Where does the money go when deposit interest rates are lowered and wealth management fees are reduced?
Abstract: The overall investment risk appetite of residents continues to sink, and industry insiders analyze that the most popular products are deposits and low-volatility and stable financial management, which account for the vast majority of the new financial assets this year. Compared with the past, the allocation ratio of highly volatile assets such as equity and equity blend has decreased
Text: Yan Qinwen
Edited by Yuan Man
"The deposit rate has fallen again and again, and it is already lying flat. With the third round of deposit interest rate cuts landing this year, Tang Lei, who has always been Xi of putting money on a regular basis, gradually realized that the way to manage money by relying only on deposits may not last long.
Recently, a number of banks represented by large state-owned banks and joint-stock banks have lowered the listed interest rates on deposits. For example, one-year and two-year fixed deposits were lowered by 10 basis points and 20 basis points respectively, while three-year and five-year fixed deposits were reduced by 25 basis points. Among them, the three-year fixed deposit listed interest rate of large state-owned banks fell below 2%, entering the "1% era".
The change in deposit rates has not only affected investors like Tang Lei, who have always been risk-averse. In fact, in recent years, under the influence of the superimposed market of the epidemic, the overall risk appetite of residents has continued to sink - whether it is the "3,000-point defense war" that has been launched from time to time in A-shares, or the "green" fund, or the property market that continues to maintain an adjustment trend, all of which have aggravated investors' risk aversion.
Against this backdrop, the proportion of cash and deposits in residents' investable assets continued to rise. According to data released by the People's Bank of China, household deposits increased by 16.5% year-on-year in the first three quarters of this year. In addition, according to the senior executives of the Shanghai branch of a city commercial bank in East China, since last year, residents' funds have been transferred to assets with a higher margin of safety, "the most popular products at present are deposits and low-volatility and stable financial management, which account for the vast majority of the new financial assets this year." Compared with the past, the proportion of customers with high-volatility assets such as equity and equity blending has decreased. ”
It is worth mentioning that recently, the wealth management subsidiaries of banks have frequently released good news to the market. According to incomplete statistics, since December, more than 10 bank wealth management subsidiaries have issued announcements on phased rate adjustments, and many wealth management subsidiaries have adjusted the rates of some wealth management products to 0.
On the one hand, banks are actively attracting customers through fee reductions, and on the other hand, deposits with falling interest rates, which side is more attractive to investors whose risk appetite has been reduced?
Deposit interest rate reduction vs wealth management fee reduction
Since December 22, the six major state-owned banks and joint-stock banks have lowered the listed interest rates on deposits, and the lump sum deposits, small deposits, lump sum deposits, and interest withdrawals in call deposits, large-amount certificates of deposit, and fixed deposits have all been affected.
"This is the largest deposit rate cut since 2016, the previous rounds were mainly long-term deposit interest rate cuts, and the deposit interest rate cut below one year is the first time in recent years, aiming to flatten the too steep deposit interest rate curve, marking the subsequent deposit interest rate curve may be fully downward. The banking team of CICC's research department pointed out.
Tang Lei calculated that if he has a deposit of 1 million yuan, after the current round of one-year fixed deposit is reduced by 10 basis points, the interest received in one year will be reduced by about 1,000 yuan; after the two-year deposit is reduced by 20 basis points, the two-year interest will be reduced by about 4,088 yuan; and after the three-year fixed deposit is reduced by 25 basis points, the three-year interest will be reduced by about 7,900 yuan.
In the face of the continuous decline in deposit interest rates, some investors with low risk appetite have become "special forces" for deposits, while others have turned their attention to prudent bank wealth management, resulting in a tendency to divert savings. The difference is that bank wealth management has recently set off a price war of "preferential rates", actively releasing benefits.
Taking the personal wealth management products distributed by China Merchants Bank as an example, on December 27 alone, a number of bank wealth management companies announced the adjustment of interest rates, involving more than 30 products. Taking Minsheng Wealth Management, which was announced on the same day, as an example, the company announced that from January 1, 2024, it will give preferential treatment to the fixed management fee (0.30%), sales fee (0.30%), and custody fee (0.02%) of the E share of the "Daily Profit Enhancement Cash Management No. 34 Wealth Management Product", which will be reduced to 0.05%, 0.15% and 0.01% respectively.
