As 2023 draws to a close, many investors are still confused about the future direction of the market. The performance of different sectors is very different, and the market trend in the short term is particularly volatile, making the trend of the stock market the object of constant ridicule this year.
Asset allocation "stabilizer"
Volatile markets are nothing new for seasoned investors. Generally speaking, when the market is constantly volatile, investors will tend to look for relatively low-risk safe havens, and traditional wealth management products, currency funds or short-term debt funds are all financial choices for investors.
Therefore, in the current complex market environment, it is necessary to reduce investment risks through asset allocation and diversified investment targets.
Looking at the trend of the Shanghai Composite Index and the CSI All Bond Index in the past decade, the volatility of bond assets is better than that of stock assets, and it has maintained a steady upward trend, with a high "risk-return ratio", which can be called a "stabilizer" for asset allocation.
Source: Manager publicity and promotion materials, of which the data is from Wind, the statistical interval is 20121230-20221230; The past performance of the index does not represent the expected return, the fund is risky, and investment needs to be cautious.
Therefore, in recent years, under the background of the introduction of new asset management regulations and the decline in the income of monetary funds, short-term debt funds with better returns have gradually been favored by investors, and their popularity even exceeds that of other low-risk products.
Short-term debt funds
"Bodyguard" in volatile markets
Why do investors prefer to invest in short-term debt funds in recent years when the stock market has fallen into volatility and investors have turned to other areas in pursuit of long-term low-risk returns? What makes short-term debt funds unique that make them a safe haven in volatile markets?
What is a short-term debt fund?
As a branch of bond funds, short-term debt funds mainly invest in short- and medium-term fixed income assets, such as government bonds, credit bonds and financial bonds, compared with other funds. Since the remaining maturity of the bonds invested in them is shorter, short-term debt funds are generally less risky.
The data is taken from the "Fixed Income Special Report: New Regulations on Fixed Income Asset Management Products and Capital", of which the data comes from Wind, Orient Securities Research Institute
Then the difference between short-term debt funds and other bond funds is: First, short-term debt funds, as pure debt funds, basically do not invest in equity assets such as stocks and warrants. Second, because the remaining maturity of the invested bonds is short, short-term bonds are usually not affected by long-term operational problems or policy changes, and at the same time, short-term bonds are relatively less sensitive to changes in market interest rates, so the investment risk of short-term debt funds is usually low, becoming a "safe haven" for investment. 02
The performance of short-term debt funds in the past decade
With its "safe haven" investment characteristics, short-term debt funds have quickly won the trust and love of a large number of fund investors. Therefore, in recent years, with the sharp fluctuations in the stock market and the decline in bank deposit rates, many investors have turned to short-term debt funds with relatively stable performance.
Under such circumstances, the number of investors participating in short-term debt funds and the total size of short-term debt funds have shown an increase trend. Short-term debt funds also lived up to expectations, demonstrating their strength in relatively stable returns in an uncertain market environment.
We can see from the statistics of the income performance of the short-term debt fund index in the past ten years that the short-term debt fund index has achieved positive returns in the past ten years, of which the highest in 2019 was 2.44%; This compares to a minimum of 0.58% in 2016.
Source: Oriental Wealth Choice Data (20140101-20231020) 03
Volatility of short-term debt funds
Many investors are turning to short-term debt funds, and the driving factor behind them is not entirely the pursuit of higher yields. Instead, they prefer a more prudent financial strategy, where investors expect to earn slightly more than bank deposits and money funds while keeping their funds safe, rather than facing large fluctuations in funds.
Therefore, the volatility of short-term debt funds has also become one of the factors influencing investors' decision-making. In the past decade, in addition to the positive return of the short-term debt fund index in the past decade, the volatility of the short-term debt fund index has also been well controlled, with a maximum drawdown of only -0.72%.
Source: Oriental Wealth Choice data (20140101-20231020)
In general, after the introduction of the new asset management regulations, most investment products have been adjusted, while short-term debt funds, with their relatively stable income and lower risk, have become a good choice for investors who seek sound financial management, hope to avoid large fluctuations and expect to obtain slightly higher returns than bank deposits and monetary funds.
Which short-term debt fund is worth investing in?
The equity market continues to fluctuate, the "seesaw" effect of stocks and bonds is obvious, and bond assets are sought after by most investors. Short-term debt funds have won the crowd of volatile funds, attracting a large number of investors' attention with relatively stable income.
Among the many short-term debt funds, Jiahe Pantai short-term bond can be said to be an ideal choice that cannot be missed. In addition to the characteristics of high liquidity and low risk of short-term debt funds, the yield of Jiahe Pantai short-term bond A reached 2.88% in the past year, and the performance benchmark for the same period was 2.31%.
The yield and performance benchmark data of the graph are from Hang Seng Juyuan Data and are reviewed by Trusteeship. This product was established in 20190724, the above data as of 20230928, the picture is organized from Pai Pai Network Wealth; Among them, the performance comparison benchmark is: the yield of the CSI Short Bond Index; In the last three full fiscal years (2020-2022), the income and performance benchmark returns of Jiahe Pantai Short Term Bond A Fund are: 5.1%/2.50%, 3.89%/2.89% and 3.21%/2.39%, respectively, and the data are derived from the 2020-2022 periodic report disclosed by the fund manager.
Mainland funds have been operating for a short time and cannot reflect all stages of stock market development. The past performance of a fund is not indicative of its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of the performance of the fund.
The outstanding performance of Jiahe Pantai Short Term Bond A has also made it a five-star praise from authoritative rating agencies Haitong Securities and Galaxy Securities. (Source: Fund Manager Promotional Materials.) Among them, the rating data comes from Haitong Securities' "three-year, five-year, ten-year comprehensive series of fund ratings" (as of 20230728, similar funds refer to "short-term debt bonds") and Galaxy Securities' "Fund Star Evaluation Quarterly Public Report" (as of 20231006, similar funds refer to "short-term pure debt bond funds (Class A/C)"). ）
Therefore, in general, Jiahe Pantai short-term bond bonds do not invest in stocks, are not affected by the rise and fall of the stock market, and are more in line with the needs of pursuing long-term low-risk returns. In addition, the rate of Jiahe Pantai short-term bonds is relatively low, and the redemption fee can be waived for long-term holding (more than 30 days).
Since late August, the long and short frequent games, swinging expectations back and forth, the difficulty of making money is self-evident, and avoiding duration risks has become the choice of many investors. In line with the short-term debt market, the "package of bonds" scheme has been substantially implemented, making the short-term debt fund have a high allocation value in the current market environment.
Risk Warning:
The views of fund managers, fund managers and authors (if any) mentioned in this article do not represent any position of this platform and do not constitute any investment advice.
Investment is risky, and mainland funds have a relatively short operating time and cannot reflect all stages of stock market development. The past performance of the fund referred to in this information is not indicative of its future performance, the performance of other funds managed by the fund manager does not constitute a guarantee of the performance of the fund, and we do not promise or predict the future return of the product by express, implied or otherwise. Investors should pay careful attention to various risks, carefully read the fund contract, fund product information summary and other sales documents, fully understand the risk-return characteristics of the product, make investment decisions according to their own circumstances, and be responsible for their own profits and losses for investment decisions.
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