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1. Revenues are approaching historical lows

"The yield of Tianhong Yu'ebao is close to 1.4%. Where can I find alternative products?"

Since the beginning of this year, as the yields of risk-free assets such as government bonds and bank deposits have fallen, the yields of money market funds such as Yu'e Bao have also fallen again, and many workers are anxious to find alternatives. "The yield of Tianhong Yu'e Bao is close to 1.4%, where can I find alternative products?"

▲ (Tianhong Yu'ebao's earnings trend in the last six months. Image source: Alipay)

It is worth noting that Tianhong Yu'ebao is not the same as Yu'ebao that we usually refer to. Tianhong Yu'ebao is just the largest of Yu'ebao's many products, and each user can freely choose different products in Yu'ebao.

27-year-old Zhang Ning has always been accustomed to putting money in Tianhong Yu'e Bao. She runs a beauty online store, and in her spare time, she is also a blogger on Douyin and Xiaohongshu, sharing her experience of using her own products. "Our industry is now rolling in low prices, and it is difficult to make money." She told "Shijie". Her online store is not big, with a daily turnover of more than 2,000 yuan and a profit of only more than 200 yuan. In order to earn more income, Tianhong Yu'e Bao is her first choice.

According to Zhang Ning's recollection, she began to transfer money to Tianhong Yu'e Bao around the beginning of 2021. "At that time (the return) should have exceeded 2%. For someone like me who needs money at any time, Tianhong Yu'e Bao is flexible in deposits and withdrawals, and can also earn some interest, which is very suitable." Zhang Ning said that in the past three years, she has earned a total of nearly 2,000 yuan from Tianhong Yu'e Bao.

But now, Zhang Ning has begun to say goodbye to Tianhong Yu'ebao. Finally, on the recommendation of a friend, she transferred her money to another cash management product "Yu'ebao", many of which have an annualized return of more than 2% in the past 30 days.

In fact, not only the returns of money market funds such as Tianhong Yu'e Bao continue to decline, but other low-threshold, high-liquidity "baby-type" products are no exception. For example, the other two money market funds available in Yu'e Bao, Penghua Yingyu Bao Currency Fund A and Taikang Xinyi Bao Currency Fund C, have both seen their 7-day annualized returns drop from the "2" range to around 1.4% in the past month.

▲ (Not only Tianhong Yu'e Bao, there are more than 40 other "baby-type" products in Yu'e Bao to choose from)

Wind data shows that in the past three months, among the 881 money market funds with performance records in the entire market (each share is calculated separately), 312 had a 7-day annualized yield of less than 1.5%, accounting for 35%; while the vast majority of products have dropped to the "1" digit, and there are only 14 products with returns exceeding 2%, which can be said to be rare.

Taking the largest Tianhong Yu'e Bao as an example, the 7-day annualized return has dropped from 2.0330% at the beginning of the year to 1.43% on July 21, approaching the historical low of 1.2920%, ranking in the bottom 35% among all money market funds; the return per 10,000 shares has dropped from 0.5887 yuan to 0.3882 yuan.

That is to say, if you save 10,000 yuan, you can get about 58 cents a day in the beginning of the year, but recently it is less than 40 cents. "I can't even afford a popsicle." Zhang Ning said that this income level makes her a little anxious.

"Shijie" noticed that there are many people like Zhang Ning who have left Tianhong Yu'ebao and switched to other products. While they complained about the lower and lower interest rates of Tianhong Yu'ebao, they searched for alternatives all over the Internet.

Li Rui, a 35-year-old mechanical engineer, has been more concerned about the stability and returns of financial products since he lost his job at the end of last year. "I looked at the money market funds of other large companies and found that the returns were generally between 1.4% and 1.8%. After comparing them, I chose a product from a large fund company."

▲(Some of the optional money market funds in Yu'ebao, the yields are as of July 20)

Although the yield per ten thousand shares of this product is not high, only about 0.41, which means that if you deposit 10,000 yuan, you will receive 0.41 cents every day, but the 7-day annualized yield in the past six months has been above 1.7%, which still impressed Li Rui.

The question is, they are all "baby products". Tianhong Yu'ebao was not only established earlier, but also had a yield that soared to a historical high of 6.76% in January 2014, with almost no rivals at the time. With high yields, its scale at its peak was an astonishing 1.69 trillion. Why is its yield lagging behind now?

"It's difficult for an elephant to dance. Tianhong Yu'e Bao is the largest money market fund on the market. It's like asking an elephant to dance, which is bound to be clumsy and inconvenient." A practitioner told "Shijie" that Tianhong Yu'e Bao's risk control requirements are higher than those of ordinary money market funds, and its asset selection is more inclined to stable and more liquid assets, which sacrifices some of the yield.

