The development of China's asset management industry has been going on for more than 20 years since the birth of the Public Offering Fund in 1998. During this period, the market has gone through several rounds of bull and bear, like the rolling of the Yangtze River, which has washed away countless heroes, and a group of pioneers in the industry has emerged over time and is playing an increasingly important role.

Talking of the representative figures of China asset management, LIU Qingshan is definitely one of them. He is currently the chairman of Wellspring Capital, the first batch of employees in the fund industry in China. He participated in the preparation of China Asset Management and Xiangcai Hefeng Fund (the predecessor of Manulife Teda Fund Management), and served as the fund manager, investment director, deputy general manager and general manager of Manulife Teda Fund Management Company. LIU Qingshan has outstanding long-term investment performance, and is currently a member of the Professional Committee of Private Equity Investment Fund of China Fund Industry Association.

Recently, Brokerage China reporters conducted a face-to-face interview with LIU Qingshan. At a time when China's capital markets and management industry are undergoing profound changes, it is obviously helpful to listen to the wisdom of such an industry leader.

Ten golden sentences form the interview

1.Whatever you study, whatever you research, it should be for use.

2.Asset management industry, if you can survive, you will win. In the emerging and transforming securities market environment, you must know that it varies from time to time, and then figure out your survival rules.

3.Direction is more important than effort. Don't go against the trend.

4.You can't completely copy the theory of others, but you should combine the local conditions with your own, and eventually become your own.

5.Grasp your process, determine your idea, and then follow this set of ideas, and the investment performance and results will follow.

6.Investment is a matter of great probability. In the long term, a company's value is its net worth and the rise in its share price is its ROE. pursuing an overall portfolio ROE of 15% gives you a source of long-term target returns.

7.To judge whether ROE is true or not, we should emphasize the stability of the company's operating cash flow and ROE.

8.The company's competitive structure is simple, clear and well-defined, and the business model can be replicated, all of which contribute to the stability of ROE.

9.Dividends and buybacks are the cornerstones of long-term investment, which is exactly what the A-share market is lacking right now.

10.Young people should be reflective and honest with themselves; they should keep learning and not be stagnant; they should be able to judge the situation and know when to persevere and when to give up, and not go to extremes.

A practical asset manager

I am not a stubborn person, good at accommodation, and the realm I pursue is' practical use' ". LIU Qingshan summed up his personality with the words "be practical", which started the interview. His hometown is Changde, Hunan. In his view, this is also a typical feature of Hunan people.

The idea of "applying knowledge to the world" was first put forward by thinker GU Yanwu during the Ming and Qing Dynasties. "That is to say, whatever you study, whatever you research, should be for use. For example, when I look at history, I don't spend too much time worrying about whether certain details are true or false. Instead, I focus on what it can enlighten me about my current work, life and world view."

He has more than 20 years' experience in the securities asset management industry in LIU Qingshan. When talking about why he entered this industry, he joked: "There is a saying that if you work with anything, there's no shortage of it. At that time, life was very tight, and the main concern was to solve the problem of survival. Since I am short of money, I want to work with money." The securities industry was new in China at that time. LIU Qingshan, who graduated in 1997, joined China Asset Management, and soon chose a newer subdivision track-Public Offering Fund.

"There were many subdivisions in the securities industry. Compared with the prospects and the input-output ratio, I thought the fund industry had a big space for development at that time. This industry did not even exist, but was still in preparation, and few people paid attention to it. 'he said. After the Interim Measures for the Management of Securities Investment was issued in 1998, LIU Qingshan was transferred from the China AMC Securities Fund Department to participate in the establishment of the company. FAN Yonghong (known as the "godfather" of the Chinese fund industry) was his leader at that time.

