Since the beginning of this year, the bond market has performed well and the volatility has increased, while the equity market has rebounded since the Spring Festival. For investors who are not satisfied with the returns of pure bond funds, but are worried about the volatility of equity products and do not want to take too high risks, secondary bond funds may be one of the more suitable financial management tools.
What is a secondary debt base?
The secondary bond base mainly invests in the bond market and can participate in equity assets to a small extent. Generally speaking, the proportion of the portfolio of the secondary bond base is not less than 80% of the fund's assets in bonds, and no more than 20% of the fund's assets in equity such as stocks, and the risk-return attribute is between pure bond funds and hybrid funds.
The secondary bond base is more dynamic than the pure bond fund, and the fund manager can appropriately allocate more assets such as stocks when the equity market is good, and have the opportunity to increase returns. At the same time, the volatility risk of the secondary bond base is smaller than that of equity funds, and when the downside risk of the equity market is greater, the fund manager can moderately reduce the allocation of equity assets, so it has a certain defensive ability.
In the past 20 years, the secondary bond index has achieved positive returns for 16 years, with the highest annual yield of 41.94%, and the maximum drawdown of the year is only -3.77%. Only 4 years of negative yields, even in the years of decline, the secondary bond index significantly outperformed the CSI 300, and the yield gap compared with the China Bond Index is not large.
Data source: Wind, the secondary bond-based index refers to the Wind Hybrid Bond Secondary Fund Index, and the China Bond Index refers to the China Bond-New Composite Full Price (Total) Index, 2004-2023. Past performance of the index is not indicative of its future performance, the market is risky, and investors should be cautious.
Why do you need a secondary debt base?
As the risk-free rate continues to fall, single-asset volatility increases. The secondary bond base can reduce the risk caused by the fluctuation of a single asset through the combination of main debt and few shares, thereby reducing the overall volatility of the investment portfolio, and thus improving the holding experience of investors.
1
In the era of low interest rates, the bond market still has allocation value
In fact, most of the income of bond funds comes mainly from coupon income. Coupon income is mainly derived from the regular interest payment of bonds, that is, the coupon rate agreed upon at the time of bond issuance. A bond's interest rate is usually related to its maturity and credit rating, and the risk-free rate has a limited impact on it.
Fund managers can increase coupon income by extending the duration and other operations. In the era of low interest rates, the bond market is still likely to bring better income performance to investors. Therefore, the secondary bond base, which is mainly based on bond investment, still has allocation value under the downward trend of the risk-free interest rate.
2
A small amount of equity asset allocation, don't panic when it falls, and can keep up when it rises
This year's two sessions put forward the expected target of GDP growth of about 5%, which can be said to have injected a boost into the market, and this confidence comes from two aspects:
1
Policy side
This year, the role of countercyclical policies is beginning to be felt, and there is still room for future policies:
Monetary policy side
At present, the real interest rate is still at a high level, the mortgage interest rate is still high, and there is still room for decline in the future;
Fiscal policy
At present, the leverage level of the central government is low, and the central government needs to increase leverage to meet demand in the future;
Industrial policy
The two sessions mentioned that the comprehensive elaboration of new quality productivity and the support for the trade-in of the equipment industry, as well as the renewal of important consumer goods industries such as automobiles and home appliances, will help the pillar industries stabilize and rebound.
2
External demand side
The adjustment of the advanced economies of Europe and the United States is expected to come to an end, which will bring about a continuous improvement in external demand, which has also been verified by the latest export data.
Looking ahead, with the improvement of policy force and external demand, it is more likely that both the economic operation and corporate demand will continue to exceed expectations, and the fundamentals are expected to continue to improve. By allocating a small amount of equity assets, the secondary bond base has the opportunity to help investors share the benefits brought by the rise in the equity market to a certain extent.
3
Expected yields have not fallen with the market, and the secondary bond base may be more likely to meet investor demand
The overall bond market has indeed undergone some changes this year, with yields lowering, but most investors' psychological expectations are likely to remain at the same level as before. The returns of investable assets in the market are declining, so professional investors may want to increase their returns by winning capital gains, so that the portfolio can also meet the income requirements of holders under a relatively low coupon and a part of the capital gains. Capital gains are the trading of bonds in the secondary market to earn the price difference, which naturally increases the volatility of the bond market.
