Reporter of this magazine|Xue Xiaoyu
Synopsis:
- In 2024, wealth management products with rights will usher in an "upward" space, and wealth management companies are actively exploring the road of equity asset investment with bank wealth management characteristics, carrying out service and mechanism innovation, so as to reflect the "temperature" that wealth management products with rights should have.
- In order to expand equity products, bank wealth management companies have boosted investor confidence by innovating rate models. In addition, the trend of "breaking the net" and not charging management fees is becoming more and more obvious.
- Banks should continue to pay attention to investors' holding experience and carry out more services and mechanism innovations, such as appointment subscription, regular payment, target profit, and co-investment.
Spring flowers are blooming, grass grows and warblers fly, and financial products with rights have also ushered in the spring of development. Previously, after the impact of the two "net breaking tides" in 2022, equity wealth management products were launched on the market, and the issuance volume shrank significantly, and the overall scale of equity and hybrid products of wealth management companies will decline significantly in 2023. However, since the beginning of 2024, with the bullish bond base, the issuance of wealth management products with rights has picked up, which has boosted the confidence of institutions and investors.
The layout of wealth management products with rights is not only an important embodiment of the high-quality development of bank wealth management, but also conducive to changing the situation of bank wealth management only relying on fixed income products to "go the world on one thigh", and also helps to break the psychological expectations of investors who require stable income. In this process, bank wealth management should better take into account risks and returns, so as to reflect its due temperature and make investors more buying.
The layout of equity assets is an important embodiment of the high-quality development of bank wealth management
Wealth management products with rights, as the name suggests, refer to wealth management products that include equity investment. Under normal circumstances, in the process of operation, the manager of such wealth management products will invest in a certain proportion of fixed-income assets such as bonds as a "foundation", and at the same time allocate a certain proportion of equity assets such as stocks, equity funds or index funds to achieve the purpose of increasing income and increasing profit flexibility.
At present, the valuation of the mainland equity market is low, and with the steady development of the economy and the gradual recovery of the capital market, the prospects of wealth management products with rights are promising. A number of bank wealth management companies said that the equity market is in a period of upward cycle bottom, and the layout of equity wealth management products at this time may be a major development opportunity for wealth management companies.
Ma Kunpeng, chief analyst of the banking industry of China Securities Construction Investment, said: "2024 is the year of optimization of the financial asset allocation structure, and the '28 law' in asset allocation will continue to hold, and the structure of 80% of safety cushion assets and 20% of Bo income assets will not change, but it is expected that the proportion of public funds and equity assets will rebound." Puyi Standard also believes that in terms of product types, based on the low risk appetite of bank wealth management investors, fixed income assets will still occupy most of the market space, but considering the diversification trend of customers' financial needs, the layout of equity products is an indispensable and important direction in the high-quality development of bank wealth management.
In addition to banking institutions optimistic about the development prospects of the equity market, in the context of the continuous decline in interest rates and the gradual return of real estate to residential attributes, the asset allocation structure of residents will be more diversified, and the proportion of equity assets will gradually increase. In this context, the layout of equity assets by wealth management companies is a timely and rational choice to meet the wealth management needs of customers.
The layout of wealth management products with rights has been frequently moved
In fact, some wealth management companies have begun to redeploy equity assets from the end of 2023, and are trying new models of wealth management products with rights through multiple channels.
On 26 December 2023, Everbright Wealth Management launched the Sunshine Red Preferred 500 Index Enhanced C, which is the second equity public offering product issued by Everbright Wealth Management after nearly two years, with a risk rating of 4-star. According to the product manual, the product is configured with CSI 500 Index Enhanced Strategy Asset Management Products in the form of FOF/MOM, and the equity asset position is maintained at more than 80%, and the performance comparison benchmark is "CSI 500 Index Yield ×85% + China Bond Composite Wealth (Total) Index Yield ×15%". It is worth noting that this product is not sold to individual investors, but only to institutional customers of Everbright Wealth Management, which is also the only equity public offering product of Everbright Wealth Management that is not sold to individual investors. Everbright Wealth Management said that the initial issuance of the product is only for institutional customers, but it also retains the share of individual customers, and the share of individual customers will be launched at an opportune time.
