Do not follow the usual value investment style

--King Zhefei Lipper, general manager of the Franklin Fund Company, has ranked the investment performance of Global fund management companies over the past decade, Franklin Templeton beyond Pimco, the U.S. fund company (Capital Group), Fidelity, T Rowe Price and other well-known institutions, Become King of the 10-year fund performance (King of Decade). What is the mechanism and operation idea behind Franklin Templeton's ten-year performance?　　What is the difference between the operating environment of foreign fund industry and Domestic fund industry, and what can we learn from each other? Reporters recently with the state Sea Fu Franklin Fund company general manager King Zhefei to open a dialogue.　　Prior to joining the Franklin, King Zhefei worked for the Franklin Templeton Investment Company for 11 years as senior vice president and global head of portfolio analysis and investment risk. Investment is the balance between risk and income Q: The past decade has been a "stumbling decade" for the Overseas fund industry, and the market is lumpy by the cloud.　　And most of the time, you work in Franklin Templeton and in charge of wind control, looking back on that experience, what do you feel most deeply? King Zhefei: The deepest feeling is that investment performance is the balance between risk and potential benefits.　　Ignoring any of this may be a huge loss to long-term investment performance.　　I've been through two things in Franklin Templeton and I'm impressed. The first thing was the rise of the US hedge fund boom of 1997, when I worked for Franklin's hedge fund. Although the start seems to be huge, but with the 1999 Indonesian currency crisis, 2000 Russian bond turmoil, the entire industry investment environment has also deteriorated sharply, our hedge funds have also suffered significant losses. We also witnessed the collapse of a very prestigious long-term Capital management company, which, in the end, Franklin Templeton the hedge fund business and set up a risk-control unit in the context of the trade-offs. And I led the formation of this department, began to strengthen the company's hundreds of public offering funds and more special account of the risk management work.　　From the profit-seeking hedge fund to the strengthening of risk management, Franklin Templeton's process is also very representative in the industry. The second thing is the dotcom boom of the 2000. At that time, the market is a craze, Franklin Templeton's part of the value of funds and deep value funds are facing a very large internal and external pressure. After several discussions within the company, whether to reverse the trend, the company still decided to adhere to the consistent value of investment style, do not follow the trend of upsurge.　　That decision followed the dotcom bust, which made a huge reputation and performance. Looking back, it was those years of pain and perseverance that actually laid the best asset management company's performance for the next 10 years.　　It was at that time that we had a gap in the performance of our competitors.　　It's risk management, not risk control! Q: The importance of risk management is well known in the industry, each fund company has a full-time wind control departments and positions. But aBody to carry out the different families, but the scale of tension.　　It seems to us that risk control often stands in the opposite of investment performance. A: What I want to say is that the idea is important.　　We emphasize "risk management", not "risk control". If it is risk control, then I just keep the risk of the smaller the better, so many likely to assume a certain risk of profitable investment is not to do it? A few investment opportunities with uncertainties?　　That certainly stands in the opposite of investment income. The concept of risk management is different. We are not pursuing risk as small as possible, we are looking at the degree of risk and benefit matching. Every investment has a risk, and the key is whether you know where the risk is, and if your portfolio can withstand it, the risk is reasonable compared to your earnings.　　It's a matter of risk management. Franklin has a set of risk management systems, such as the proportion of positions, such as the concentration of investment. have certain monitoring. If you get to a certain proportion, we will prompt you, may have the risk, you want to understand, this may have the risk. For example, if you invest 30% of your money in a Southeast Asian country, what are you going to do if something like that happens in Thailand?　　In the long run, such risk management is to help fund earnings performance. The system is also introduced into the Franklin mechanism. To straighten out the investment platform of the fund company and strengthen the risk management is my first priority as the general manager. This does not mean, of course, that our funds are low risk and low returns. The core of risk management is to allow fund managers to understand the risk points in the portfolio, to test the compatibility between expected returns and risks, and to help fund managers understand the impact of future risks on the portfolio.　　