The “carbon neutrality” investment circuit is surging, and some industry pioneers with an earlier forward-looking layout have begun to reap fruit. Huabao Fund, a subsidiary of the world's top 500 Baowu Group, is one of the earliest fund companies to lay out and implement green sustainable investments in the domestic public equity industry, and is recognized by the industry as an “pioneer in ESG investment”. Thanks to years of intensive cultivation and operation, Huabao Fund's green responsible investment advantage has become more and more prominent since this year, especially Huabao Fund's equity investment division 2, which is known for its “balanced style.” From 2021 until November 16, the average yield of funds managed by fund managers of Huabao Fund Equity Investment Division II reached 19.86%, ranking among the top 10 in the industry in the performance rankings of all fund companies in the market for the same period.

On November 18, Huabao's Sustainable Development Hybrid Fund (Class A: 012262, Class C: 012263) went on sale at Yufeng. This is another new masterpiece of “ESG investment pioneer” Huabao Fund in the field of green sustainable investment. He Zhe, one of the core members of Huabao Fund's Sustainable Investment “Golden Team” and “Balanced Growth Group” expert, is personally responsible for this fund. Since 2021, the A-share industry sector has rotated frequently. Among many investment styles, the “balanced growth” style, with the advantage of “profitable” and “stable enough” styles, has gradually become a good remedy for dealing with the “rapid sector rotation” of A-shares.

The “sustainable investment” performance during the year ranked among the top ten in the industry

Bill Gates said in his book “The Climate Economy and the Future of Humanity” that when it comes to climate change, two numbers are important: the first is 51 billion, and the second is 0. The former is the approximate tonnes of greenhouse gases that the world emits into the atmosphere each year, while the latter is the goal we need to achieve.

The goal of “carbon neutrality” was born and has now received responses from more than 130 countries, and the “30·60” dual carbon target proposed by China has attracted the attention of the international community. There is no doubt that this is an energy revolution that has never been seen before. In the next 40 years, whether it is the adjustment of economic growth models, industrial structures, and energy structures, consumption patterns, lifestyles, and ecological construction, they will be affected by this.

There is a sea of stars ahead, and investment in the “carbon neutrality” theme has just begun. Key “carbon neutral” technologies, including renewable resource utilization, energy efficiency, clean power generation, energy storage, hydrogen energy, carbon capture, utilization and storage (CCUS), and digitalization, are driving the formation of new industrial chains and profit pools. Since this year, new energy-related segments such as new energy vehicles, energy storage, and photovoltaics have successively become hot spots in the capital market.

For asset management institutions and outstanding fund managers who have been deeply involved in green sustainable investments for a long time, the Nuggets “carbon neutrality” track is exciting and has come to fruition. According to Wind statistics, the equity investment division of Huabao Fund, where He Zhe works, excels in the “balanced style” and has made great achievements in the field of green sustainable investment. From 2021 until November 16, the average yield of funds managed by fund managers of Huabao Fund Equity Investment Division II reached 19.86%, ranking among the top 10 in the industry in the performance rankings of all fund companies in the market for the same period.

What is particularly noteworthy is that according to Wind statistics, as of November 16, 2021, Huabao Green Leading Equity Fund, Huabao Industry Selected Hybrid Fund, and Huabao Green Themed Hybrid Fund managed by Yan Xu, fund manager of Huabao Fund Equity Investment Division II (Balanced Style Investment Director), achieved high returns of 29.33%, 28.03%, and 17.65% respectively during the year; Huabao high-end manufacturing equity fund and Huabao's transformation and upgrading hybrid fund managed by He Zhe had annual returns of 21.98% and 22.81% respectively. The market was volatile in 2021, and it was not easy to achieve such good results.

The “ESG investment pioneer” has fallen one more time

Behind the impressive performance, it can be seen, on the one hand, that there are big fish on the green sustainable investment circuit; on the other hand, the sustainable investment team, including He Zhe and Yan Xu, is showing excellent active management ability after years of accumulation.

We learned from the fund's regular holdings report that as early as when the market had not paid attention to investment opportunities in the utility sector, Huabao Fund's sustainable investment team had already begun a forward-looking layout in this field. Today, the secondary market stock price continues to verify the team's investment logic. This not only contributed to rich investment returns, but also reflects Huabao Fund's sustainable investment team's deep understanding of the construction of a new power system.