The increased volatility of the bond market has increased the demand for fund managers' investment capabilities. In addition to increasing the income through capital gains in the bond part, the secondary bond base can also obtain additional income by participating in a small amount of stock market investment, so as to strive to achieve the expected yield of investors.
At the same time, professional fund managers, especially those with experience in the allocation of large types of assets, can dynamically adjust the proportion of stock and bond assets through the judgment of the market, reduce the risk caused by the fluctuation of a single asset, and thus reduce the overall volatility of the portfolio. In the pursuit of a balance between volatility and returns, the secondary bond base can be said to be a good financial choice from the perspective of long-term allocation.
HSBC Jinxin Huixin 6-month holding period
Limited to spring, "Xin" moves online
Cai Ruolin, the proposed fund manager, said that for the management of HSBC Jinxin Huixin Fund, in order to achieve the goal of controlling volatility while taking into account returns, bond assets are the main types of asset allocation, and in the equity allocation part, the equity allocation will be cautiously increased after the portfolio has accumulated a certain income safety cushion, and at the same time, the upper limit of equity asset allocation will be strictly controlled and the portfolio drawdown will be controlled.
Proposed fund manager Cai Ruolin
It starts with research value
12 years of experience in the securities industry, including 7 years of experience in public fund management. Rich experience in asset allocation. As a senior "all-rounder" in fixed income investment, Cai Ruolin has rich experience in the management of secondary debt-based and partial debt mixed funds.
Caught up in talent
Cai Ruolin's masterpiece HSBC Jinxin 2016A*, since 2018, has had a positive annual return for 6 consecutive years, and the maximum drawdown in the past 6 years has been controlled within -2% (-1.66%), and among the 345 secondary bond bases established before 2018 (each type of share is calculated separately), only 2 products have achieved this goal, and HSBC Jinxin 2016A is one of them (data source: Wind, as of 2023.12.31). Historical data does not represent the future, the market is risky, and investment needs to be cautious). At the same time, the risk indicators of HSBC Jinxin 2016A in the past year, the past three years and the past five years are better than the average of the same category**. The product crosses the bull and bear market, reflecting Cai Ruolin's good ability to allocate large categories of assets.
*HSBC Jinxin 2016A, effective from 1 June 2016, the proportion of fixed income assets of HSBC Jinxin 2016 Life Cycle Fund is 95%-100%, and the proportion of equity assets is 0-5%. HSBC Jinxin 2016 Life Cycle Fund A in the past 6 years (performance comparison benchmark yield) is as follows: 7.08% (0.35%) in 2018, 5.67% (0.35%) in 2019, 4.32% (0.36%) in 2020, 5.77% (0.35%) in 2021, 0.48% (0.35%) in 2022, 1.88% (0.35%) in 2023, and the fund yield comes from HSBC Jinxin and is reviewed by the custodian bank.
**HSBC Jinxin 2016A below the range risk indicators outperform the peer average
Data source: The fund yield comes from HSBC Jinxin, the fund yield is reviewed by the custodian bank, and the maximum drawdown and annualized volatility are from Wind, as of 2023.12.31. Maximum drawdown: The drawdown of the yield when the net value of the product reaches the lowest point at any historical point in the selected period. The smaller the absolute maximum drawdown, the smaller the drawdown risk of the fund, and vice versa. Annualized volatility refers to the annualized value of the standard deviation of the return over a specified range. The higher the annualized volatility value, the higher the risk of volatility and vice versa. HSBC Jinxin 2016 Similar Refers to Wind Hybrid Bond Secondary Fund Classification. The past performance of the fund and its net value are not indicative of its future performance, and the performance of the fund managed by the fund manager does not constitute a guarantee of the performance of other funds.
Be loyal to the team
✦HSBC Jinxin Fund Fixed Income Team has set up five departments: Public Fixed Income Investment Department, Special Account Fixed Income Investment Department, Monetary Asset Investment Department, Overseas Fixed Income and Multi-Asset Investment Department, and Fixed Income Research Department. The team currently has 12 members with an average experience of more than 10 years, led by Lv Zhanjia, a fixed-income veteran who has been deeply involved in the bank wealth management and asset management market for 14 years, and strives to fully cover the fixed income investment field through a multi-dimensional structure. 1
✦The team has a mature fixed income investment process, and ensures the scientific decision-making of the bond investment process and strictly controls credit risk through risk assessment and tracking before, during and after investment.