Entering 2024, wealth management companies will make frequent moves in the layout of the equity market. Some wealth management companies have actively launched equity products such as "fixed income +", hybrid and partial stock products, which to a certain extent has released a signal for wealth management companies to increase their equity layout.
Ping An Wealth Management firmly believes that the current equity market is in the gold allocation window when the pessimism is at its extreme. On January 9, 2024, Ping An Wealth Management issued the "Xingchen Tianli One-Year Fixed Opening No. 2" wealth management product, which is a "fixed income +" product, and the "+" strategy includes neutral strategy, ETF arbitrage, convertible bond arbitrage strategy, etc., in pursuit of stable income from accumulated "weighted" assets.
On February 2, 2024, the "Zhaozhirui and Stable (Anying Preferred) Closed No. 6" hybrid wealth management product issued by CMB Wealth Management was officially established, with a risk rating of R3 (medium risk) and a raised amount of 1.354 billion yuan, which was an initial offering scale of more than 1 billion yuan, which once attracted widespread attention in the market. The fixed income asset allocation of this product is not less than 60%, the equity asset allocation ratio is 20%-40%, and the actual stock long ratio is controlled no more than 10%.
In addition, Minsheng Wealth Management launched the partial stock hybrid product "Yinzhu Hybrid Smart A-share Opportunity" with a risk level of R4, IB Wealth Management launched the "Fuli Xinghe Fuda Dividend" with a risk level of R3, Huaxia Wealth Management launched the "Tiangong Rikai Wealth Management Product No. 13 (CSI 1000 Index)", and Everbright Wealth Management established the "Sunshine Orange Anying Happy Daily Open (180-day minimum holding)".
How to better balance risk and benefit
Weighted wealth management products have higher expected returns, but also have more risks and uncertainties. In order to better balance returns and risks, based on the investor attributes and inherent characteristics of bank wealth management products, wealth management companies are actively exploring a road of equity asset investment with bank wealth management characteristics.
●Adhere to a multi-asset and multi-strategy portfolio
Judging from the disclosed product manuals, many equity wealth management products adhere to multi-asset, multi-strategy, and diversified portfolios, and emphasize risk control. For example, ABC Wealth Management directly stated in the product brochure of "ABC Tongxinlong Value Selection No. 37" that in the process of investing in equity varieties, it will control the fluctuation range of net asset value, especially the downside risk as the primary factor.
China Merchants Bank has been deeply engaged in the field of wealth management for many years, providing a good soil for equity investment. CMB Wealth Management strives to create products that can bring stable returns to customers by building a multi-asset and multi-strategy portfolio covering deposits, bonds, high dividends, preferred stocks, neutral strategies, gold, etc. A number of "Sunshine Orange Anying" series of hybrid products issued by Everbright Wealth Management emphasise that they mainly invest in equity assets with quasi-fixed income attributes, and most of the products are hybrid wealth management products with R2 (medium and low risk) risk rating.
Ye Yuzhang, general manager of the multi-asset investment department of IB Wealth Management, said that equity assets have always been an important asset in wealth management, and the market attention is high, but after three years of downturn in the stock market, it takes a long time for market sentiment to be repaired, and there is great uncertainty. IB Wealth Management will deploy fixed income enhanced products with dividend strategy, fixed income enhanced products with gold ETF and fixed income enhanced products with convertible bond characteristics, mainly promoting the form of products with the shortest holding period, which is convenient for customers to apply for and redeem, in order to enhance the income of customers and ensure certain liquidity needs of customers.
