Quarterly Report Interpretation | Index bond base, asset allocation tools are preferred

Indexed investment is becoming more and more popular, and index funds have also become a "tool base" that can quickly and conveniently grasp market opportunities. However, individual investors are generally more familiar with stock index funds, in fact, bond index funds are also worth paying attention to, and the number and scale of such funds have also grown rapidly in the past two years.

The fixed income product line of the Great Wall Fund has long been deployed in this field, and the interest rate bond index fund represented by the Great Wall China Bond 1-3 year government and financial bonds, the Great Wall China Bond 3-5 year CDB bonds, and the Great Wall China Bond 5-10 year CDB bonds have won the favor of investors with relatively stable performance in the volatile market.

The scale of the index bond base is rising

Bond index funds, that is, with the relevant index of bond assets as the tracking target, have the dual attributes of "bond fund" and "index fund".

In recent years, the scale of bond index funds has grown rapidly. Wind data shows that by the end of 2023, there are 232 bond index funds in the whole market, and their scale has increased significantly from 9.073 billion yuan to 705.116 billion yuan in the past ten years, indicating that their allocation value has been recognized by more and more investors.

According to the type of bond as the underlying asset, general bond index funds can be divided into three categories: interest rate bond index funds, credit bond index funds, and interbank certificate of deposit index funds. The Great Wall China Bond 1-3 Year Government and Financial Bond, Great Wall China Bond 3-5 Year CDB Bond, and Great Wall China Bond 5-10 Year CDB Bond under the Great Wall Fund are all interest rate bond index funds, and further subdivided into policy financial bond funds, which mainly track the policy financial bond index and the CDB bond index.

(The above chart is based on public information and is for illustrative purposes only and does not constitute actual investment advice, so you should be cautious when investing.) ）

So, what are the characteristics of interest rate bond index funds? The underlying assets of interest rate bond index funds are basically interest rate bonds, which are mainly issued by the central government, local governments, policy banks, central banks, and other institutions, and the more common types of interest rate bonds include treasury bonds, local government bonds, policy financial bonds, and central bank bills. Due to the government's creditworthiness, this type of bond has a low default risk. Therefore, for investors with low credit risk tolerance, interest rate bond index funds are a more suitable choice.

In addition to the clarity of the underlying assets, the investment strategy of the interest rate bond index fund is also relatively fixed and transparent, closely tracking the underlying index to maintain the style and not drifting, which helps investors control the risk-return characteristics of the portfolio.

Long-term performance, significant excess returns

The duration span of the three interest rate bond index funds under the Great Wall Fund is different, providing investors with more choices.

From the name of the fund, it is clear at a glance that the Great Wall China Bond 1-3 Year Government and Financial Bond, the Great Wall China Bond 3-5 Year CDB Bond, and the Great Wall China Bond 5-10 Year CDB Bond respectively track the China Bond 1-3 Year Policy Financial Bond Index, the China Bond 3-5 Year CDB Bond Index and the China Bond 5-10 Year CDB Bond Index, respectively, with the remaining periods of the constituent bonds covering 0.3 to 3 years (including 0.5 and 3 years), 2.5 to 5 years (including 2.5 years and 5 years), 4.5 to 10 years (inclusive) and other different time intervals.

The overall performance of the three interest rate bond index funds was outstanding, and they exceeded the benchmark performance of the same period, achieving relatively ideal excess returns. Taking Great Wall China Bond 5-10 year CDB Bond A as an example, the quarterly report shows that as of the end of 2023, the net value growth rate of the product in the past six months, the past year and since its inception has been 1.96%, 4.46% and 8.20% respectively, and the performance benchmark for the same period is 0.94%, 1.77% and 3.90% respectively, with significant excess returns. In addition, according to data from Galaxy Securities, the performance of Great Wall China Bond 5-10 Year CDB Bond A in the past year ranked 8th among 115 interest rate bond index bond funds (Class A), ranking among the top in the same category. (The performance comes from the fund's regular report, the ranking comes from Galaxy Securities, as of 2023.12.31, the past performance of the fund does not represent future returns, the evaluation results are not a prediction of future performance, the fund is risky, and investment must be cautious)

Multi-strategy strength at the helm, investment "both offensive and defensive"

The above three interest rate bond index funds are all managed by Zhang Yan, the manager of the Mesozoic Fund of Great Wall Fund, who joined Great Wall Fund in 2014 and has served as a researcher and assistant fund manager in the fixed income department, and has been a fund manager since September 2017, with more than 9 years of experience in the securities industry and more than 6 years of experience in fund investment management.

