Reporter: Li Yuwen Editor: Zhang Yiming
At a time when deposit interest rates continue to fall, some bank wealth management products are like opening "plug-ins", and the yield has soared, and even this is a low- and medium-risk product that emphasizes "stability".
The reporter noticed that the annualized rate of return of Bank of China Wealth Management, an R2 medium and low risk product, was as high as 13% in the first quarter of this year, far exceeding its annualized return performance in previous quarters. You must know that after the latest round of deposit interest rate cuts at the end of last year, the deposit interest rates of major commercial banks have been below 2%. Although wealth management and deposits are products of different natures, only in terms of the intuitive comparison of yields, such a high rate of return on bank wealth management has also made many investors quite excited.
So, what is happening behind the soaring yield of this wealth management product? Is it the right time to "get on the bus"? Can you really pocket such a high yield after buying it? Every time this reporter investigates this.
The bank's R2 wealth management yield exceeded 10%
The reporter found a "(9-month rollover) Bank of China Wealth Management - Stable Wealth Fixed Income Enhancement" product on the Bank of China APP, which was assessed as R2 medium and low risk, and the unit net value performance in the first quarter of this year was significantly higher than before. According to the reporter's calculations, the annualized rate of return of the product in the first quarter of this year was as high as 13.34%.
In the long run, such a strong range-based return performance is rare. According to the APP, the annualized yield of the product since its inception at the end of April 2021 is 3.99% (as of April 8).
According to the interval annualized rate of return = (net value at the end of the period - net value at the beginning of the period) / net value at the beginning of the period / (end date - beginning date) * 365 * 100%, the reporter sorted out the annualized rate of return performance of the product in each quarter since its inception at quarterly intervals.
(9 months rollover) Bank of China Wealth Management - Stable and Rich Fixed Income Enhances the Annualized Income Performance of Each Quarter, Reporter's Statistics
(9 months rollover) Wealth Management - Stable Wealth Fixed Income Enhanced Net Share, source: Wealth Management website
As can be seen from the chart, the product was not spared from the two rounds of net value drawdowns suffered by the bank wealth management market in March and November 2022, and the annualized return performance in the corresponding quarters fell sharply. According to the reporter, the annualized rate of return of the product in the past quarters rarely exceeded 10%, but in the first quarter of this year, it was significantly higher.
According to the information disclosed in the investment operation report for the third quarter of 2023, about 68% of the product's holdings are bonds, 26% are cash and bank deposits, interbank certificates of deposit, and 6% are public funds. In addition to cash and bank deposits, the top 10 assets with a relatively high proportion of investment scale after penetration also include CCB perpetual bonds, bonds issued by China Power Investment, Shaanxi Communications, Hubei Hongtai and Shaanxi Investment Group.
iFind shows that the closing price of 23 CCB Perpetual Bond 02 has been climbing in recent months. According to the valuation of the Shanghai Clearing House, on March 29, the last trading day of March, the full valuation price of the bond climbed to 104.4871 yuan from 102.3125 yuan at the beginning of the year, which is estimated to be an annualized return of about 9% in the first quarter.
23建行永续债02估值，来源：iFind
In addition, the valuations of the remaining bonds have also increased significantly compared to the beginning of the year, as shown in the table below.
The reporter checked and measured the income performance of R2-level fixed income products sold on the APP of many banks in the first quarter of this year, of which the annualized rate of return of more than 10% is rare. However, the reporter noticed that although many products did not reach such a high level of income, the annualized rate of return in the first quarter of this year was also significantly higher than before in terms of their own historical returns.
For example, on the CCB APP, the reporter saw a fixed income product that was assessed as R2 lower risk - "Anxin minimum 720-day fixed income product", issued by CCB Wealth Management. The reporter also calculated the annualized rate of return of the interval = (net value at the end of the period - net value at the beginning of the period) / net value at the beginning of the period / (end date - beginning date) * 365 * 100%, the annualized rate of return of the product in the first quarter of this year was as high as 7.5%, and the annualized rate of return since its establishment was less than 4% in the long run.
