The 2023 Shanghai Global Asset Management Forum was held on October 12-13 in Shanghai. Jin Ling, Investment Director of CCB Pension Management Co., Ltd., was invited to attend and participated in the roundtable discussion on "Promoting the High-Quality Development of Pension Finance." She shared insights on how to achieve high returns in corporate pension management.
According to information disclosed by the China Fund Industry Association, there are currently 21 institutions managing the basic pension insurance funds, 18 institutions managing the domestic entrusted funds of the national social security funds, and 23 institutions managing the entrusted funds of enterprise annuities and occupational annuities. Unlike public and private funds, pension fund managers, due to the different nature of the funds, are more focused on the long-term absolute returns of the products in terms of investment returns.
CCB Pension Management Co., Ltd., as the first domestically established professional pension management institution approved by the State Council, has achieved a top-three position in the industry in terms of investment returns for the enterprise annuities and occupational annuities under its management. The success in this achievement is inseparable from the efforts of the excellent investment management team led by Ms. Jin Ling.
Ms. Jin Ling stated that the high investment return of enterprise annuities depends primarily on two aspects. First, the duration of our liabilities is very long. Engaging in asset management, the duration of liabilities and the risk-return profile of clients determine the final returns. Second, it is related to the rules of this industry. Both the first and second pillars of social security funds are ranked relative to absolute returns, determining that our asset allocation always has a positive yield. This requires finding the right balance in the stock and bond markets to achieve better absolute returns. In the investment process, pension fund management must follow the market and avoid path dependence. For example, in the past, non-standard yield might have been high, and fixed-income yield might have been high. However, in recent years, more emphasis is needed on the management and investment capabilities in the stock market. As investment managers of pension funds, the most important capability is active investment management, including the ability to invest in bonds and professional investment capabilities in stocks.
Over the past decade, the average return on investment for China's pension funds has ranged between 5% and 5.5%. This achievement is comparable to the levels of the U.S. 401K and Hong Kong's pension fund management. It has relied on the Chinese real estate market and local financing platforms, the largest carriers of both indirect and direct financing. However, the environment has undergone changes. Standing at a new starting point, what professional institutional managers need most is to objectively face the market and continually enhance their ability to identify risks.
As a bank-affiliated asset management company, CCB Pension Management Co., Ltd. has a natural advantage in identifying credit risks in fixed-income investments. However, the more challenging aspect lies in the management of stocks investments, requiring accurate judgment and an understanding of the engine industries driving China's future economic development. For institutional investors, especially during market downturns, it is crucial to delve deeper into structural opportunities that align with the development of the times, and to appropriately expand the investment scope and variety.
In terms of stocks investment strategy, we focus on technology, healthcare, and selected consumer goods. In fixed-income investments, the focus is on REITs projects related to high-quality Chinese infrastructure and real estate that have stable cash flow.
In the future, with the acceleration of China's aging process and the continuous improvement of the pension system, the demand for pension fund investments will continue to grow. How to enhance the investment return of pension funds while ensuring the safety and stability of the funds is a crucial issue in the field of pension finance. It requires joint efforts from financial institutions, government departments, investors, and various stakeholders to promote the healthy development of pension finance.