"Her Strength" | China Merchants Fund Xu Rongman: Navigating cycles with meticulousness and a long-term perspective, with risk control as the core foundation of the portfolio

In traditional understanding, strength is often associated with rigidity and sharpness, but the capital markets are never short of sharpness. Female fund managers are redefining professional strength by combining firmness and flexibility. The current “her power” breaks this binary opposition—firmness means sticking to principles and bottom lines, while flexibility represents wisdom and guidance. Together, they create an investment path that balances strength and warmth between net value curves and long-term value.

“By clearly defining the tool nature of index products and strictly replicating indices, we provide investors with highly transparent, low-cost investment tools, leaving the pursuit of excess returns to asset allocation decisions,” said Xu Rongman, Fund Manager of the Index Product Investment Department at China Merchants Fund. “Women have natural advantages in long-term planning, attention to detail, and continuous optimization. Their patience, prudence, focus on risk control, and long-term perspective align closely with the core of the asset management industry’s steady development.”

China Merchants Fund Index Fund Manager Xu Rongman

Regarding long-term investment, Xu Rongman pointed out that it is a way to counteract short-term fluctuations, leverage compound interest, and practice disciplined investing—sharing in the long-term growth of economic and corporate value. This investment approach naturally aligns with index investing.

“Risk control plays a central role in portfolio management and runs through the entire investment research lifecycle,” she said. “This includes pre-investment risk control indicators and rules, real-time monitoring during operation, and post-performance attribution and systematic optimization.”

With industry development, index funds, thanks to their high transparency, low costs, risk diversification, and strong allocation features, are gradually becoming essential tools for investors to plan long-term investments and optimize asset allocation. This trend aligns closely with Xu Rongman’s disciplined and long-term investment philosophy.

Faced with the many types of index funds available today, how to allocate assets scientifically, manage meticulously, and select rationally has become a key concern for investors.

In Xu Rongman’s view, different index funds are suited for specific scenarios. Broad-based indices are highly representative of the market and suitable as core holdings to help investors share in long-term market gains. Sector and thematic indices focus on specific tracks and require consideration of industry cycles, policy directions, and short-term catalysts, making them suitable as satellite strategies to enhance portfolio resilience. Enhanced products aim to outperform the index on a tracking basis, but management styles vary greatly, so careful selection of fund managers and management teams is necessary.

“Tracking error is a core performance indicator for index funds and must be managed throughout the entire portfolio lifecycle,” she emphasized. “Before product launch, set risk control and compliance indicators; during the build-up phase, strictly follow index constituent stocks and weights; during operation, monitor deviations and tracking errors in real-time. Address deviations caused by index rebalancing, corporate actions, or daily redemptions through timely system identification and calibration to ensure effective tracking of the target index. Regular reviews and optimizations should be conducted to continuously improve management accuracy.”

For ordinary investors, when choosing index funds tracking the same underlying, priority should be given to those with lower tracking errors, and attention should also be paid to excess return capabilities.

For ETF products, focus on on-market liquidity, including average daily trading volume, premium/discount levels, and bid-ask spreads, and prefer products with better liquidity.

Message:

Look at and understand short-term market fluctuations from a longer-term and industry cycle perspective. Help investors understand the risk-return characteristics of different products through appropriate portfolio allocation and long-term holding strategies to navigate market cycles.

Text / Nan Nan Xu Editing / Nan Xu

(Edited by: Nan Nan Xu)

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