●Carry out innovative design of management rate
In order to expand equity products, bank wealth management companies have boosted investor confidence by innovating rate models. For example, the performance benchmark given by "Zhaozhirui and Stable (Anying Preferred) Closed No. 6" is 2.80%-4.20%, and no management fee will be charged if the performance benchmark is not reached, and only when the full-cycle operation income of the product exceeds 4.2% annualized, the excess part will be charged a floating management fee, which is also a major feature of the product. In addition, the equity products issued by CMB Wealth Management, such as Zhaozhuo Value Select and Stable and Upgraded Anying Selection, all emphasize breaking the practice of "income protection in drought and flood" in the asset management industry and implementing an innovative management fee mechanism.
CMB Wealth Management said that after nearly two years of consolidation, the equity market has been in a more cost-effective region. At the current market time, every trust of customers is more valuable. Through the innovative design of rates, on the one hand, it can give back to customers, and on the other hand, it is also to deeply bind the interests of managers and investors, convey the sincerity and confidence of the company and customers, and let investors feel at ease.
In addition, the trend of "breaking the net" and not charging management fees is becoming more and more obvious. In 2024, the "Yinzhu Hybrid Smart A-share Opportunity" issued by Minsheng Wealth Management requires that if the cumulative net value of the product fee reaches 1.2 for three consecutive trading days, it can be opened in advance, and when the cumulative net value of the product is less than 1.00 on the same day, the manager will suspend the collection of fixed investment management fees from the next natural day.
●Scheme to increase the amount of intake
Pan Dong, General Manager of Everbright Wealth Management, said that in the past, equity products were mainly based on themes and industries, but the investment research of wealth management companies is different from that of public funds, so banks should introduce quantitative strategies when deploying equity investment. Everbright Financial Management believes that there will be opportunities for broad-based investment in 2024, and at the same time, it hopes to make "alpha" returns, so it has joined ETFs in some industries for enhancement. To this end, Everbright Financial Management has set up a quantitative team and launched the "Sunshine Orange Anying Quantitative Enhancement" series of quantitative wealth management products for private banks and retail customers in the third quarter of 2023. Everbright Financial Management said that in the future, it will also launch a series of "Quant Earning" products, and the proportion of the quantitative part will gradually increase from 10% to 40%, and the continuous increase of quantitative strategies can appropriately match customers' tolerance for market fluctuations on the one hand, and on the other hand, it is also a verification of the institution's own investment and research capabilities.
How to make investors more buy-in
Objectively speaking, wealth management products with rights are still a niche. According to the statistics of Puyi Standard, as of February 25, 2024, the scale of equity products of wealth management companies is 37.15 billion yuan, and on the whole, it accounts for less than 0.2% of the total scale of bank wealth management.
In addition to the small size of the market, controlling the risks of wealth management products with rights is undoubtedly more concerned by investors. Many investors said that buying wealth management is still seeking stability, and some investors said when choosing whether to buy products with rights, "pure stocks will not be bought, and mixed ones can be considered". It can be seen that investors still have certainty in the return of rights-bearing products.
Looking ahead, Liang Min, General Manager of the Equity Investment Department of Everbright Wealth Management, said frankly that there is still a long way to go to break the "psychological expectation" of investors who require bank wealth management to provide stable returns, and suggested that bank wealth management should be allowed to set up a wealth management investment advisory model similar to public funds in the future, and called for the expansion of bank wealth management sales channels, such as sales in brokerages and Internet channels in the future, so as to reach customers who are more in line with their risk appetite, especially young people.
In addition, as the sales of wealth management products with rights face difficulties such as customer perception and risk assessment restrictions, banks should continue to pay attention to the holding experience of investors, and carry out more services and mechanism innovations, such as appointment subscription, regular payment, target profit, and co-investment (for example, on December 1, 2023, CMB Wealth Management announced that it would invest 10 million yuan in its equity wealth management products with its own funds), so that the wealth management products with rights have the functions of taking profit and stop loss, so that investors can feel the "temperature" of the product and attract more potential customers.