In the fund industry, LIU Qingshan spent most of his time sticking to the front line of investment and research. After working in China Asset Management for three years, he went to Xiangcai Securities in 2001 to set up the then Xiangcai Hefeng Fund and was responsible for research and the formation of a research team. Since 2003, he has served as a fund manager and managed the Hefeng Growth Fund, which is the first industry category fund in the domestic public offering industry that focuses on investing in growth stocks. In 2004, Xiangcai Heyin fund (the predecessor of Taida Manulife Fund) issued a new all-market fund - Xiangcai Heiyin Banking Select Fund (the predecessor of Taida Manulife Industry Select Fund), also under the responsibility of LIU Qingshan, this management is nearly 10 years, because the long-term performance of the product is excellent (the Public Offering Fund industry has managed a product for more than 7 years in a row, and the annual return ranks eighth in the industry), he has been promoted all the way to the company's deputy general manager. In 2013, LIU Qingshan became the general manager of Taida Manulife Fund. Until he left in 2015 to create private equity Qinghe Quan Capital.

"I usually pay more attention to the observation and reflection on investment and market. Basically, when I come in the morning, I start reading books, articles and reports, and I think about these things. Investing requires you to read widely, and you will pay more attention to the content. " LIU Qingshan summed up his daily life like this.

An open investment system continues to evolve

Unlike young people who now have a large number of mature investment systems to learn from, LIU Qingshan, as a witness of China's fund industry, formed his investment philosophy mainly by his own constant polishing in practice, and the early market environment was a far cry from the present. In his words, you survive, you win.

"At that time, the first thing I thought about was how not to be eliminated. I had the advantage of not being stubborn as I said before. Confucianism stresses seeking common ground while reserving differences. The same place can cooperate, while different places can live peacefully. If you can achieve integration, you will naturally survive. "In the new and changing securities market, you have to know that it's different and you have to figure out your rules," he explained.

The first fund managed by LIU Qingshan is an industry fund to invest in growth stocks. In 2003 and 2004, the A-share market showed the "Five Golden Flowers" market. The performance of growth stocks was generally not satisfactory. Besides, he just started to manage the products, which can be said to be a "bad start". "In 2004, it was to reflect, summarize and improve, and then seize the market opportunity. What was done in that year was very outstanding. After that, I was also in charge of the whole market fund, and my investment philosophy has been continuously integrated in the investment process, and I finally achieved a ten-year report card with an annual return of 20%. "

In LIU Qingshan's memory, the company's two foreign joint ventures gave him an early opportunity to communicate with top overseas investors, some of which had a profound impact on the formation of his investment philosophy.

"The first round was a joint venture with ABN Amro's asset management company. I remember their investment director at the time, and every time we met, he would ask me a question: 'What do you think is sustainable about your performance, or the performance of your team?' I said to raise the salary so that the team would have cohesion. He said maybe not quite. Then he gave me a suggestion, which is that as the head of the team, you have to drive people to think frequently and answer questions like this - what are the three things you have to solve today, this week, this month, this quarter, this year, these three years?"

"This is problem orientation. It taught me that direction is more important than effort and do not to oppose the trend. This way of thinking has taught me how to think directionally and conditionally, which I think is very beneficial. If you can ask questions, you are half the battle," says Mr. LIU.

The cooperation with Manulife Financial is the second joint venture with foreign capital, which is the largest insurance company in North America. "Manulife Financial" has many fund managers who have been in business for more than 30 years, and in the exchange with them, LIU Qingshan has a deeper understanding of growth stock investment.

"Every time I go to Manulife Financial, the other party will give me two translators, although my English expression ability is average, but whether the translation is complete or not, I can hear it as soon as I hear it, so every time we communicate very fully, at that time we discussed a big topic is what is the method of growth stock investment in the end. Not modestly speaking, at that time TEDA Manulife's growth stock was the leading in the industry, and when discussing with Manulife Financial, we have studied and theorized the method of growth stock investment. At that time, it was proposed that there were two angles for investing in growth stocks: first, the concept of long-term endgame, your business model, market share, penetration rate, how much revenue and profit can be created in the end, plus a reasonable valuation; the second is the acceleration of performance growth, that is, the second derivative, if the second derivative is greater than zero, there is a basis for high valuation. "

By talking to senior fund managers of various styles at Manulife Financial, LIU Qingshan summed up a lot. And these growth stock investment ideas, which were very much at the forefront of the Chinese market at the time, also achieved notable results for them, with the firm's Growth Fund winning the annual championship twice.

