The cause of the incident is that a well-known private equity fund manager in Shanghai has repeatedly extracted performance rewards without telling customers. The "share reduction method" is very rare in the industry. Investors can only see the net value, but can't see the reduction of their share. At present, the redemption period of the product has not yet ended, but the fund is already in a state of loss, with a net value of 0.89 on February 26.
So here comes the question
1. Is it reasonable for private equity funds to reduce their shares and withdraw performance compensation fees?
2. The share is quietly decreasing. Has the private equity firm fulfilled the notification business?
To this end, the fund manager gave a detailed answer:
This active share reduction is not completely accurate. At present, there are two ways to extract performance compensation from private equity fund industry, one is the net value method, and the other is the share method. The company's private placement products, some take the net value method, some take the share method, and the specific extraction method is clearly stipulated in the fund contract. Investors can find relevant provisions in the relevant fund fees and tax clauses in the private equity fund contracts signed.
Take the private equity fund contract of Tiannian Securities Investment Fund of our company as an example. Purchase products on the 20th of each month, and postpone them to the next working day in case of holidays. New customers subscribe 1 10,000 yuan, old customers add 1 10,000 yuan, management fee is 2%, and custody operation fee is 0.2%. Each subscription/subscription fund is locked 1 year, and 20% of the excess performance income is extracted according to the high water level method.
When is the performance extraction date?
The manager will separately extract performance rewards from individual fund share holders according to the high net worth investment method of individual fund share holders. The accrual date of performance reward is the redemption date, dividend date, liquidation date or settlement date (the trading day before the opening date), which is called the accrual date of performance reward.
What is the extraction method of high water level? To put it bluntly, when the cumulative net value of products reaches a new high on the performance extraction day, private equity companies can extract it. This is also a common practice in the private equity industry.
To put it simply, if the net product value rises from 1 yuan to 1.2 yuan, and the holder buys 1 10,000 copies, what is the difference between the two methods?
1. According to the net value method, if the private equity company withdraws 20% of the performance reward proportion according to the excess income (1.2- 1=0.2 yuan), the income will be 0.2*20%=0.04 yuan. Then the total assets of the holder will become (1.2-0.04) * 1 ten thousand shares = 1 1.6 million yuan.
2. If the withdrawal method is 0.04/1.2 *100 = 3.33 and the unit net value is still1.2 yuan, the total assets of the holder will become1.2 * (100-3.33).
In other words, investors have almost the same assets in these two ways.
Which method is better?
Which is more reasonable, the extraction method, the net value method and the share method?
At present, the popular net value extraction method in sunshine private equity industry is intuitive and convenient for investors to understand, but the share extraction method is actually more reasonable and can make up for the shortcomings of the net value extraction method.
A private equity person in Shanghai said that some products owned by his company also adopted the share calculation method. The reason is that the net value extraction method will have two defects:
First, in a certain period of time, it will cause unfairness to the old holders, which cannot be solved. For example, private equity products are extracted at the high point of previous performance awards, and new holders enter at the low point, and quit if they fail to reach the original high point, so fund companies cannot extract performance awards;
Second, when calculating the cumulative net value, according to the net value method, the extracted part is directly added back, and there is no way to reflect market fluctuations. There will be a deviation between the increase ratio of unit net worth and the increase ratio of accumulated net worth of private equity products. Both of these problems can be solved by share calculation method, but customers are not used to it yet.
How to understand a specific moment? To give a simple example, the private placement products purchased by the holder increased from 1 yuan to 1.5 yuan, and according to the regulations, the performance reward was extracted from the earned 0.5 yuan (0.5 * 20% = 0. 1 yuan).
According to the net value method, the net value of private placement products returns to1.5-0.1=1.4 yuan. If the net product value cannot exceed 1.5 yuan, performance awards cannot be extracted. If the market is not good, the net product value will drop to 1. 1 yuan. At this time, a new customer bought it at the price of 1. 1 yuan, and the product subsequently rose to 1.3 yuan. New customers earn 1.3- 1 = 0.2 yuan sells. As the net value of the product fails to exceed 1.5 yuan, the private equity firm will not be able to extract the performance reward of the profitable part of the customer. If the customer is selected separately, the net product value of the corresponding customer will become 1.3-0.2*20%= 1.26 yuan. In this way, customers entering in each time period will correspond to different fund net values, and at this time, the net value announced by the product is only 1.3 yuan.
According to the share method, there is only one product with a net value of 1.3 yuan, and each product has a different share, so it is easy to accrue performance compensation, which makes up for the deficiency of the net value extraction method.
Why does the net worth method become mainstream?
After listening to a lot of detailed analysis of private placement, I also have questions: Since the share extraction method has more advantages, private companies can benefit from it and share more performance returns, why does the net value extraction method become the mainstream?
The above-mentioned private investors in Shanghai further explained: "The fundamental reason lies in the net value extraction method, which is more direct and objective and easy for holders to accept. The way of withdrawing shares often gives investors a feeling that their money has been stolen, and its acceptance will have a process, which requires private equity companies to spend more energy to communicate with customers. In fact, the customer's assets are under the supervision of the custodian bank, and the holder's asset security is guaranteed. "
A senior private equity person in Shenzhen also said that the main reason why investors feel ignorant is that the general information disclosure system of private equity companies is seriously lagging behind and the system support is very poor. At present, the information disclosure of private equity funds is published once a week, and only the unit net value of products is published. In this way, investors only know the changes in net worth, and the holders' shares and total assets are invisible. It can be said that the experience is very poor, not to mention the ultimate experience under the Internet.
