The debt base has become a "popular fried sub-base", and the wholly foreign-owned public offering is also busy with the layout, and Schroder and BlackRock debuted on the same day

Finance Associated Press, December 5 (Reporter Wu Yuqi) Since the beginning of this year, the approval process of wholly foreign-owned public offerings has accelerated, and wholly foreign-owned public offerings have also continued to be "new". Judging from the recent fund issuance, Fidelity Fund, Schroder Fund, and BlackRock Fund accelerated the announcement of the issuance of bond bases, among them, Fidelity Yuda pure bonds under Fidelity Fund have been raised, and on December 4, Schroder's first fund Schroder Hengxiang Bond and BlackRock Eversheds 30-day holding period bonds were launched on the same day.

Fund market participants said that the current money-making effect is weakened, risk aversion is strong, investors maintain a more cautious investment attitude towards investment products with higher income volatility, and capital investment will also be more favored in bond funds and other low-volatility products with more stable returns. Fund companies, including wholly foreign-owned public offerings, have shifted their focus from equity products to bond-based products after realizing this.

Schroder and BlackRock released their bond bases on the same day

On December 4, Schroder Bond Fund, the first public offering product of Schroder Fund, was officially launched. According to the reporter of the Financial Associated Press, the new product of Schroder Fund is a secondary bond base, which will put more than 80% of the positions in fixed income assets, and at the same time put some positions in equity assets to provide investors with a diversified portfolio.

According to the Schroder Fund, the fund will capture the excess returns that it is good at in multi-level income sources. First, the new product will focus on high-grade credit bonds, consolidate the underlying income of the portfolio, and provide high-quality liquidity; secondly, earn bond capital gains through swing operation and duration strategies; thirdly, increase portfolio returns through moderate leverage; finally, the new product will give full play to the advantages of fund managers' multi-asset allocation, use equity ETFs to manage equity positions, and flexibly capture opportunities for market style switching and industry rotation.

When talking about why he chose the bond base as the first product, Schroder said that with the low interest rate level in recent years and the continuous volatility of the equity market, many investors hope to find a low-volatility product that takes into account both income and risk. As a world-renowned multi-asset manager, Schroders' first product in China is expected to superimpose Schroders' world-leading asset allocation capabilities on the basis of bond yields to help investors grasp the opportunity to increase returns while controlling drawdowns.

Coincidentally, BlackRock Fund also launched a bond fund on the same day - BlackRock Eversheds 30-day holding bond, which is different from Schroders' secondary bond base, the product is positioned as a pure bond fund that takes into account both income and liquidity, and does not involve in stocks or convertible bonds, and is committed to becoming the choice of investors to allocate assets or spare money management.

Wind data shows that BlackRock currently has a total of 6 funds, namely 4 partial equity hybrid funds, 1 partial debt hybrid fund and 1 hybrid bond secondary fund. However, two of the bond products, BlackRock Puyue Fengli and BlackRock Xinyue Fengli, have achieved negative returns of -0.20% and -0.78% respectively since their inception.

In addition, the first bond fund of Fidelity Fund was also raised last month, on November 23, the Fidelity Yuda Pure Bond Fund managed by Cheng Hao was established, the fund was issued from November 1 to November 21, and the initial offering scale reached 5.000 billion yuan, becoming one of the new explosive funds this year. Cheng Hao, the fund manager of the product, previously mentioned in an exclusive interview with the Financial Associated Press that the bond-based strategy is mainly based on short-term interest rate bonds.

A large public market person told reporters that bond market investment is still highly active, and the recent bond market adjustment seems to be coming to an end, showing signs of stabilization and recovery. In addition, considering that most investors are cautious about risk this year, they are more inclined to choose relatively low-risk bond bases, so that such products continue to be eagerly sought after by the market.

Can the debt cow last long?

Since the beginning of this year, the bond bull market has been carried out throughout the year, with the yield on 10-year treasury bonds falling from a high in February to 2.55%, and bond funds have performed well overall. Recently, the interbank funds have maintained a tight balance, the central bank has maintained a balance as a whole, and the net investment before the month has maintained a stable capital side. Last week was a volatile bond market as a whole, with the curve still flattening.

Can the bond bull market continue? Many people in the industry, including the proposed fund manager of this new product, are optimistic about the future trend of the bond market.

Schroder Fund Shan Kun said, "At present, a series of supportive policies have been implemented to ensure the smooth operation of economic development, and we look forward to the introduction of more favorable policies, if the interest rate fluctuates greatly, or the interest rate rises significantly, it will not be conducive to the continuous release of fiscal policy." "On the other hand, the real estate industry is currently in a relatively stable recovery trend, and the steady recovery of the real estate industry is expected to be positive for the bond market.

Liu Xin, director of fixed income investment at BlackRock Fund, said: "With the continuous promotion of the steady growth policy, the economic recovery has gradually improved, and at the same time, under the influence of the capital side at the end of the year, it is expected that the bond market will still balance and fluctuate in the fourth quarter of this year. ”

CICC said in the research report that overall, the most tense stage of capital is passing, and in the future, driven by the potential strength of the RMB, fiscal investment, and the continuation of easing by the central bank, interbank liquidity is expected to return to easing, and the stability of capital is also expected to be improved, which may gradually dispel the current concerns of the market. For cash bonds, if the funding rate returns to a stable level within the year, the short-end interest rate may usher in a round of supplementary cuts, and the space for the long-end interest rate to further decline will also be opened. Against this backdrop, we are still optimistic about bond investment opportunities, and the risk of a sharp adjustment in interest rates is relatively limited.

In the international bond market, Wu Meiyan, director of fixed income investment in Hong Kong at Schroders Investments, said that at a time when inflation in the United States is easing compared with the past, the job market is still tight, and tensions in the Middle East may lead to higher oil prices, and the market is worried that inflation will rise again. The anxiety is reflected in the bond market, as US Treasury yields continue to climb, continuing to fluctuate since the third quarter of this year.

From the perspective of allocation, she said that she would aim at the current higher interest rate and choose the opportunity to enter the market. "We will maintain our view that US interest rates will remain high for a period of time, regardless of whether we continue to raise rates in the future, after which rates will remain high, and based on the current market consensus, there will be no chance to start cutting interest rates after the first quarter of 2024. Income-seeking investors may consider buying bonds now to lock in the current high interest rates as a stable source of income. “

Matthew Quaife, global head of multi-asset investment management at Fidelity International, said the decline in bond yields has led to a positive higher-than-normal return on government bonds. Because the soft landing and cyclical recession scenarios are interrelated and mutually influential, this means that if the Fed changes its interest rate policy next year, bond yields will fall. Therefore, if the end of this economic cycle is a cyclical recession, resulting in lower real interest rates, the value of medium-term investment grade bonds and inflation-linked bonds will be revealed.

Liu Xin also mentioned that if the weakening of the U.S. economy also drives down U.S. bond yields, it will also marginally benefit the domestic bond market.

(Finance Associated Press reporter Wu Yuqi)