In addition, the fund's asset allocation is more diversified and conservative. Taking the latest second quarter report as an example, the top 10 bonds invested by Dacheng Cash Increase A, which has a higher return, account for a minimum of 0.79% of its fund's net asset value. Tianhong Yu'ebao is like a conservative gardener, with the top 10 bonds accounting for less than 0.4%, which can be said to be very diversified.

In the specific investment portfolio, Tianhong Yu'ebao put 70% of its positions in bank deposits and settlement reserves with low risks and low returns, and only gave 18.82% of its positions to buy-back financial assets that can bring higher returns. In simple terms, the so-called buy-back financial assets are like renting a book in a bookstore. You pay a deposit and have the right to read the book within a specified period of time. When the rental period ends, you return the book to the bookstore and get back the deposit, and the bookstore also gets a certain amount of compensation.

In comparison, the higher-yielding E Fund Zengjinbao A has a position in higher-yielding assets that is 10 percentage points larger than Tianhong, reaching 28.28%.

2. Walk on one leg

Tianhong Yu'e Bao, the once highly anticipated "financial management magic tool", has lost its impressive yield rate; at the same time, the performance of Tianhong Fund Company in equity products has not improved much.

Since 2019, equity funds have replaced money market funds and become the "hottest" in the public offering market. Since then, various fund companies have seized the opportunity and launched one popular equity product after another.

However, Tianhong Fund, the "darling" of the last era, did not have many products that could hit the pulse of the market during the golden age of equity products.

For example, in the past three years, Tianhong's best performing stock fund is "Tianhong CSI Dividend Low Volatility 100 Link A". This product is like a dark horse that stands out, and under the hands of fund manager Liu Xiaoming, it has achieved a three-year return rate of 32.46%.

Among the mixed products, Tianhong Tongli A, jointly managed by three fund managers Jin Meng, Ren Ming and Jiang Xiaoli, is not lagging behind, with a cumulative return of 18.24% in the past three years, ranking 25th among 1,961 similar products.

However, the scale of these two products is not very large, at 3.446 billion and 1.538 billion yuan respectively.

The "Tianhong SSE 300 ETF" and "Tianhong CSI Photovoltaic Industry" are like the "giant twins" in the Tianhong family. Their latest scales have reached 8.8 billion and 7.9 billion respectively, almost reaching the 10 billion threshold.

In particular, the Tianhong CSI Photovoltaic Industry Fund, which was led by Liu Xiaoming, was once the leader of Tianhong's equity products, with a scale of over 10 billion yuan. However, affected by the continuous bottoming out of the photovoltaic industry, it suffered a loss of 1.678 billion yuan in the second quarter of this year. Together with the loss of 605 million yuan in the first quarter, the fund suffered a heavy loss of 2.283 billion yuan in the first half of this year.

The ups and downs of this fund are just a microcosm of Tianhong's many equity products. Among the 135 stock funds (different shares are calculated separately), 47 have achieved positive returns since the beginning of the year, accounting for about 35%. In other words, more than 60% of stock products have lost money this year.

▲ (Tianhong Fund product structure. Source: Wind)

In the money market fund arena, Tianhong is like a skilled helmsman, and has achieved remarkable results. In particular, Tianhong Yu'ebao, with its low threshold, high liquidity and relatively stable returns, once became a landmark product in the market. But when the focus turns to equity, Tianhong seems to be faltering, and the development of equity products is relatively lagging behind. For example, the layout and performance of stock and mixed products are much weaker than its strong position in the money market fund field.

Overall, Tianhong currently has a management scale of 1,179.8 billion. Among them, money market funds represented by Tianhong Yu'ebao are the largest, with a scale of 831.7 billion, accounting for more than 70%. Bond funds followed closely behind with 236.3 billion, accounting for 20%. Equity funds and hybrid funds, which best reflect investment and research capabilities, account for a relatively small proportion, less than 8%.

In addition, looking at the entire fund industry, Tianhong ranks fifth with a total scale of 1,179.8 billion. If we only look at the scale of non-money market funds, Tianhong's scale is 348.1 billion, ranking 15th. Among the top 15 institutions, Southern, Penghua, etc., although they also have larger money market funds, are only slightly larger than non-money market funds, while Tianhong's money market fund scale is 2.4 times that of non-money market funds.

▲ (Ranking of non-cash scale of public offering companies. Source: Wind)

"Long-term reliance on a single product may expose fund companies to higher market concentration risks." The aforementioned industry insider said that the yield of money market funds is relatively low, and long-term reliance on money market funds will limit the company's overall returns. "Especially as market interest rates fall, the attractiveness of money market funds decreases, and Tianhong Fund will also face greater pressure to increase performance."

