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on august 17, the "2024 asset management annual conference" hosted by "21st century business herald" and co-organized by pudong development bank was grandly held in hongkou, shanghai.

as the overall scale of the "fixed income +" market exceeded the 1.9 trillion yuan mark, the industry is particularly concerned about the market trends and asset allocation strategies in the second half of the year. in the roundtable discussion on "offensive and defensive strategies for fixed income investment" held that afternoon, many guests from asset management institutions, including luo yingzong, general manager of the fixed income department of shanghai pudong development bank wealth management, xu zhe, general manager of the fixed income department of everbright wealth management, wu weisen, general manager of the fixed income department of hengfeng wealth management, cheng hao, deputy director of the fixed income department of fidelity funds, and li yi, director of the fixed income investment department of shanghai pudong development bank ansheng fund, participated in the discussion.

fixed income boom driven by both the capital side and the asset side

among the asset management products in the first half of 2024, the scale of pure fixed income and "fixed income +" products driven by the bull market in bonds has increased significantly. according to wind data, as of the end of june 2024, the total scale of "fixed income +" funds in the entire market was 1.92 trillion yuan, and the net value performance has repeatedly set new highs.

regarding the craze for "fixed income +" products in the first half of the year, the guests at the meeting interpreted the reasons behind it from the funding side and the asset side.

luo yingzong pointed out that policy changes in the first half of the year were one of the main factors affecting the market this year. the policy of prohibiting "manual interest supplementation" led to a significant downward shift in the center of market interest rates. in addition, the measures taken by banks to maintain the interest rate spread level prompted a large amount of on-balance sheet funds to seek new investment outlets. these funds flowed to bank wealth management products and fund companies' "fixed income +" products, which were considered to be lower risk, and became an important driving force for market changes.

wu weisen said that on the asset side, the yields of various bond varieties have dropped significantly compared with the beginning of the year. although there have been several corrections during this period, the magnitude is limited, and investors have a good holding experience and relatively good returns. on the funding side, due to the reduction in deposit interest rates and the cessation of "manual interest supplements", some deposit customers with low risk appetite have turned to bank fixed-income wealth management products.

li yi also mentioned that from the asset side, bond yields have continued to decline, and bond prices have risen a lot, pushing up the net value performance of net value products, making the bond product returns in the past period of time perform better. second, from the perspective of public investors, deposit interest rates have fallen while bond product returns have performed relatively well. the "water level difference" between the two has formed a certain subscription fund flow. as for the growth in the scale of "fixed income +" products, xu zhe believes that this is a good thing. on the positive side, "fixed income +" funds have achieved positive returns for customers and achieved relatively high returns; on the negative side, it can reverse the public's negative impression that the asset management industry is always pro-cyclical.

in cheng hao's view, most of the positions of "fixed income +" products are fixed income, so under the background of good overall performance of fixed income this year, it has laid a good foundation for its income. at the same time, with the downward trend of static yield of fixed income assets in recent years, the upper limit of its income is expected to gradually decline. under this circumstance, "fixed income +" products have become an investment option that can be used for both defense and offense.

institutions explore "fixed income +" asset allocation

behind the growth of “fixed income +” products is the adjustment of the asset allocation strategy of the “+” part. what kind of exploration and practice have various asset management institutions made?

luo yingzong admitted that after the first quarter of last year, puyin wealth management began to try some "fixed income +" products. for the "+" part, the company has tried gold etfs, equity indexes, dividends, derivative financial instruments, and even ten-year treasury bonds.

luo yingzong said that the practice process not only deepened puyin wealth management's understanding of the various dimensions of the "+" strategy, such as prudently avoiding equity investments when the market fluctuates, and timely adding gold etfs or high dividend strategies when market certainty increases; it also made puyin wealth management cautious about unfamiliar areas and avoid blind exposure in the short term. at the same time, "interaction with investors also helps us improve our understanding of products, customer risk preferences and channels."

based on the practice of everbright wealth management, xu zhe pointed out that the management model of the wealth management industry and other types of asset management industries in the field of "fixed income +" is different. taking everbright wealth management as an example, the "fixed income +" products are roughly divided into two series: one is the traditional actively managed "fixed income +", and the equity part is mainly allocated to industry broad-based and index etfs; the other is "fixed income +" derivatives, including gold-linked targets, us dollar bond indexes and other types. he believes that in the field of "fixed income +", it is necessary to first build the investment research capabilities required for different product types. at the same time, it is also necessary to cultivate the capabilities of investment managers, including the ability to allocate major asset classes, the choice of positions, and the ability to identify the style of the next stage.