The net value of the unit of "Anxin's minimum holding of 720-day fixed income products", source: CCB Wealth Management
According to the product's investment management report for the third quarter of 2023, the top 10 assets with a high proportion of investment scale after penetration include perpetual bonds of Agricultural Bank of China, bonds issued by real estate companies such as C&D Real Estate Group and Zhuhai Huafa Group, financial bonds issued by Great Wall Asset Management, and a hybrid bond fund.
iFind shows that on March 29, the closing price of 23 Agricultural Bank of China perpetual bond 01 rose to 102.21 yuan from about 99.4 yuan in early December last year. According to the valuation of the Shanghai Clearing House, the full valuation of the bond was 103.8960 yuan on March 29 and 101.7328 yuan on January 2, which estimates its return level in the first quarter to be about 9% annualized.
23农行永续债01估值,来源:iFind
Similarly, the valuations of the remaining bonds have risen significantly since the beginning of the year, as shown in the table below. Among them, the annualized return level of 21 Great Wall Capital Bond 01BC and 21 Huai Mine Shangxin ABN001 is more than 10%.
The strength of the bond market pushes the yield of fixed income wealth management to "soar"
A number of interviewees told reporters that the rise in the yield of fixed-income wealth management products is related to the strength of the bond market.
Ming Ming, chief economist of CITIC Securities, said in an interview with reporters that the main reason for the rise in the yield of fixed-income wealth management products is that the interest rate of the bond market has continued to decline since the beginning of the year, and the market is full of long-term sentiment.
The relevant person in charge of Nanyin Wealth Management also told reporters that the positions of fixed-income bank wealth management products are mainly based on bonds and money market instruments, and under the easing policy, the bond bull market continues to deduce, prompting more funds to flow to the bond market, promoting the price of bonds to rise significantly, and the proportion of bond holdings of some fixed-income wealth management products is higher, driving the yield of products to rise significantly.
As of the end of 2023, the scale of fixed income products will be 25.82 trillion yuan, accounting for 96.34% of the total scale of wealth management products, making them the absolute main force in the bank wealth management market. Fixed income wealth management mainly invests in debt assets such as deposits and bonds, and the proportion of such assets is not less than 80%. Due to the high proportion of bond asset allocation of some fixed income products, the price fluctuation of the bond market has a greater impact on the net value performance of such products.
Image source: Annual Report on China's Banking Wealth Management Market (2023)
The reporter noted that since December last year, the bond market has come out of a wave of rising market, and long-term interest rates have fallen. The yield on 10-year Treasury bonds to maturity fell from 2.67% in early December last year, fell below 2.5% several times in January, and fell to 2.26% on March 7, hitting a new low. On March 29, the yield on the 10-year Treasury bond to maturity was 2.30%, still at a historically low level.
Image source: Wind client
In terms of credit bonds, according to the China Chengxin International Research Institute, the yields of credit bonds of different maturity grades fell to varying degrees at the end of February, ranging from 6 to 30 bp. Among them, the yield of 1-year medium-term notes of each grade is the most obvious downward compared with the end of last month, with a downward range of more than 19bp.
In terms of the market, the scale of the newly established bond base stood at the 100 billion yuan mark in March, and more than ninety percent of the bond base has achieved positive returns since the beginning of this year, and about 60 bond bases have earned more than 3% in the past three months. Industry insiders expect that there is a risk of a correction in the bond market, but the room for a correction is limited, and the follow-up may be dominated by shocks.
Wealth managers recommend "waiting and seeing" first, when is the opportunity to "get on the bus"?
So, is it an appropriate time to buy fixed-income wealth management products? Can we really get 10 percent or even higher returns after buying? For this reason, this reporter recently visited a number of banks in Shanghai and consulted a number of wealth managers.
