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Source: Time Weekly Author: Zhao Peng

Some bank wealth management products experienced short-term pullbacks.

Recently, many investors on social media reported that the bank wealth management products they purchased suffered periodic losses. Among them, a Zhejiang netizen posted that the amount of loss of a CITIC Bank wealth management product he purchased reached 1,061.04 yuan in a single day. Some investors also said that the net value of the products they held under ICBC Wealth Management, Bank of Communications Wealth Management, and China Merchants Bank Wealth Management had retreated.

ICBC Wealth Management staff told the Times Weekly reporter that due to the recentBondsAffected by market fluctuations, the net value of some bank wealth management products fluctuated. However, the volatility of the bond market has stabilized, and the wealth management products that had previously experienced a retracement have begun to gradually recover. The net value of products mentioned by investors on the Internet is close to the previous high point. Investors can patiently wait for the net value of low-risk products that have previously experienced a retracement to recover.

The reporter found that only a few investors understood the deep-seated reasons for the short-term correction of bank wealth management products, while most investors participating in the discussion found it difficult to understand the short-term correction of bank wealth management products. Due to the short-term fluctuations in the net value of bank wealth management products, some investors said on social media that they were preparing to redeem or had already redeemed related products.

Previously, the central bank had warned that wealth management products may face the risk of drawdown. The "China Monetary Policy Implementation Report for the Second Quarter of 2024" released by the central bank analyzed that the returns of asset management products ultimately depend on the underlying assets. Since the beginning of this year, some asset management products, especially bond-type wealth management products, haveAnnualized Rate of ReturnIt is significantly higher than the underlying assets, which is mainly achieved through leverage, and there is actually a large interest rate risk. When market interest rates rise in the future, the net value of related asset management products will also fall sharply.

Rapid fluctuations in bank wealth management net value

The Times Weekly reporter found that a Zhejiang netizen purchased a wealth management product called Xinyin Wealth Management Huiyingxiang Six-month Holding Period No. 5 Private Banking Exclusive (hereinafter referred to as "Xinyin Huiyingxiang"). Xinyin Huiyingxiang starts at 400,000 yuan, and the product risk rating is R3 (medium risk), which means that the principal is not guaranteed to be repaid when the product expires or is redeemed. There is a certain principal repayment risk and the income is subject to certain fluctuations. In the asset allocation of Xinyin Huiyingxiang, debt assets must account for more than 80%, and the total value of equity assets, commodity and financial derivative asset positions and derivative account equity shall not exceed 20%.

China Merchants BankThe APP shows that the performance benchmark of Xinyin Huiyingxiang is 2.30%-4.05%. The Times Weekly reporter noticed that on August 7 and August 12, the net value of the product fell by 0.02% and 0.03% respectively. The aforementioned Zhejiang netizen said that his investment principal was about 6 million yuan, and he lost 1,061.04 yuan in a single day on August 7, but he started to make money again in the past three days, and made about 1,500 yuan on August 15.

A Shanghai netizen said that the ICBC Wealth Management Tiantian Xintianyi fixed income open-end wealth management product (hereinafter referred to as "Tiantian Xintianyi fixed income") he purchased lost 27.92 yuan on August 8. A Jiangsu netizen posted that the ICBC Wealth Management Xintianyi 30-day holding profit fixed income enhanced open-end wealth management product (hereinafter referred to as "Xintianyi 30-day fixed income enhanced") he purchased lost 140.74 yuan on August 12.

ICBC APP shows that Tiantian Xintianyi Fixed Income and Xintianyi 30-Day Fixed Income Enhanced are both PR2-level products.ICBCExplanation: The risk level of PR2 is lower, and the principal and income are less affected by risk factors. Customers with or without investment experience who have a risk tolerance of conservative, balanced, growth-oriented, and aggressive types are suitable for purchasing this type of product.

From the perspective of investment scope, Tiantian Xintianyi Fixed Income is a standard fixed income financial product, while Xintianyi 30-day Fixed Income Enhanced can operate as a standard fixed income product and can be transformed into a "fixed income +" product at any time. In the asset allocation of Tiantian Xintianyi Fixed Income, fixed income assets must be greater than 95%, and derivative financial instruments such as treasury bond futures for hedging or risk hedging must be less than 5%. In comparison, in Xintianyi 30-day Fixed Income Enhanced, the proportion of fixed income assets must only exceed 80%, and equity assets and financial derivative assets must not exceed 20% in total, of which financial derivative assets must be less than 5%.

In response to the net value drawdown of bank wealth management products, ICBC Wealth Management staff said that ICBC Wealth Management's product line, which is mainly based on fixed-income products, will not undergo significant adjustments, and products with risk levels of PR1 and PR2 account for 50% and 40% of all products, respectively. Recently, the company launched a low-volatility dividend strategy product of Dingxin to cope with the volatility of the bond market. At the same time, in order to facilitate the "working people" group, some ICBC Wealth Management products have opened the "night wealth management" mode.

Net value products are the general trend

Staff from several bank wealth management subsidiaries told the Times Weekly reporter that short-term fluctuations in performance are difficult to avoid for net value products. After bank wealth management products broke the rigid redemption policy, it was difficult for investors and front-line sales staff to adapt quickly. Even with risk warnings, some investors still believe that bank wealth management products can only make money and not lose money. The net value drawdown of bank wealth management products for one or several days will be difficult for some investors to accept, and investor education work is a long and arduous task.

In 2018, new asset management regulations were introduced, which explicitly required financial institutions to implement net value management for asset management products. From 2019 to 2023, the outstanding balance of net value bank wealth management products in my country will increase from approximately 10 trillion yuan to 26 trillion yuan, and the proportion will increase from 43% to 97%. Net value management has become a general trend.