✦In the fourth quarter of 2023, HSBC Jinxin was awarded the three-year AAAAA rating of active bonds, demonstrating the investment strength of the company's fixed income team. 2
1Source: HSBC Jinxin, as of 2024.01.31.
2 Data source: Tianxiang Fund Evaluation Center, as of 2023.12.31. Fund Manager Active Bond Rating: A fund manager with at least one bond fund (excluding index bond fund) that has been established for at least 37 months (including 1 month of position opening time). Past performance and net worth of a fund are not indicative of its future performance, and the performance of funds managed by the fund manager does not constitute a guarantee of the performance of other funds. The market is risky, and investors need to be cautious.
Risk Warning: The views contained in the document are based on the market environment at the time of the preparation of the document, and do not constitute the necessary basis for future investment decisions of HSBC Jinxin's funds, nor do they constitute any substantive investment advice or commitment to readers or investors. The market is risky, and investors need to be cautious.
The past performance of HSBC Jinxin Harvest Fund A (performance benchmark yield) is as follows: 3.73% (1.89%) in 2023 and the past performance (performance benchmark yield) of HSBC Jinxin Abundance Fund C is as follows: 3.42% (1.89%) in 2023. In 2022, the results will not be shown because the fund contract has been in effect for less than 6 months. The fund managers during the period are: Fu Yuqing (2022.10.20-present), Cai Ruolin (2022.8.16-present).
The past performance of HSBC Jinxin Stable Profit Enhancement Short and Medium Term Bond A (performance comparison benchmark yield) is as follows: 3.21% (3.43%) in 2021, 1.74% (2.53%) in 2022, 3.21% (3.12%) in 2023, and the past performance (performance benchmark yield) of HSBC Jinxin Stable Profit Enhancement Short and Medium Term Bond C (performance comparison benchmark yield) is as follows: 2.90% (3.43%) in 2021, 1.47% (2.53%) in 2022, 3.01% (3.12%) in 2023 ）。 In 2020, because the fund contract has been in effect for less than 6 months, the performance will not be listed. The fund managers during the period are: Fu Yuqing (2021.02.18-present), Cai Ruolin (2020.11.19 fund contract effective date - present).
The past performance (performance compared to benchmark yield) of HSBC Jinxin Huian Pure Bond 63-month Regular Open Fund is as follows: 3.59% (3.75%) in 2021, 3.87% (3.75%) in 2022 and 3.69% (3.75%) in 2023. In 2020, because the fund contract has been in effect for less than 6 months, the performance will not be listed. The fund managers during the period are: Cai Ruolin (2020.10.29 fund contract effective date - present), Fu Yuqing (2022.10.20 - present).
The past performance of HSBC Jinxin Fengning Fund A (performance benchmark yield) is as follows: 3.06% (1.89%) in 2023, and the past performance (performance benchmark return) of HSBC Jinxin Fengning Fund C is as follows: 2.94% (1.89%) in 2023. In 2022, the results will not be shown because the fund contract has been in effect for less than 6 months. The fund manager during the period is: Cai Ruolin (2022.12.20 fund contract effective date - present).
HSBC Jinxin 2016 Life Cycle Fund A has the following performance in the past 5 years: 5.67% (0.35%) in 2019, 4.32% (0.36%) in 2020, 5.77% (0.35%) in 2021, 0.48% (0.35%) in 2022, and 1.88% (0.35%) in 2023. The fund manager during the period is: Cai Ruolin (2016.01.30-present). The past performance of HSBC Jinxin 2016 Life Cycle Fund C (performance benchmark rate of return) is as follows: 2023 fund shares are not listed for less than 6 months after the establishment of the fund. The fund manager during the period is: Cai Ruolin (2023.09.19-present). According to the fund contract, since 2016.06.01, the proportion of equity assets of the fund is 0-5%, and the proportion of fixed income assets is 95-100%.
The past performance of HSBC Jinxin Huijia Fund A (performance compared to the benchmark yield) is as follows: -0.2% (-0.78%) in 2023. The past performance of HSBC Jinxin Huijia Fund C (performance compared to the benchmark yield) is as follows: -0.53% (-0.78%) in 2023. The fund managers during the period are: Fan Kunxiang (2023.03.11-present), Cai Ruolin (2023.01.17-present).
Data source: HSBC Jinxin, the results have been reviewed by the custodian bank, as of 2023.12.31. The past performance of the fund and its net value are not indicative of its future performance, and the performance of the fund managed by the fund manager does not constitute a guarantee of the performance of other funds.