news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

As the interest rate market becomes more volatile, bond funds have once again become the focus of market attention. On August 8, a rumor that "regulators do not allow the issuance of public bond funds" spread like wildfire. China Securities Journal reporters learned from various sources in the industry that fund companies have not received such guidance at present, but the pace of bond fund approval has indeed slowed down recently.

In fact, this rhythm has begun to appear since 2023, mainly due to the consideration of balanced issuance of "equity and bond funds". As more and more bond funds are issued and the longer the duration, the greater the risk of bond market adjustments. Data shows that the proportion of bond fund issuance has increased all the way, from less than 25% in 2021 to 66.934% in 2022, to 70.87% in 2023, and to more than 80% in 2024 (as of August 8).

Fund analysts said that the bond market has seen significant gains in the previous period, and market sentiment is relatively high, but at the same time, long-term risks are also gradually accumulating, and the central bank may still use tools to regulate when necessary. In the medium and long term, the current macroeconomic recovery is still weak, monetary policy may remain loose, the bond market is still in a friendly environment, and overall risks are controllable.

The establishment of bond funds has basically not been publicized

In the fund issuance chain, application and sale are two different stages. Since the fund needs to wait for approval after application, it will enter the sale stage only after passing the approval and obtaining the approval document, and the new fund will be established after the sale. The time span between these links ranges from several months to a year. Therefore, the change in the pace of bond fund approval cannot be deduced only from the recent establishment of new bond funds. Taking August 8 and 7 as examples, there are still products such as Huashang Hongxin Pure Bond Fund, Boyuan Zenghui Pure Bond Fund, and Hongtu Innovation Tianyi Bond Fund established in the entire market, and products such as Morgan Hengrui Bond Fund and Huitianfu Wensheng Pure Bond Fund have also been reported.

However, according to private information obtained by Securities China reporters and fund companies, the pace of bond fund approval has indeed slowed down recently. "The bond funds issued or established recently are basically existing products that have been approved before. Some companies have not received bond fund approval documents for a while. This tone does not require or have specific documents. This is a product strategy adjustment made by the fund industry based on changes in the current market environment." A person from a small and medium-sized public offering market in Beijing told Securities China reporters.

"Bond funds can still be applied for. Our company just reported a pure bond fund last Friday. As far as I know, there is no ban on the issuance of public bond funds. But compared with other products such as index funds, the approval pace of bond funds has indeed slowed down. This is mainly due to the consideration of balanced issuance of equity and bond funds." The head of a medium-sized public offering brand in South China told Securities China reporters.

Furthermore, the brand's personnel analyzed that bond funds have always been mostly customized by institutions, with the characteristics of a small number of holders and a large average holding size per household. Starting around 2023, small and medium-sized investors have gradually joined the ranks of bond fund holders. But on the other hand, equity funds are not only difficult to issue, but newly established funds are also small in scale. After establishment, funds are quickly redeemed, mini or even liquidated. The market's "asset shortage" situation still exists, and funds are still flowing into fixed-income targets.

The most direct example is the continuous increase in the scale of bond funds, which once pushed the total scale of public funds to exceed 30 trillion yuan or even 31 trillion yuan. In order to balance the market structure, the approval of bond funds has slowed down since last year. "Recently, fund companies have also lowered their voices in promoting bond funds. We have considered internally that we dare not issue too large a bond fund (about 5 billion yuan is enough, and no more than 8 billion yuan at most), and we will not promote it after it is issued. But to be honest, under the current market demand, if there is no such consideration, it can be issued on a large scale." said the above-mentioned brand person.

Bond fund issuance accounts for more than 80%

What the above-mentioned fund person said is confirmed by more intuitive data.

According to iFinD data from Tonghuashun, as of August 8, 235 of the 728 newly established funds this year were bond funds. Although the number is not large, the fundraising scale is 586.791 billion yuan, accounting for more than 80% of the total fundraising scale of 727.09 billion yuan for all newly issued funds. In 2023, the scale of newly issued funds will be 1.14 trillion yuan, and the scale of newly issued bond funds will be 805.208 billion yuan, accounting for 70.87%. In 2022, the scale of newly issued bond funds will be 984.047 billion yuan, accounting for 66.934% of the overall fundraising scale of 1.47 trillion yuan. In 2021, the scale of newly issued funds will be as high as 2.94 trillion yuan, and the issuance scale of bond funds will be only 728.525 billion yuan, accounting for less than 25%.