On the same day, CMB Wealth Management issued more than 10 preferential rate announcements. Among them, the fee rate of many products has been adjusted to 0. For example, the fixed investment management fee (annualized) of the "Zhao Rui Fenghe (Short Bond) 7-day Holding Period No. 1 Fixed Income Investment Plan" will be adjusted from 0.15% to 0%. The promotion period is from 1 January to 1 March 2024.
According to incomplete statistics, since December, more than 10 bank wealth management subsidiaries have issued announcements on phased adjustment of rates. Ningbo Wealth Management, Bank of Communications Wealth Management, Everbright Wealth Management, IB Wealth Management, CNCBI Wealth Management, Huaxia Wealth Management, Ping An Wealth Management and other companies have joined the army of rate reductions.
Choice: Deposit or Manage
From the perspective of the types of wealth management products that have recently carried out preferential rates, they mainly involve fixed income products, cash management products, etc. Compared with equity wealth management products, the above are low-risk wealth management products, which coincide with the needs of investors who are Xi to deposit to avoid high risk.
On the one hand, bank wealth management that actively attracts customers through fee reduction, and on the other hand, deposits with falling interest rates, which side is more attractive for investors who prefer to be more conservative?
From the perspective of the income that investors are most concerned about, compared with the deposits of state-owned banks and joint-stock banks, the performance of some low-risk banks' wealth management is slightly advantageous.
In terms of cash management products, the "Minsheng Wealth Management Daily Profit Enhancement Cash Management No. 34 Wealth Management Product E", which is mentioned above with preferential rates, as an example, according to the product display page, the seven-day annualized rate is 3.19%. According to the open source securities research report, judging from the data in the first 11 months of 2023, the yield of cash wealth management is still higher than 2.2% despite the downward trend.
In terms of fixed income products, the monitoring data of Puyi Standard shows that from December 18 to 24, the average redemption yield (annualized) of open-ended fixed-income wealth management products due by wealth management companies was 2.57%, and the average redemption yield (annualized) of closed-end fixed-income wealth management products at maturity was 3.30%.
In terms of deposits, taking a stock bank as an example, the interest rates for three-month, half-year, one-year, two-year and three-year fixed deposits are 1.65%, 1.85%, 1.95%, 2.15% and 2.6% respectively (minimum deposit of 1,000 yuan), and the interest rates for three-month, half-year, one-year and two-year certificates of deposit are 1.7%, 1.9%, 2.0% and 2.15% (minimum deposit of 200,000 yuan) respectively.
It is worth mentioning that cash management wealth management mainly invests in bank deposits, interbank certificates of deposit, treasury bonds, high-rated bonds and other assets, and its characteristics such as daily interest, no fixed term, and flexible redemption take into account the liquidity needs of some low-risk investors.
"At present, the interest rate of demand deposits is about 0.2%, and cash management products are flexible, some have higher returns than time deposits, and the investment threshold is low, which is more friendly to low-risk enthusiasts like me. Tang Lei said.
However, some investors believe that compared with bank wealth management, deposits are still attractive, "the current market environment, can ensure that the principal has outperformed many people, the current deposit interest rate of some small and medium-sized banks or private banks is still above 3%, first deposit in later." An investor said that after witnessing the fluctuation of the net value of bank wealth management in the past year, he will still choose deposits as a low-risk asset allocation.
In addition, according to a senior executive of a city commercial bank branch in East China, judging from the data, there has been no significant outflow of the bank's deposits this year. Affected by the sluggish investment sentiment of customers, wealth management funds have a tendency to convert deposits. "The overall risk appetite of residents has sunk, and funds have been transferred to assets with a higher margin of safety. ”
In the view of an asset management industry practitioner, "for investors with low risk appetite, they can prioritize according to their own needs, and then diversify their money in order from more to less." For example, capital preservation is the primary need, and you can allocate more deposits or insurance, and put the remaining money in low-volatility and stable financial management to increase income. ”
Future: Can low-volatility bank wealth management returns be sustainable?