In the researcher stage, Zhang Yan covered many fixed income asset classes from macro interest rates to credit bonds to convertible bond research, laying a solid research foundation. After taking up the position of investment management, he has managed a variety of products from pure bond funds to bond index funds, and then to primary and secondary bond bases.

For the investment management of interest rate bond index funds, Zhang Yan mainly starts from two aspects. On the one hand, by keeping close to the duration of the underlying index, maintaining the stability of liabilities and the main strategy, we try our best to control the tracking error of the index to reduce the impact of market shocks on investment returns; on the other hand, we should adjust the leverage level of the portfolio in a timely manner, and appropriately allocate assets such as reverse repurchase and certificates of deposit with higher returns under appropriate circumstances, so as to strive to increase the portfolio income, which can be described as "both offensive and defensive". At the same time, he also attaches great importance to the management of the debt side and attaches great importance to the liquidity impact caused by the huge redemption.

In Zhang's view, bond investment is a complex project, whether it is research or investment, there are many factors that need to be considered, but the most important thing is to grasp the main contradictions, grasp the big and let go of the small, and look for the "vague correct". "It's a lot more important to get a vague right than digging into the details and then getting a precise one. Such a framework is also one of the important reasons why we have not made directional errors in the allocation of large types of assets in recent years. ”

Description of the performance of similar funds managed by Zhang Yan:

(1) Great Wall China Bond 1-3 Year Policy Financial Bond Index Securities Investment Fund Class A/C was established on August 11, 2020, Zhang Yan has served since its establishment, and the 2020.8.11-2020.12.31, 2021, 2022, and 2023 Class A performance/Class C performance/performance comparison benchmark increases are: 0.88%/0.83%/0.63%, 0.95%/0.97%/0.88%, 51.28%/51.20%/0.12%, 2.48%/2.35%/0.32%。

(2) Great Wall China Bond 3-5 Year CDB Bond Index Securities Investment Fund Class A/C was established on November 19, 2020, Zhang Yan has served since its establishment, and the benchmark increases of Class A performance/Class C performance/performance in 2021, 2022 and 2023 are: 4.05%/3.95%/0.98%, 2.84%/2.72%/-0.45%, 3.11%/0.47%/2.99%.

(3) Great Wall China Bond 5-10 Year CDB Bond Index Securities Investment Fund Class A/C was established on July 28, 2021, Zhang Yan has served since its establishment, and the Class A performance/Class C performance/performance comparison benchmark increase in 2021.7.28-2021.12.31, 2022 and 2023 is 0.96%/0.91%/1.73%, 2.60%/2.37%/0.36%, 4.46%/4.35%/1.77% respectively.

(4) Great Wall Dingli One-Year Regular Open Bond Originated Securities Investment Fund was established on March 16, 2023, and Zhang Yan has served since its establishment, and the performance/performance benchmark increase from 2023.3.16 to 2023.12.31 is 3.72%/4.07% respectively.

(5) Great Wall Jinli Three-month Regular Open Bond Securities Investment Fund Class A/C was established on August 4, 2023, and Zhang Yan has served since its establishment, less than half a year after its establishment, and there is no performance disclosure for the time being.

(6) Data from the Fund's periodic report as of December 31, 2023.

Risk Warning: Fund investment is risky, investors should carefully read the Fund's Fund Contract, Prospectus and other legal documents before purchasing the Fund. The fund manager undertakes to manage and use the fund assets in good faith, diligence and responsibility, but does not guarantee that the fund will be profitable, nor does it guarantee a minimum return. The operation time of the mainland fund is relatively short, and it cannot reflect all stages of the development of the stock and bond markets. The performance of other funds managed by the Fund Manager does not constitute a guarantee of the performance of the Fund, and the past performance of the Fund and its net worth are not indicative of its future performance. The Fund operates on a regular open basis, and during the Closed Period, you will be subject to liquidity constraints due to the inability to redeem or sell your Fund shares. This information is only a promotional material, not as any legal document, and any information is subject to the latest version. This product is issued and managed by Great Wall Fund, and the agency does not assume the responsibility for the investment, redemption and risk management of the product. The fund manager reminds that every citizen has the obligation and right to report money laundering crimes. Every citizen should strictly abide by the relevant laws and regulations on anti-money laundering.

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