"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 edge. 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, reflected in net value curves and long-term value.

“By clearly defining the tool nature of index products, strictly replicating indices, and providing investors with highly transparent, low-cost investment tools, we leave 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 principles of steady development in the asset management industry.”

China Merchants Fund Index Fund Manager Xu Rongman

Regarding long-term investing, 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 value and companies. 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—from pre-investment risk indicators and rules setting, to real-time monitoring during operations, and post-performance attribution and systematic optimization,” she said.

As the industry develops, index funds, with their high transparency, low costs, risk diversification, and strong allocation features, are gradually becoming essential tools for investors to plan long-term investments and for institutions to optimize asset allocation. This trend aligns closely with the disciplined and long-term investment philosophy upheld by Xu Rongman and her team.

Faced with a wide variety of index funds in the current market, 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 are suitable as core holdings to help investors share in the market’s long-term gains. Sector and thematic indices focus on specific tracks and should be combined with industry cycles, policy directions, and short-term catalysts to serve as satellite strategies that enhance portfolio resilience. Enhanced products aim to outperform the index on the basis of tracking, but management styles vary greatly, so careful evaluation 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. “Set risk control and compliance indicators before product launch; strictly follow index constituent weights during the construction phase; continuously monitor deviations and tracking errors during operation, and promptly identify and calibrate deviations caused by index rebalancing, corporate actions, or daily redemptions through systematic checks to ensure effective tracking of the target index; also, conduct regular reviews and optimizations to improve management accuracy.”

For ordinary investors, when choosing index funds tracking the same underlying, prioritize those with lower tracking errors, and focus on their ability to generate excess returns.

For ETF products, pay special attention to on-market liquidity, including average daily trading volume, premium/discount levels, and bid-ask spreads, and prefer those 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, and navigate market cycles through appropriate portfolio allocation and long-term investment philosophies.

Text / Xu Nannan Editing / Xu Nan

(Edited by: Xu Nannan)

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