As a pioneer and practitioner of domestic ESG investment, Huabao Fund earlier began strategic cooperation on ESG investment with overseas institutions such as PRI, MSCI, FTSE, S&P, the London Stock Exchange, and the Luxembourg Stock Exchange, as well as professional institutions such as the Beijing Green Sustainable Development Research Institute and Shangdao Ronglu. In recent years, the company has borne fruit in the systematic construction of ESG investment research. At present, Huabao Fund has integrated ESG into a series of processes such as stock research, stock screening, asset portfolio construction, investment decision making processes, and risk control systems, product research and development, and product recommendations. For example, at the research level, Huabao Fund researchers will also consider the listed companies' initiatives, strategic steps, and pain points in low-carbon transformation and climate change countermeasures, etc., so as to collect high-quality data information and conduct ESG evaluations of listed companies. The localized ESG evaluation system combined with industry characteristics has become an important infrastructure built by Huabao Fund. Based on these evaluations and ratings, the investment department of Huabao Fund will construct an investment portfolio accordingly; at the same time, the company also puts forward very high requirements for the logic and relevance of relevant evaluations, including ESG, in terms of stock price transmission.

Huabao Fund is not only actively integrating ESG into the investment and research system, but is also implementing negative ESG screening strategies for the company's core stock bank. In terms of strategic planning, the company plans to continue to increase investment in the green and low-carbon sector and continue to withdraw from stranded assets such as high carbon. On the other hand, in the investment process, Huabao Fund, as a shareholder of listed companies, also strengthened communication with listed companies by fulfilling shareholder obligations, and sharing advanced international ESG experiences and best practices with listed companies.

On November 18, Huabao's Sustainable Development Hybrid Fund (Class A: 012262, Class C: 012263) went on sale at Yufeng. This is another new masterpiece of “ESG investment pioneer” Huabao Fund in the field of green sustainable investment. The fund contract shows that the sustainable development goals are closely related to important topics such as promoting economic growth, combating climate change, protecting the environment, and sustainable development of human society in the ESG concept, and focuses more on the medium- to long-term, sustainable positive goals and segments of the ESG framework. The fund's share of stock investment is 60%-95%, and the investment portfolio will be constructed by comprehensively evaluating the sustainable development capabilities of the industry and the company from the three dimensions of Environmental (Environmental), Social (Social), and Corporate Governance (Governance).

Source of data:Wind and Galaxy Securities, data as of 2021.11.16. The 2016-2020 annual net worth growth rate of Huabao high-end manufacturing equity funds and their performance comparison benchmark growth rates were -5.27%, -9.16%, -26.05%, 40.24%, 63.06%, and -11.82%, -0.94%, -29.11%, 29.89%, and 34.04%, respectively. The performance comparison benchmark for Huabao high-end manufacturing equity funds is Shenyin Wanguo Manufacturing Index yield × 80% +Shanghai Securities Treasury Bond Index yield × 20%. The 2016-2020 annual net worth growth rate of Huabao Transformation and Upgrading Fund and its performance comparison benchmark growth rates were -1.40%, 14.31%, -28.15%, 22.50%, 39.35% and -5.46%, 8.53%, -13.57%, 20.18%, and 16.06%, respectively. The performance comparison benchmark for Huabao's transformation and upgrading fund is the yield of the China Securities 800 Index × 55% +the yield of the Shanghai Securities Treasury Bond Index × 45%. The annual net worth growth rate of Huabao New Choice for 2017-2020 and its performance comparison benchmark growth rates were 3.54%, 0.16%, 13.66%, 4.40% and 8.49%, -10.68%, 19.73%, and 15.58%, respectively. The performance comparison benchmark for Huabao's newly selected one-year fund is the yield of the Shanghai and Shenzhen 300 Index × 50% +the yield of the Shanghai Securities Treasury Bond Index × 50%. The 2019 to 2020 annual net worth growth rates of Huabao Green's leading equity funds and their performance comparison benchmark growth rates were 0.48%, 39.24%, 3.93%, and 21.53%, respectively. The comparison benchmark for Huabao Green's leading equity funds is the yield of the China Securities 800 Index × 80% +the yield of the Shanghai Securities Treasury Bond Index × 20%. The annual net worth growth rate of Huabao's green-themed hybrid fund in 2018-2020 and its performance comparison benchmark growth rates were 0.03%, 24.68%, 37.90%, and -7.97%, 27.64%, and 21.53%, respectively. The performance comparison benchmark for Huabao's green-themed hybrid fund is the yield of the China Securities 800 Index × 80% +the yield of the Shanghai Securities Treasury Bond Index × 20%. The 2016-2020 annual net worth growth rates of selected hybrid funds by Huabao Industry and their performance comparison benchmark growth rates were -18.62%, 6.96%, -32.34%, 24.87%, 41.24%, and -11.28%, 21.78%, -25.31%, 36.07%, and 27.21%, respectively. The performance comparison benchmark for selected hybrid funds in the Huabao industry is the yield of the Shanghai and Shenzhen 300 Index. The 2016-2020 annual net worth growth rate of the Huabao Revenue Growth Hybrid Fund and its performance comparison benchmark growth rates were -8.71%, -2.67%, -26.47%, 30.19%, 57.29%, and -3.37%, 10.67%, -9.34%, 8.74%, and -2.05%, respectively. The performance comparison benchmark for Huabao Yield Growth Hybrid Fund is 65% SSE dividend index yield +35% SSE treasury bond index yield. The 2020 net worth growth rate of hybrid funds selected by Huabao Research and their performance comparison benchmark growth rates were 1.77% and 5.11%, respectively. The performance comparison benchmark for hybrid funds selected by Huabao Research is the yield of the China Securities 800 Index × 80% +the yield of the China Securities Composite Bond Index × 20%. The 2016-2020 annual net worth growth rate of Huabao Advanced Growth Hybrid Fund and its performance comparison benchmark growth rates were -26.34%, -0.99%, -17.99%, 46.37%, 67.41%, and -12.30%, 6.59%, -24.60%, 22.39%, and 13.91%, respectively. The performance comparison benchmark for Huabao Advanced Growth Hybrid Fund is the yield of the New Shanghai Composite Index.