The senior private equity person gave specific suggestions. Because of the stock plan, many millionaires don't understand. If they don't read the terms carefully before signing the contract, they will feel cheated. After the private equity fund company needs to withdraw the remuneration again, it can well avoid the relevant contradictions by informing customers of the withdrawal method, asset share change and total assets change through various forms such as mail.
However, the best way to solve the above problems is to list the unit net value, cumulative net value, holding share and total assets of customers' products when disclosing information to customers every week, but this will require high system costs, especially operating costs. If the private equity fund company finds a company to develop this system by itself, it is estimated that the cost of this system should be at least100000 yuan, which depends on whether the private equity company is willing to invest. Regarding the way of share withdrawal, it needs the joint efforts of the entire private equity industry.
Performance reward and return, a pair of contradictions, subject to the contract.
Private placement takes performance compensation as its main source of income, while Public Offering of Fund takes management fees as its main source of income. I remember in 2008, whether Public Offering of Fund should rely on management fees or not, and "ensuring the harvest through drought and flood" also caused widespread discussion. Some proposals also suggest adopting the model of performance committee, so that performance can be more closely tied with managers. After the stock market crash in 20 15 years, we can see the advantages and disadvantages of the performance commission model better.
Investors' returns and performance returns are contradictory. When the market rises, this contradiction is covered up by the index; When the market falls, this contradiction is more prominent. Management fees, performance commissions, etc. They are the basis for the survival of management companies, whether public offering or private offering. The best way is to charge a reasonable fee when helping customers make money, so that the interests are consistent, but why is it difficult to achieve this ideal state? The investment industry cannot avoid uncertainty, nor can it ignore luck. In fact, investors, like investors, have little difference in the composition of luck when buying fund shares and managers buy stocks.
Back to the essence of fund investment, it is to give money to experts for financial management, because I believe that professionalism is better. Thus, the most typical principal-agent problem in economics arises. After the net value is damaged, people will pay special attention to the cost problem, because after the net value falls, the trust relationship between managers and investors is destroyed and adverse selection is easy to occur. The solution lies in: first, respect the contract. Contract is the last position for investors and managers. Detailed contracts protect investors and managers. In real life, investors often pay insufficient attention to contracts in advance, and many of them may be based on trust in managers. Investment is no small matter, especially for private equity with a million-level start, which is more like "cooking small and fresh". Second, managers should fully communicate with investors on products in advance. Recommend roadshows. In roadshows, more attention is paid to opportunities and performance growth, as well as the performance of the wise SHEN WOO in the past, but the extreme risks are not revealed enough. For risk warnings, most of them are in the corner of the brochure "Investment is risky, and you need to be cautious when entering the market".
Which is better, discount share or net deduction?
For the extraction method of excess performance, the method of net worth innovation is generally adopted. But there are three subtle differences:
First, the frequency problem. Because the earliest private equity fund in China is a trust plan issued by a trust company, it is common in history to extract performance rewards when the net value of the monthly open day reaches a new high. After that, Public Offering of Fund's one-to-many special account products are usually opened once every quarter because the frequency of opening is not more than four times a year, and performance rewards are considered when opening. Since 20 14, more and more private equity funds have issued products by filing with fund industry associations, usually setting up an open day at a fixed time every month, and considering the extraction of performance awards with monthly frequency. Logically speaking, the higher the withdrawal frequency of private equity funds, the better for managers and the worse for investors.
Second, the extraction method. Discount or deduct the net value? In the case of pure arithmetic, the two methods have the same influence on investors' assets, and there is no difference. Only in the case of discounted shares, from the perspective of unit net value, its cost is gradually rising, and it is not intuitive for investors to observe the gains and losses of their investment, and further calculation is needed. The method of deducting the net value is more intuitive, and the net value above 1 yuan is earned. According to the existing statistics, the net deduction method is mainly used in China.
Third, the extracted object. Is it full extraction or single extraction? The overall high water level method is a new high in the net value of fund shares, so the performance reward is accrued. Under normal circumstances, the accrual date of the overall high water level method matches the open day of fund subscription and redemption. If the fund's net share value does not reach a new high, then the newly subscribed investors are "cheap", because the income between the subscription price and the previous highest net share value is not included in the performance reward, which is actually not conducive to the manager. The single high water level method calculates the performance reward according to each subscription or purchase, which is more reasonable than the overall high water level method and overcomes the shortcomings of the overall high water level method. The single high water level method also has some disadvantages. It is complicated and needs a higher valuation system. Therefore, the first method is widely used in China.
Information disclosure is also an asset management ability.
When it comes to asset management ability, most people think of grasping the rise, avoiding the fall, and selecting dark horses, and their net worth has hit record highs. In fact, information disclosure, like investment ability, is an important part of asset management ability. Information disclosure is a formal channel to transmit information to investors, which is a direct interface for managers to show their investment ideas and styles. The power of "seeing is believing" also makes the letter cover become the main window for investors to understand and grasp managers. A good asset management company should not only manage its own portfolio, but also manage its investors. The result should be that investors are happy and managers are satisfied. For managers, a good investor should be able to stand with * * *, never give up, and finally succeed together; For investors, a good manager is serious and responsible, capable and worthy of long-term trust. Only when managers and investors have a clear understanding of the investment concept and style can they go further and achieve good results. Trust plays a role in screening investors for managers and is a starting point for investors to screen managers.
At the beginning of February this year, the fund industry association issued the "Measures for the Administration of Information Disclosure of Private Investment Funds", which has detailed provisions on the letter cover of private placement. The private equity industry started late, and there is a certain arbitrariness in actual operation, which is exactly what private equity funds need to face up to and correct in the future. Information disclosure is also a part of asset management ability. Only by recognizing this can we go further and better.