wu weisen bluntly stated that at present, hengfeng wealth management's fixed income department is relatively cautious about the assets in the "+" part of the "fixed income +" products, and still manages the "fixed income +" products with the concept of absolute return to maintain the stability of the products.

from the perspective of fixed income investment of foreign public funds, cheng hao said that the company will explore some relatively niche products and less crowded tracks. "for example, the liquidity of panda bonds has improved under the compression of interest rate spreads of other conventional products this year, and asset-backed securities (abs) are all directions we will consider in allocation. in addition, in the future, some traditional credit allocation accounts may switch to allocation interest rate products due to insufficient supply of credit products. for example, there will be more non-interest bond funds to invest in local bonds or financial bonds. this is also a trend we will pay attention to on the allocation side."

li yi pointed out that although the "fixed income +" fund must invest in the assets listed in the contract, it should not be restricted by this limitation. it can be implemented through the allocation of major asset classes and industry selection. in the future, research will be conducted to try to allocate through etfs, and even make a broader asset spectrum allocation in some newly issued products.

bond market outlook for the second half of the year

since last year, the bond market has been hot due to the "asset shortage", which has also attracted great attention from regulators to the trading behavior of financial institutions. regarding the trend of the bond market in the second half of the year, the guests at the meeting were relatively optimistic, but also pointed out that long-term strategies and credit sinking strategies may not be sustainable.

luo yingzong pointed out three reasons why he is optimistic about the bond market. first, from a policy perspective, the policies in the past two years have revealed that the country tends to long-term planning and high-quality development, and the possibility of introducing short-term rapid stimulus policies is relatively low. "the entire policy still has a certain basis for protecting the bond market."

secondly, since the beginning of this year, monetary policy has ensured the stability of the capital market and prices have been relatively balanced. as for the recent regulatory guidance or punishment measures on the behavior of urban investment commercial banks in the secondary market, luo yingzong believes that it is aimed at guiding the behavior of financial market institutions and focusing on their main business and long-term development. in addition, referring to the recent case of a japanese bank's capital chain being broken, "some actions of the central bank may also be from the perspective of maintaining the liquidity security of financial institutions."

finally, considering factors such as the implementation of the policy prohibiting "manual interest compensation" and the reduction in deposit interest rates, which have prompted funds to flow into the asset management industry, the market's buying power is still relatively abundant.

xu zhe said that the bond market is determined by three factors: long, medium and short cycles. among them, the long cycle is the state of industrial policy and industrial development; the medium cycle has had a greater impact on bonds in recent years, and the central bank's interest rate corridor has played a significant role in traction; the short cycle is the game of funds and policies. now many factors that are favorable to the bond market are generally fully priced. in the second half of the year, the treasury bond interest rate may fluctuate around 2.1%. some negative or potential negative factors that are gradually recognized by the market, and the current strength of the fundamental bulls will slow down the downward speed of interest rates to some extent. however, it will also be very difficult to move up the framework of the medium and long-term industrial debt cycle and the interest rate corridor.

wu weisen believes that the bond market will maintain relatively narrow fluctuations for a certain period of time in the future. she mentioned that hengfeng wealth management's allocation strategy has not changed logically in the second half of the year compared with the first half of the year, and has achieved the "three adaptation principles": the adaptation of products to investors, the adaptation of products to asset allocation, and the adaptation of asset rotation to the market; no credit sinking, and maintaining the security of holdings. the difference is that hengfeng wealth management needs to pay more attention to the liquidity and convertibility of each portfolio in the second half of the year. in addition, based on the judgment that the bond market will still have a period of narrow fluctuations, the frequency of rotation of different bond varieties will also be slightly increased.

"overall, we continue to be optimistic about china's interest rate bond market," said cheng hao. "we expect interest rates to remain on a downward path, but since interest rates have already fallen sharply in the first half of the year and are at a historical low, the pace of further decline may be more tortuous than in the previous period. therefore, we believe that investors still need to respect the central bank's risk warnings and practical impact on long-term interest rates. for the allocation of interest rate bonds in the future market, we believe that the supply of bonds is an important factor and a risk point that needs to be paid attention to, because the reason behind some current long-term treasury bond speculation is actually due to the lack of assets, and the market demand for bond allocation is far greater than the supply."

li yi also said that there is no doubt that the overall environment is favorable to the bond market, but expectations for bond returns in the second half of the year still need to be managed well.

in li yi's view, this year's bond bull market is also significantly different from the past. "in this year's bond bull market, the traditional credit selection strategy has underperformed the duration strategy to a certain extent." in this context, he pointed out that on the one hand, we need to pay attention to the duration risk under the protection of low coupons, and on the other hand, we can pay more attention to some undervalued assets that have fallen more and been ignored by the market, such as high-quality equity assets and convertible bonds.