From the comparison of single funds, the issuance gap between equity funds and bond funds is more obvious. According to the data in 2024, as of August 8, a total of 19 bond funds with a scale of up to 8 billion yuan were established in the market, covering various types such as policy financial bonds, interest-bearing bonds, pure bonds, and green inclusive financial bonds. However, in the same period, only 23 ordinary stock funds were established in the market, with a scale of 5.623 billion yuan, of which 10 were initiated funds; a total of 150 equity-oriented mixed funds were established, with a scale of 43.16 billion yuan. The total scale of the two was 48.783 billion yuan, accounting for less than 7% of the total scale of 727.09 billion yuan raised by all new funds issued during the year.

Under such circumstances, the idea of ​​"equity-bond balance" has attracted the attention of the fund industry. "In recent years, the products encouraged to develop are equity funds, and there have been many policy decisions. Obviously, the fact that bond funds have become the main development theme recently is obviously contrary to this. As more and more bond funds are issued, and the longer the duration, the greater the risk of bond market adjustments." An insider of a public fund in Shanghai told a reporter from Securities China.

Bond duration generally refers to the weighted average of the time it takes for bond investors to recover their principal and interest. Under normal circumstances, the shorter the duration, the less sensitive the bond is to interest rates and the less affected it is by interest rate fluctuations. The longer the duration, the greater the interest rate risk and the greater the volatility of the portfolio. For investors, the duration of a bond fund can measure the risk and return characteristics of the fund, as well as the fund's sensitivity to changes in market interest rates.

According to the reporter's understanding, no fund company has yet required a letter of commitment that the duration of a newly approved bond fund will not exceed two years. However, as of now, the historical percentile of bond funds is not low. According to a research report by a securities firm, as of August 4, the net asset value of bond funds in the entire market was 10.64 trillion yuan, up 0.11% month-on-month, of which medium- and long-term pure bond funds increased by 0.09% month-on-month. Judging from the trading day situation, the duration of medium- and long-term pure bond funds has lengthened, with an average of 3.33 years, which is in the 10%-25% historical percentile in the past year; the duration of short-term pure bond funds has lengthened, with an average of 0.95 years, which is in the 10%-25% historical percentile in the past year.

Overall risk is controllable

The above considerations about excessive duration are also reflected in the trading market.

According to Jinxin Fund, the bond market has started to pull back in the past week, and the yields of 10-year and 30-year treasury bonds have begun to reverse. Among them, the sale of bonds by large banks on August 5 caused a small adjustment in the market, and the zero-yuan reverse repurchase operation conducted by the central bank on August 7 also increased the cautious sentiment of the market, and the bond market fluctuated narrowly. Also on the 7th, the China Interbank Market Transactions Association launched a self-discipline investigation on several commercial banks, and issued an announcement on the morning of the 8th that there were violations of lending bond accounts and interest transfer in small and medium-sized financial institutions, and the clues of such cases would be further investigated and handled.

Under the combined influence of these news, as of the close of August 8, the main 30-year contract fell sharply, closing down 0.52%. In addition, the main 10-year Treasury bond futures contract fell 0.27%, and the impact on short-term bonds was slightly smaller, with the main 5-year and 2-year contracts falling 0.13% and 0.03% respectively. "The bond market has risen significantly in the previous period, and market sentiment is relatively high, but at the same time, long-term risks are gradually accumulating. The central bank may still use tools to regulate when necessary. In addition, the bond market has adjusted back, and the previous profit-taking may choose to be closed in time, which will cause short-term fluctuations. However, in the medium and long term, the current macroeconomic recovery is still weak, monetary policy may remain loose, the bond market is still in a friendly environment, and the overall risk is controllable." Jinxin Fund said.

Wells Fargo Fund pointed out that the current domestic long-term interest rate pricing is significantly lower than overseas. If the subsequent long-term interest rate continues to decline to a relatively low point, it may also threaten the viability of financial institutions. Therefore, a series of operations by the central bank may be intended to limit the rapid decline of long-term interest rates, while keeping the yield curve in an upward shape to prevent financial risks. Taking the eurozone as an example, its nominal GDP grew by 3.86% year-on-year in the first quarter of this year, and the 10-year government bond yield was 3.07% during the same period. my country's nominal GDP grew by 4.06% year-on-year in the second quarter of this year, and the 10-year government bond yield was only 2.23% during the same period, and the 30-year government bond yield was only 2.47%.

In addition to public funds, other institutional investors have also noticed these changes. "As for domestic bonds, we did not buy them in the previous bull market, but bought some later. But judging from the current situation, now may not be a good time to buy bonds. In the past period of time, the yield of long-term bonds has significantly exceeded the coupon of bonds, which is equivalent to overdrawing the yield of the next year in the past six months. The central bank has recently been operating borrowing and selling, which will make the price of bonds lower and the long-term yield will rise." The head of proprietary investment of a Beijing industrial group told the reporter of Securities China.

Editor: Li Xuefeng

Proofreading: Wang Wei