There are 4 fund managers in the equity investment department of Huabao Fund, namely Yan Xu, He Zhe, Mao Wenbo, and Zeng Hao. Yan Xu managed three funds, Huabao Green Lead, Huabao Green Theme, and Huabao Industry Selected. The management start dates were 2021.4.10, 2021.4.10, and 2014.7.9 respectively. As of 2021.11.16, the returns during his tenure were 37.80%, 19.02%, and 118.44% respectively. He Zhe managed Huabao's high-end manufacturing, Huabao's transformation and upgrading, and Huabao's new preferred funds. The management start dates were 2018.8.24, 2018.7.2, and 2021.4.10 respectively. As of 2021.11.16, the returns during his tenure were 147.87%, 67.92%, and 11.59%, respectively. Mao Wenbo managed the Huabao Revenue Growth Fund. The management start date was 2015.4.9. As of 2021.11.16, the return during his tenure was 62.39%. Zeng Hao managed the three funds selected by Huabao Research, Huabao Advanced Growth, and Huabao's Competitive Advantage. The management start dates were 2020.8.26, 2017.12.27, and 2020.12.8 respectively. As of 2021.11.16, the returns during his tenure were 13.92%, 136.08%, and 6.21% respectively.

According to the 2021 performance ranking data, all funds in the four major categories of common equity funds, partial equity hybrid funds, flexible allocation funds, and balanced hybrid funds in the Wind classification were selected, all funds established after the fund's establishment date of January 4, 2021 were excluded, and shares other than Class A shares were excluded, the yield of all funds since this year was calculated. The average yield of all funds managed by each company was calculated and ranked according to the management company classification. The average yield of all funds established before the beginning of the year before the beginning of the year of Huabao Fund Equity Investment Division II was then calculated, and finally the result of this yield in the average yield ranking of all fund companies was obtained.

Risk warning:The fund manager promises to manage and use fund assets with the principles of honesty, credit, diligence and responsibility, but there is no guarantee that the fund will be profitable or that there will be no minimum return. The Fund's past performance and the level of its net worth do not indicate its future performance, and the performance of other funds managed by the fund manager does not guarantee the Fund's performance. Investors should read fund legal documents such as the “Fund Contract”, “Recruitment Manual”, and “Product Information Summary” in detail to understand the specific situation and risk-return characteristics of the fund. The risk evaluation methods used by different sales agencies are different. Their risk rating may differ from the risk-return characteristics expressed in fund legal documents. Investors are required to complete the matching test between risk tolerance and product risk in accordance with the requirements of the sales agency when purchasing this fund. The market is risky, and you need to be careful when investing.