, a single sector, or a single style," said Xiong Siyuan, a senior investment consultant at Yingmi Fund.

Xingye Global Fund believes that no matter which market stage investors are in, asset allocation is always a matter that investors need to consider seriously. Investors should determine the proportion of equity, debt, and other assets based on their own risk tolerance and expected return targets.

The person in charge of the fund advisory business at Huabao Securities also believes that one of the major characteristics of fund advisory services is to fully leverage the advantages of public funds, namely transparent operation and diverse categories. Paying attention to various asset categories such as stocks, bonds, commodities, and QDII can help investors more smoothly navigate each market cycle.

How to operate in the fourth quarter?

After the A-share market warms up, how should the diversified allocation advisory portfolio operate in the fourth quarter? The stock market characteristic indicators provided by several advisory institutions show that the current A-share market has good investment value. At the same time, diversify the allocation of bonds, gold, and other assets.

The "Five-Star Signal" market indicator released by Huaxia Fund on October 24 shows that the current A-share market is in a four-star opportunity area, with a stock-bond cost-effectiveness percentile of 18.11%, and the stock market still has high investment value. The latest value of the "thermometer" for the CSI 300 Index on the advisory platform Qie Man, owned by Yingmi Fund, is 26.1 degrees. According to its data standards, the valuation of the A-share market is in the undervalued range.

For the subsequent allocation ideas, Xiong Siyuan believes: first, it is necessary to find assets with long-term upward characteristics; second, it is necessary to make risk hedging configurations and strive for "if the east does not shine, the west will shine"; third, it is necessary to buy low and sell high, and re-adjust and re-balance the asset portfolio every half year.

In terms of specific allocation directions, the investment research team of Zhong Ou Wealth Advisory believes that among income-generating assets, after this round of adjustment, long-term interest-bearing bonds have valuation appeal relative to policy interest rates, and the long-term odds have returned to a range with configuration value.

In terms of value-added assets, the investment research team of Zhong Ou Wealth Advisory believes that considering that the A-share market is in the period of disclosing the third-quarter reports of listed companies at the end of October, coupled with uncertain factors such as the Federal Reserve's interest rate cuts, the A-share market after a sharp rise has transitioned to the second stage. It is expected that the second stage of this round of market rebound will show a trend of fluctuating upward, and the Hong Kong internet and technology sectors are still worth paying attention to. In addition, in terms of anti-inflation assets, there is a risk of gold price correction in the next one or two months, but from a medium-term perspective, gold is still a beneficiary in the early to middle stages of the Federal Reserve's interest rate cuts.