"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 gentleness. The current “her power” breaks this binary opposition—firmness means sticking to principles and bottom lines, while gentleness signifies 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 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 implement disciplined investing—sharing in the long-term growth of economic value and enterprises. 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 also aligns with the disciplined and long-term investment philosophy upheld by Xu Rongman and her team at China Merchants Fund.

Faced with the wide variety 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 to 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 require judgment based on industry cycles, policy directions, and short-term catalysts; they can serve as satellite strategies to enhance portfolio flexibility. 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 the 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, and daily redemptions through systematic 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 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 a long-term investment philosophy.

Text / Xu Nannan Editing / Xu Nan