This is important for investment and equally important for investors.　　Not for the short-term market pressure around Q: Just now you talked about risk management, then what do you think has a significant impact on the long-term performance of Franklin Templeton?　　A: adhere to their own investment style, not for short-term market pressure. Franklin Templeton's Templeton Company is known for its value investment in the industry. Such investment style during the dotcom bubble is to bear a lot of pressure, at that time, internal performance pressure and external market pressure is very large. But eventually they stuck with it and got a lot of success.　　For Franklin Templeton, the most critical period of performance in the last 10 years may have been the most stressful period of our market.　　Can imagine, if at that time did not insist, then 10 years later today, also will not have this performance best brand.　　Q: Insisting on style is really crucial, but for fund companies, there are also realistic pressures, such as scale pressures, short-term performance pressures, and investor pressure, how do you see these pressures?　　A: These pressures do exist, but we will try not to let these pressures affect our fund's investment management. thanFor example, as a general manager, I never participate in the decision-making of the Fund.　　Our fund managers have considerable freedom of investment-within the scope of risk management and fund contracts. In addition, we will not allow some of the market's irrational pressure to transfer to the investment sector, such as marketing, short-term performance comparisons and so on.　　We will do more in investor education and more to let investors know what kind of fund product we are, rather than let fund managers be more pressured by short-term performance rankings.　　Q: Short-term performance ranking is an unavoidable topic, the company to fund managers how to assess it? A: Our assessment requirements and Franklin's approach is the same, our goal is to hope that the fund managers every 1 years of performance into the industry's top one-second. This seems to be a very low requirement, but it is actually very high. I think if your fund goes into the top one-second each year, you can enter the forefront of the industry in the long-term rankings. This is actually a very high demand.　　We want our fund managers to be able to run from a long term rather than a short-term ranking. Franklin Templeton's performance rankings are very representative. It has been the fund's best asset management company in the last 10 years. Its 1-year performance ranking is the 26th in 59 companies.　　The 5-year performance ranking is 16th, but the 10-year period is the first.　　Team stability is the most important question: The Franklin Fund has risen rapidly in the past two years, what do you think is the main reason?　　A: There are several aspects. First, after several years of accumulation, we have developed a more powerful research team. And this is mainly relying on our own training, the introduction of a supplement.　　There is a strong corporate platform support, can give the fund performance more help.　　Second, we have some experienced fund managers who can give us practical guidance and help, and they have a team with a more prominent role. Thirdly, our foreign shareholder, Franklin Templeton, has great support for us. such as regular monthly stock exchange meetings and fixed income Exchange meetings. The investment director and team of the foreign shareholder will come to our company regularly to exchange, and we will send our investment research team to communicate overseas, including attending the Franklin Templeton Global Meeting.　　Such information sharing also has great support for investment research.　　Four, our incentive, the appraisal mechanism and the risk management mechanism are more effective. Q: In the past two years, the fund industry has been changing particularly frequently, especially in the investment team.　　However, the Franklin overall fund managers team is fairly stable, even after the fund's performance rose, still quite stable, how do you do? A: I think that for the company, "the team is stable, there is nothing more important than this."　　"A stable team, it is possible to make the company's investment and research capacity and experience to accumulate and improve." Specifically, compensation incentives are certainly part of the package. But other aspects are also important. For example, the fund manager's investment autonomy, for example, the whole company's atmosphere of communication. And inThe space for personal development and ascension on our platform.　　I think this is an important key to keeping our team stable. Jin Zhe, general manager of Franklin Fund, China University of Science and Technology and Ph. D., Australian National University, certified financial analyst, financial risk manager. Senior Vice president and portfolio analysis and Investment risk Department of the Australian Federal Institute for Scientific and Industrial Research, Harvard University computer scientist, Franklin Templeton Investment Corporation. Managing Director of Franklin Fund Management Co., Ltd.