According to the "China Banking Wealth Management Market Half-Year Report (First Half of 2024)" (hereinafter referred to as the "Wealth Management Half-Year Report") released by the Banking Wealth Management Registration and Custody Center Co., Ltd., as of the end of June 2024, the bank wealth management market had a scale of 28.52 trillion yuan, with a total of 15,400 new wealth management products issued in the first half of the year, raising 33.68 trillion yuan in funds. Among them, the scale of net value wealth management products was 27.84 trillion yuan, accounting for 97.61%, an increase of 0.68 percentage points from the beginning of the year and 1.67 percentage points from the same period last year.

The "China Monetary Policy Implementation Report for the Second Quarter of 2024" pointed out that before the new asset management regulations, many asset management products had "expected returns" that were usually consistent with the actual returns at maturity, which implied rigid redemption. After the introduction of the new asset management regulations, under the net value mechanism, investors' returns fluctuate with the actual value of the underlying assets, and there is no longer rigid redemption.

Net value management places higher demands on both asset management product managers and investors. The report believes that managers need to adapt to changes in asset prices in the financial market. Investors need to gradually change the traditional concept of over-reliance on stable expected returns, have a deeper understanding of the essential differences and risks between the expected return rate of products and the final actual return rate, and establish a more scientific and rational investment concept.

The head of a branch of a joint-stock bank in South China told the Times Weekly reporter that in the actual sales process, they would emphasize to customers that the expected rate of return of financial products does not represent the final actual rate of return. If the product rate of return does not reach the expected rate of return, some customers will always have some emotions. There will also be customers who buy financial products online and go to offline outlets for consultation because they do not reach the expected rate of return.

The "Wealth Management Semi-annual Report" shows that in the first half of 2024, the average yield of wealth management products is 2.80%. At the end of July, the average annualized yield of bank wealth management exceeded 3%, while the current bank's 3-year fixed deposit rate is less than 2%, and some investors invest their deposits in such products. However, high returns correspond to high risks. In the environment of breaking the rigid payment, asset management products cannot have both "low risk" and "high returns" in the long run.

Financial products are mainly fixed income products

As of the end of June 2024, the outstanding scale of fixed-income products was 27.63 trillion yuan, accounting for 96.88% of the outstanding scale of all wealth management products, an increase of 0.54 percentage points from the beginning of the year and 1.73 percentage points from the same period last year. The asset allocation of wealth management products is mainly fixed income, with the balances of bonds, non-standardized debt assets, and equity assets being 16.98 trillion yuan, 1.78 trillion yuan, and 850 billion yuan, respectively, accounting for 55.56%, 5.82%, and 2.78% of total investment assets, respectively.

A person who used to work as a non-bank analyst at a securities firm told the Times Weekly reporter that after the new asset management regulations, the proportion of net value products has increased, and a considerable portion of net value products are ultimately invested in fixed-income assets. A considerable portion of bank wealth management products with low risk levels can be regarded as bond funds, and it is normal for net value fluctuations to occur. The probability of overshooting in the short-term bond market is low, but the volatility of bond assets will increase to a certain extent.

A macro analyst from a securities firm told the Times Weekly reporter that last year, the incremental funds in the bond market mainly came from institutional allocation demand, while this year, a considerable part of the incremental funds in the bond market came from retail investors. Therefore, the volatility of this round of bond market may be greater than last year, but it is generally controllable.

according toChina Merchants SecuritiesAccording to the statistics of the fixed income team, the 7-day annualized average yield of wealth management products from August 4 to 11 was 2.39%, a decrease of 194bp from the previous month. Among them, the 7-day annualized yield of cash management wealth management products was 1.75%, a decrease of 3bp from the previous month; the 7-day annualized yield of fixed income wealth management products was 3.05%, a decrease of 148bp from the previous month. Faced with the decline in the yield of wealth management products caused by the volatility of the bond market, many investors began to worry that the redemption wave of bank wealth management products would occur again.

Guotai Fund told the Times Weekly reporter that the interest rates of 10-year and 30-year treasury bonds are gradually approaching the reasonable range of long-term treasury bond yields, and is currently cautiously optimistic about the market outlook. Currently, short-term bond products have a high investment cost-effectiveness. The long-term logic of the bond market fundamentals has not changed, and bond funds are still an important part of asset allocation in the low-interest rate era. Moreover, bond funds have stable coupon income, which is upward in the long term, and short-term fluctuations may be a better time to enter the market. Short-term bonds still have allocation value, so there is no need to panic and choose the right time. Long-term products can indeed be more cautious.

The Macro Strategy Department of Southern Fund pointed out that the core reason for the recent bond market volatility is that the 10-year Treasury bond interest rate fell rapidly last week, briefly breaking 2.1% in the middle of the week, and the regulatory attention to interest rate risk has increased significantly. The second quarter monetary policy implementation report clearly strengthened the reminder and warning of interest rate risk. In addition to the recent series of "combination punches" by the central bank, the volatility of the bond market is also reasonable.

Invesco Great Wall Fund believes that for the subsequent trend of the bond market, the medium- and long-term upward trend may be difficult to reverse. The current macroeconomic situation is in a recovery trend, and the real economy needs a loose monetary environment. Whether it is financial institutions or individual investors, the demand for bond allocation is still strong. In addition, the continuous reduction of bank deposit interest rates has increased the demand for bond allocation by ordinary investors. For the opportunities after the recent adjustment of the bond market, if investors are prepared for short-term fluctuations, they may pay appropriate attention. If you are sensitive to fluctuations, interbank certificates of deposit and short-term debt products will be relatively more stable.