"My investment system is a coherent, open system, not a closed mind, which is constantly absorbing and evolving. You can't copy it completely, but you also have to combine it with your own reality, and eventually it must become your own," he laments.

'I want to  still be in this market even I'm 80'

Why did you give up your position as a general manager of a Public Offering Fund to do Private Offering Fund by yourself? This question LIU Qingshan is often asked by the media. He says he just wants to be in this market even at the age of 80. "I have been thinking, if I retired at the age of 50 or 60 what else can I go and do? You can't do management positions at 80, but you can do investment, and the older you get in this industry, the more valuable it might be. It's not difficult to make such decisions when you set your value standards and figure out what your ultimate pursuit in life is." With that, LIU Qingshan founded Wellspring Capital in May 2015, choosing a different kind of life.

It is worth mentioning that there is a small allusion behind the name "    wellspring". The so-called "Qing He moistens all things", the word "Qing he" comes from the Han Dynasty Jia Yi's "New Book · Shu Ning", " Now that the general trend has come, then the whole world will conform to and be governed. The four seas within a peaceful, all things grow in line with common sense.”

"Qing represents water and gas. If it is moist and smooth, plants can naturally thrive. This is a result, you don't have to pursue it deliberately. The same goes for investing. Get your process right, get your philosophy right, and then follow it. Investment performance and results will come naturally," LIU Qingshan said.

From 2015 to today, Wellspring Capital now has nearly 30 employees and a management scale of more than 5 billion. With the exception of LIU Qingshan, the core team is mostly his old colleagues at Teda Manulife, and new employees are mainly trained by themselves. As for the future development vision of the company, LIU Qingshan believes that first of all, we should polish our abilities in all aspects well. In terms of investment, we hope to be a long-distance runner, to be a star instead of a meteor. Fundraising level for the next two or three years management scale can be a higher level. "Now the company's internal running-in, reserve, including channel development and customer recognition of us have a good foundation, external conditions are also available, I feel very confident about the future."

The process of "running for Private " also gave LIU Qingshan a lot of insights. In his view, Private Offering Fund and Public Offering are quite different. "Everyone who does Private Offering Fund has no shareholder background, it mainly depends on individuals. How do you get the team together, the balance of short-term and long-term interests, and the coordination between internal interests, this is very important. The first thing is that everyone must think longer-term before doing it, otherwise there is no need to get together."

There is also a big difference between private them when it comes to investing. "There are definitely differences in the backgrounds of their clients, and in some ways Private Offering Fund clients may only give you one chance," he says in a thought-provoking summary.

As the head of Wellspring, apart from investment, LIU Qingshan is also responsible for the formulation and internal coordination of the company's development strategy framework, and he is very concerned about the company's values. "Whether it is the values of the company's investment or the values of the company's culture, everyone should brainstorm and discuss, and then set the tone for implementation."

Investing is a matter of pursuing greater probability and take ROE as the standard

Click in the official website of Wellspring Capital, you can see a few bold characters on it - "Investing is a matter of pursuing greater probability ", which is the investment philosophy advocated by LIU Qingshan, and the "greater probability" here is closely related to the ROE (return on equity) of the invested company.

"Theoretically speaking, in the long run, the company's value is its net asset, and the rise of the company's share price is its ROE. We seek to make the overall ROE of our investment portfolio reach more than 15%, so that the long-term compound annual return of 15% has a source, which is also the performance goal we are pursuing," LIU Qingshan told the reporter from Brokerage China.