In fact, at the end of the year, behind the "price war" of wealth management, is the thirst for scale growth - in the middle of this year, the scale of bank wealth management was surpassed by public funds for the first time, although it has rebounded since November, near the end of the year, the scale of bank wealth management has fluctuated.
According to the research report of GF Securities, as of December 15, the scale of bank wealth management lasted last week and shrank again, decreasing by 19.1 billion yuan to 27.68 trillion yuan from the previous month. With the gradual emergence of New Year's Eve pressure, the sentiment of financial allocation is low, and the scale of existence has been reduced this week, and wealth management has turned into a net sale of 13.4 billion yuan.
At the same time, the fee reduction activities carried out in the field of public funds have also had an impact on bank wealth management products.
Zhou Yiqin, founder of Guanyuan Consulting and an expert in financial regulatory policy, pointed out that in the field of public funds, in the second half of 2023, rate reform will be carried out for high-rate varieties, such as equity and hybrid products, and this trend of fee reduction will also affect bank wealth management related products to a certain extent. In terms of fixed income products, the rates of bank wealth management products are already at a low level, and there is limited room for fee reduction. "For wealth management companies, the 'price war' is only a short-term behavior, and more energy should be focused on investment management and risk control to create more long-term returns for investors. ”
It is worth noting that recently, there has been an intensive downward adjustment of the performance benchmark of bank wealth management products. For example, ABC Wealth Management intends to adjust the performance benchmark of the second phase of the "ABC Peace of Mind and Semi-annual Opening" RMB wealth management product (exclusive payment), which will be adjusted from 3.75% to 2.9%-3.3% from the closed period starting from December 16, 2023 (inclusive).
Regarding the behavior of bank wealth management to lower the performance benchmark, Puyi Standard analysis said that on the one hand, the regulatory requirements for the performance benchmark display are constantly increasing. The downward adjustment of the performance benchmark is a reflection of the wealth management company's compliance with regulatory requirements and the standardization of the performance benchmark display.
"On the other hand, in the context of the era of net worth, wealth management companies will adjust the performance benchmark according to market conditions to adjust investor expectations, and most of the products with the performance benchmark downward adjustment are fixed income products, which are allocated more bond assets, and the income performance is closely related to the performance of the bond market. Since the beginning of this year, the yield of the bond market has shown a downward trend, which will affect the income performance of the product to a certain extent, so wealth management companies choose to reduce the performance benchmark by lowering the performance benchmark to match the actual performance of the product and reduce investors' expectations of investment returns. Puyi Standard pointed out.
It is worth noting that the income of some banks' wealth management is also affected by the trend of interest rate cuts.
Taking cash management wealth management as an example, Kaiyuan Securities pointed out that in the first three quarters of this year, 100% of the bottom 100% of some portfolio insurance asset management products were bank deposits, which means that cash wealth management generally has the phenomenon of borrowing insurance asset management and indirect investment deposits. "We found that the 'investment scope' column of some insurance asset management product contracts indicates that deposits include time, demand, agreement, agreement and other types. ”
Under the trend of narrowing interest rate spreads in the banking industry, products with relatively high interest rates such as agreement deposits are not immune to them. At the press conference of the People's Bank of China's third-quarter financial statistics, Zou Lan, director of the monetary policy department of the central bank, once revealed that "for products with relatively high interest rates such as agreement deposits, we can also study to further strengthen self-discipline and norms." ”
On the day of the opening of this round of deposit interest rate cuts, Tang Lei received a notice from a financial manager of a joint-stock bank branch in Shanghai, "The deposit interest rate will be lowered again, and the performance benchmark of wealth management products will be adjusted downward." It is expected that there will be a significant adjustment after January 1, 2024, and it is recommended to allocate locked-in income in advance. ”
(The author is a reporter from Caijing, at the request of the interviewee, Tang Lei is a pseudonym)