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since the beginning of this year, the issuance of overseas fixed income products and fixed income wealth management products that are allocated with overseas assets has accelerated.

china securities journal reporters checked the china financial management network and found that as of september 21, the number of themed financial products with the words "us dollar", "global", "qdii" and "overseas" was 963, 648, 174 and 1,471 respectively (note: the above data are not deduplicated, and there may be a product name containing two of the above terms). according to puyi standard statistics, from the beginning of the year to date, there are more than 700 new themed financial products with the words "qdii", "overseas" and "us dollar", which is much higher than the level of the whole year last year. among them, qdii financial products with fixed income strategies are particularly sought after by investors.

with the fed's 50 basis point rate cut in place and expectations of rate cuts continuing to rise, it is inevitable that the returns of future dollar wealth management products and the performance benchmarks of new products will fall. so, what should dollar wealth management products use to stabilize returns? the answer given by professional asset management institutions and analysts is that u.s. bonds still have allocation value.

overseas theme assets and products are heating up

from the product and asset sides, overseas themes have clearly heated up since the beginning of this year.

from the product side, wealth management companies have stepped up efforts to issue wealth management products that allocate us dollar assets, exchange rates, qdii funds and other assets.

taking us dollar wealth management products as an example, according to data disclosed by puyi standard, as of september 21 this year, there were approximately 550 us dollar wealth management products issued by wealth management companies.

it is worth mentioning that its performance showed a trend of rising in the early stage and falling in the later stage. as of the end of june, the average annualized yield of relevant us dollar wealth management products this year was about 4.72%. but by the end of september, the average annualized yield of relevant products in the past year fell to 2.5%, which was generally lower than its performance benchmark.

from the asset side, although the scale of qdii and other assets invested in overseas wealth management on behalf of customers is still small, it is steadily increasing. according to the data from china financial network, as of the end of june this year, qdii invested in overseas wealth management on behalf of customers accounted for 0.9%, while the figure was 0.6% at the end of the previous year and 0.8% at the end of last year.

puyi standard pointed out that in terms of product design, the new products issued by financial management companies have the following characteristics and trends:

first, diversified asset allocation: more and more fixed-income products are beginning to introduce overseas assets such as structured notes and exchange rate derivatives to hedge risks and enhance returns;

the second is to increase the design of flexible returns: in order to cope with the fluctuations in overseas markets, some newly issued fixed income products have begun to incorporate flexible return designs, such as linking part of the returns to changes in the global macro economy or interest rates;

the third is the widespread use of exchange rate risk hedging tools: in order to reduce the negative impact of exchange rate risk on returns, wealth management products have begun to adopt exchange rate hedging strategies more widely, such as the use of forwards, swaps and other tools.

dollar wealth management may increase allocation to us bonds under interest rate cuts

the returns of dollar wealth management products with dollar deposits as their main investment target are closely linked to the federal reserve’s monetary policy.

the fed's interest rate hikes since 2022 have transmitted expectations of rising interest rates to the net value of us dollar wealth management products. so in fact, the "double high" market of high yields and high issuance volumes of us dollar wealth management has been going on for some time.

in recent months, there is a strong expectation of interest rate hikes, so in fact, many commercial banks have already lowered their us dollar deposit rates before the rate cuts were implemented. judging from the current us dollar deposit rates in the market, it is difficult to find interest rates above 5% in the past. at the same time, many wealth management companies have also lowered the interest rates of related newly issued us dollar wealth management products.

on september 19, the federal reserve decided to lower the target range of the federal funds rate to 4.75% to 5%, a reduction of 50 basis points at once. this is also the first rate cut since 2020. after the rate cut, many commercial banks told the media that they would continue to lower the us dollar deposit rate.

the market is concerned about this: if the transmission of interest rate cuts to the net value of u.s. dollar wealth management products is inevitable, how will these products make changes to their asset allocation to stabilize returns?

wang dengfeng, vice president and chief fixed income investment officer of blackrock jianxin wealth management, pointed out that in the past, the federal reserve’s interest rate cuts were almost all done in one go, but this time is different. the market has already had relatively full expectations for the interest rate cut, so it is a gradual process that is adjusted based on some major data indicators of the global economy.

the beiyuan usd fixed-income wealth management product series issued by blackrock jianxin wealth management previously mainly invested in domestic and overseas usd deposits. considering the user's demand for stability, wang dengfeng told reporters that blackrock jianxin wealth management has currently been approved for a total of 170 million usd in qdii quotas, and plans to continue issuing qdii products in the future. the subsequent reserve products will invest in some overseas usd bonds.

the conclusion that after the us dollar interest rate cut, us dollar financial products will increase their allocation to us treasuries is also supported by analysts.

huabao securities analysis pointed out that during the fed's interest rate cuts, the interest income from investing in us treasury bonds will continue to weaken, and the capital gains income from rising us treasury prices will continue to be positive, so us dollar wealth management products still have allocation value. however, huabao securities also pointed out that the returns of us dollar wealth management products and the performance benchmarks of new products may decline in the future, which may affect the pace of issuing us dollar wealth management products by some banks or wealth management institutions.