He further emphasized that this ROE refers to the real ROE. In order to judge whether it is real or not, it is necessary to emphasize that the company has good operating cash flow, and also requires the stability and sustainability of its ROE. "How can we achieve stability? On the one hand, the competition structure should be simple, clear, and concise, so that new entrants can’t attack it at any time; on the other hand, whether the business model is stable and replicable, and whether they contribute to the stability of the company's operation, so as to maintain the stability of ROE; and on the third hand, what really brings long-term returns to shareholders is dividends. Dividends and buybacks are the cornerstones of long-term investment, and that's what the A-share market is lacking."

In the past few years of investment, LIU Qingshan will focus on three types of high ROE assets: First of all, high ROE assets that focus on consumer services in long term (the height is just like the wide moats); Second, invisible high ROE assets with large R&D investment, mainly based on scientific and technological innovation; The third is the undervalued high ROE assets in the traditional cycle industry. Focusing on these three types of high ROE assets, the industry allocation in the portfolio is carried out according to the PB-ROE valuation system and the style of the short- and medium-term market.

Analyzing the current A-share market, LIU Qingshan has a positive attitude towards the medium-term opportunities of the market. We should be more optimistic rather than more pessimistic when the market falls.

Such a judgment has its inherent logic. "A-share is driven by three cycles, namely credit-currency cycle, industry cycle and regulatory policy cycle. These three cycles affect the direction, style and industry performance of the market respectively through valuation and earnings expectations. The current market has a rare three-phase superposition of upward driving. At present, the monetary cycle is in the process of easing, excess money is accumulating, and credit is expected to stabilize in the short term and the medium term. The technology cycle is in the process of bottom-up and the relative earnings expectation of the technology industry is stronger. The regulatory policy cycle is at the volume stage, the scale of refinancing is expected to increase significantly, and the expectation of mergers and acquisitions and industrial integration is expected to increase again,” he said.

From the perspective of opportunities, in addition to benefiting from the technological boom cycle brought by 4G switching to 5G, high-quality consumer stocks impacted by the epidemic in the short term also have good investment opportunities. With the control of the epidemic and the gradual recovery of production and life, these high-quality consumer and service companies with a high barrier (just like moat) also have good investment opportunities.

Suggestions for young people: good at reflection, continuous learning, and understanding of the situation 

With his outstanding long-term investment performance, LIU Qingshan has won many personal honors in the field of asset management. During his public offering, he has repeatedly won the Morningstar Fund Manager Award, the Taurus Fund Manager Award and the Outstanding Contribution Talent Award issued by the government, twice in a row on the Forbes Top Ten Fund Manager List, and is one of the only seven "Taurus Fund Tenth Anniversary Special Award" winners in the whole industry in the 20 years of public offering.

At the end of the interview, the industry veteran combined his past experience and put forward several pertinent suggestions to young people who are interested in investing:

First, be good at reflection. "When I graduated and prepared for seeking a job , one of my teachers told me: 'Young people should go to a field where you can speak for yourself.' Why are there so many grassroots fighting in the investment industry, especially in the secondary market? Because it is transparent here to some extent, and the performance curve will completely record you, which is fair to everyone. Your efforts may pay off, which means you can speak for yourself. Then when you can't , you must reflect. Why not? What's the problem? How to promote? What are your experiences and lessons? It's important that you are honest with yourself. "

Second, keep learning, the ability of self-learning is very important. "The society is developing. The science and technology, 5G, cloud games, the Internet or new business models such as online celebrity are all new things. In the face of these new things, you should not be stagnant. You should take the initiative to understand and think about them. You should know that the steel industry was also a new science and technology in A-share, and the same was true for cars and airplanes. If you do not keep learning, it will be difficult for you to achieve self-breakthrough."

Third, learn to judge the situation. "This matter is a bit mysterious, that is, you should know when to stick to it, when to give up, and cannot go to extremes. Investment is not a relationship between 0 and 1, and it cannot be one-sided. It is not a simple science, but science plus art, and it is difficult to fully quantify it. Of course, this can only be achieved through experience, and it takes time to accumulate."