The financial manager of a branch of ICBC told reporters, "The yield during this period can only be used as a reference, and it does not mean that you can maintain this level after buying." For example, the current net value of this product is 1.0661, and now buying is to convert the purchased share according to this net value, but now is the time when the bond market fluctuates, it is very likely that the net value of the product will decrease after buying, and there may be a loss when redeeming. We recommend that customers take a break from this fixed income product for now. ”
The financial manager of a branch of the Bank of China also told reporters that bonds have risen a lot, and the market has also had some pullbacks in the past few days.
The word "wait-and-see" was also heard by the financial manager when the reporter visited a branch of CITIC Bank. The financial manager told reporters that the annualized rate of return of pure debt wealth management products is generally in the range of 2.5%~3%. "At present, the coupon rate of short- and medium-term bonds circulating between banks is about 2.2%, and the income of 2.5%~3% that you can see is already thickened by short-term fluctuations in secondary market transactions. Our bond-type wealth management products with a duration of half a year have recently matured, and the annualized rate of return on the actual arrival is about 2.8%~3.2%. ”
According to the monthly report on the national bank wealth management product income index for February recently released by Puyi Standard, the investment income of fixed income products in the national bank wealth management market in the past three months was 0.90%, which was the highest level in each month in the past six months, and the investment income in the past six months was 1.41%. The reporter noted that if the returns of these two ranges are roughly estimated, the annualized rate of return of fixed income products in the bank wealth management market is about 2.8%~3.6%.
Many wealth managers bluntly said that the annualized rate of return of 10% cannot be sustainable for a long time. The wealth manager of a branch of the Industrial Bank said that the bonds in the hands of investment managers may be long or short, including the coupon interest due on the bonds and the impact of bond market fluctuations on the valuation of the bonds held, but after this period of time or after this wave of income is converted, the valuation of the bonds will be restored. "It's hard to achieve an annualized return of 6%, 7% or more for most of the year or the whole year, which is unrealistic. ”
So, when is the right opportunity for fixed-income financial management to "get on the bus"?
Since bond prices are inversely proportional to market interest rates, in short, if there is a significant interest rate cut in the future, then the price of bonds, especially long-term bonds, will rise, which means that there is a high probability of higher returns from buying such products, which is worth paying attention to.
Industry: In the long run, fixed-income wealth management products still have stable and sustained investment value
As mentioned above, the annualized yield of some fixed-income products with more bond assets in the first quarter of this year "rose" driven by the booming bond market. So, what will be the next trend of the bond market, and what is the value of fixed-income wealth management investment?
Ming Ming told reporters that the current market sentiment is high, but there is a lack of substantial positive support, and it is currently in a window period of fundamental data, and long-term bond interest rates may fluctuate at a low level. "From a medium- to long-term perspective, there is still room for the annual interest rate pivot to fall. In particular, considering the baseline assumption of moderate fundamental repair and the high probability of MLF interest rate cuts within the year, it is expected that the yield to maturity of 10-year Treasury bonds will still have room to fall in 2024. ”
At the same time, it is mentioned that the yield of fixed income wealth management is high in stages, and the coupon income of the follow-up new wealth management will be significantly lower, and it will eventually return to the center.
The relevant person in charge of Nanyin Wealth Management told reporters that in the short term, bond yields have fallen rapidly to a historically low level, with the steady improvement of the mainland economy and the solid promotion of high-quality development, it is expected that the gradual improvement and improvement of risk appetite will restrict the downward space of interest rates, and it is expected that the yield of fixed income wealth management will gradually return to normal, but it still has certain advantages compared with deposits.
He further pointed out that "looking forward to the medium and long term, after several rounds of reductions in bank deposit interest rates, the investment value of stable fixed-income wealth management products will be more prominent than bank deposits." In the future, with the improvement of the quality of economic growth in the mainland, the market interest rate level will most likely move downward. ”
National Business Daily