When I say a mutual fund manager, what kind of personality (impression) appears in your mind? A guy or a lady in his/her 40s, with financial education, 10 years or more experience in investment field…
This is not the case in China. Due to the boom of China stock market in recent years, and the boom of the hedge fund, many experienced guys (like Danbin, more about Danbin later) started or joined hedge fund so that they could make more money. Here is a Chinese article titled “rookie fund managers in charge of trillons of Yuan, only 7 fund managers have more than 7 years experience in China mutual funds”. The following Chinese video below tells the same problem.
(Sina Video: 80后基金经理是否值得信赖, click here if the video above does not work. Also the connection to sina video outside China is not good, I found one workaround is play the whole thing once, let the PC download the video locally, then play )
Not all fund managers in China are in-experienced guys/ladies, I know my friend Zhuping of Guangfa Fund has more than 10 years of experience. But again he is the CIO of GF fund, and he is no longer managing a specific fund. His does mentor his fund managers I think. Seriously, this is another reason for the big up and down of the Chinese market, because many institutional investors in China are in-experienced investors. Personally, I won’t give my hard earned money to those fund managers, I believe I can make more money by giving money to Mr. Buffett, and sleep better at night 🙂
Performance
Most Chinese mutual funds did not beat the Shanghai composite index (SHA:000001). As to the hedge fund, I heard (have not verified) Danbin did beat the market in last 3.67 years. Quote Chinese article: 据称，东方港湾2004年、2005年、2006年、2007年1～8月的收益率分别是44.5、38%、233.35%、104.15%，而同期上证综指分别为-15.4%、-8.34%、130.43%、83.34%。
BTW, I will write about the business model of hedge fund later on. Stay tuned.