This statement has been verified in the financial report. Data shows that in 2023, Tianhong Fund achieved revenue of 4.707 billion yuan, a year-on-year decrease of 13.22%; net profit was 1.408 billion yuan, a year-on-year decrease of 9.03%. During the same period, Southern Fund achieved a double increase in revenue and net profit.

Relying on a single product is like "walking on one leg", which limits Tianhong's development. Faced with the continuous decline in the returns of its flagship products, it has become particularly important to make up for the shortcomings of equity investment.

In order to make up for this shortcoming, Tianhong has also made a lot of efforts. First, in 2018, it promoted the reform of integrated investment and research; then it optimized the assessment mechanism - trying to implement performance assessment in a rolling three-year cycle, with the performance of the current year accounting for only 50% of the overall assessment. At the same time, it has constructed four sets of stock selection criteria for the four major industries of medicine, consumption, technology, and manufacturing, hoping to discover the companies with the most investment value in the industry.

However, improving equity investment and research capabilities is a long battle, and Tianhong needs to invest more patience and resources.

3. Who can replace Tianhong Yu’e Bao?

Back to Tianhong Yu'e Bao, although its returns have been declining this year, its shares have increased from 702.2 billion shares at the end of 2023 to 757.3 billion shares at the end of June this year, an increase of 7.8%.

What this reflects is the helplessness of ordinary investors in the face of declining investment returns.

We ordinary people have a simple wish for financial management: safety, high returns, and convenient access. However, there are not many products that can meet these three requirements at the same time.

Li Rui mentioned above said that in addition to money market funds, he also compared bank deposits and bond funds, which are very popular this year. "There are not many products to choose from." He told "Shijie": "Bond funds have large fluctuations and higher risks than money market funds; if you withdraw bank deposits in advance, you will lose some interest."

Kelly, who works for a foreign equipment company, also said that because she lost too much money in stocks, she also began to calculate whether the return of Yu'ebao was high or low. "I don't know much about bond funds, but it would be great if the return on products for storing change could be higher."

So after careful consideration, Kelly put part of her money in "Lingshuobao", a cash management product launched by the bank. "Like Yu'ebao, Lingshuobao can be used at any time, which is very convenient for shopping."

The "Ling Huo Bao" mentioned by Kelly belongs to Ping An Bank. Other similar products include "Chao Chao Bao" of China Merchants Bank and "Huo Qi Ying" of Bank of Communications. Similar to the Yu'e Bao we are familiar with, these products are regarded as a kind of change management tool. Although the yield rate is not very high, it provides higher return possibilities than traditional current deposits and can also be used directly for payment.

For example, the underlying assets of "Ling Huo Bao" are mainly the "Tian Tian Cheng Zhang" cash management products under Ping An Wealth Management, of which there are currently 30. As of July 23, the 7-day annualized returns of these products ranged from 1.8337% to 2.4281%, and the returns per 10,000 shares ranged from 0.5003 to 0.6290.

▲(Rate of some “Flexible Treasure” products. Source: Ping An Bank App)

In other words, if you deposit 10,000 yuan, you can get a little over 4 yuan in 7 days, which means an average of 0.63 yuan per day.

Although 63 cents is still not enough to buy a popsicle, many people still choose this type of product because of its slightly higher returns than Yu'e Bao: "Shuolingbao allows flexible deposits and withdrawals, and can automatically pay off credit cards, which is very convenient. The interest rate is slightly higher than the bank's regular deposits." An investor said in the Huolingbao discussion area.

In addition, some bond funds and commercial pension funds with shorter lock-up periods have also targeted everyone's "small money". The yields of these two products are relatively "good", but the disadvantage is that they cannot be used at any time.

For example, if you buy 10,000 yuan of a medium- to short-term bond with a closed period of three months on WeChat's "Licaitong" and hold it for one year, the profit will be between 263.65 yuan and 422.92 yuan; converted to a daily basis, it is approximately between 72 cents and 1.2 yuan, which is higher than Yu'ebao and the bank's change products.

Another example is a commercial pension fund launched by the National Pension Insurance Co., Ltd., which has risen by 3.12% in the past year. Based on this estimate, if you buy 10,000 yuan and hold it for a year, you can earn about 312 yuan, an average of 85 cents a day.

At present, the returns of traditional financial management products such as Yu'ebao are becoming increasingly meager, and the scarcity of alternative high-yield products in the market has made investors' financial management options become stretched. Either the returns are meager, the risks are high, or the liquidity is limited. The financial management dreams of ordinary people are facing challenges.

Author | Lu Chunfeng

Editor | Han Zhongqiang

Operations | Liu Shan