On April 24, the bond market "flashed its waist" for the first time in a long time after many months of strength - 5-10 year interest rate bonds generally saw a pullback of about 5BP.
Since the beginning of the year, bonds have performed well among all major asset classes. Not only has the CSI Total Bond Index hit a record high, but the 30-year Treasury Bond Index has risen by 8.58% this year, and its returns are almost comparable to risk assets such as the CSI Dividend Index and the COMEX Gold Index. (Source: Wind, as of April 23)
(Source: Wind, past performance of the index as of April 23 is not indicative of the future.) The market is risky, and investment needs to be cautious)
For most investors who choose to allocate bonds, "low volatility" is an important reason for their popularity. In the current context, many friends with "investment fear of heights" can't help but ask:
The bond market has been bullish for so long, will the trend start to change?
If we still have spare money that needs to be allocated, how can we invest in the bond base now to better control the risk of the portfolio?
Today, Xiaopu will take you to a plate
Standing in the current position, how much room is there for interpretation in the bond market?
Look at the fundamentals: macro signals are still relatively friendly to the bond market
In the long run, Treasury yields mainly reflect the market's expectations for the future of the economy and inflation.
Although many recent macro data have shown signs of recovery, the real estate industry chain, which constitutes the most important part of the mainland economy, is still in the process of bottoming out. As of February this year, the growth rate of real estate development investment and the growth rate of new residential sales area were still negative, reflecting that the overall pace of domestic demand and economic recovery has not yet been relatively elastic. In the context of the lack of boom assets, low-volatility assets such as bonds are still an important choice for investors.
In addition, the latest CPI data increased by only 0.1% year-on-year and fell by 1% month-on-month, indicating that inflationary pressures are limited and monetary policy is not necessary. (Source: Wind, as of April 23)
Look at the relationship between supply and demand: the demand for bonds continues to increase, constituting a strong support for the bond market
With the continuous reduction of the policy rate since last year, the risk-free rate of return has fallen across the market, and the demand for bond allocation by institutional and individual investors has begun to rise.
In terms of institutional investors, as deposits began to flow to small and medium-sized banks, small and medium-sized banks, represented by rural financial institutions, became the most important net buyers of long-term interest rate bonds; in addition, insurance institutions are under about 15% of the annual asset maturity reallocation pressure, and their bond allocation ratio is also increasing year by year. (Source: Wind, Huatai Securities, as of April 25)
In terms of individual investors, due to the continuous volatility of the equity market, high-interest deposits have gradually declined, and low- and medium-risk options such as wealth management and bond base have become more favored, and residents' assets have also begun to enter the bond market. In the first quarter of 2024, the scale of wealth management will increase by about 8,500 trillion yuan (excluding the quarter-end effect), and the scale of bond funds will increase by 3,647.4 trillion yuan. (Source: Wind, Haitong Securities, Huatai Securities, as of April 25)
The "buy, buy, buy" demand of institutional and individual investors has formed an important support for bond prices.
How to choose a bond base and have a better experience?
Although the current bond market is still supported by a variety of positive factors, in the context of low interest rates and rising prices, investors can also adjust the strategy of bond base selection to enhance the overall investment experience.
Focus on the overall shorter-duration bond base:
Among bond funds, we might as well start to pay more attention to short- and medium-term bond funds than medium- and long-term bond funds with higher returns and higher volatility. Short- and medium-term bond funds mainly invest in bond assets with a remaining maturity of no more than three years, and are exposed to more limited macro and policy risks.
Historically, the volatility and maximum drawdown of the short- and medium-term bond fund index have been significantly better than those of the medium- and long-term bond fund index since its establishment.
(Source: Wind, past performance of the index as of April 23 is not indicative of the future.) The market is risky, and investment needs to be cautious)
Focus on products with a more diverse strategy:
In the past high-interest rate market environment, a part of the bond base can achieve better returns by striving for coupon income through credit sinking. And due to the current downward shift in the market-wide interest rate pivot, such products are likely to face strategic failure.
Therefore, investors can also pay more attention to the types of products that use a part of their positions to fight for coupons, and appropriately match multiple strategies such as swing trading and leverage to compete for returns. In a low interest rate environment, diversify the sources of income as much as possible.
Professional fixed income factory, strive to create a good plan for spare money management
AXA SPDB Short and Medium Term Bond Fund
A 006436 C 006437
Flexible combination of interest rate bonds + credit bonds
No holding period Redemption facilitation
Class A has returned 3.68% over the past year compared to 2.99%
Class C has returned 3.57% over the past year compared to 2.99%
Source: Fund's regular report, as of March 31, 2024. The fund was established on 2018-10-25, and the A/C share returns were: 3.68%/3.57% in the past year, 9.38%/9.04% in the past three years, 16.50%/15.79% in the past five years, 18.76%/17.93% since its inception, and the benchmarks for the same period were 2.99%, 8.91%, 14.88%, and 17.08%.
SPDB AXA Ji Xin 90 days
Class A 012356 Class C 012357
Focus on short-term bonds/90-day holding period/strict risk control
Class A has returned 3.79% over the past year compared to benchmark 2.52%
Class C has returned 3.57% over the past year compared to 2.52% of the benchmark
Source: Fund's regular report, as of March 31, 2024. The fund was established on 2021-06-08, and the A/C share returns were 3.79%/3.57% in the past year, 9.90%/9.29% since its inception, and the benchmark was 2.52% and 7.02% in the same period.
SPDB AXA Ji Xin 90-day Rolling Holding Short-term Bond Securities Investment Fund Class A/C was established on 2021-06-08, the fund risk level is R2-medium and low risk, and the benchmark of fund performance is the yield of China Bond Composite Wealth (less than 1 year) index * 90% + bank one-year time deposit interest rate (after tax) * 10%. According to the fund's regular report, as of 2023/12/31, the cumulative net value return of the fund's A/C shares in 2022-2023 is 2.48%/2.28% and 3.76%/3.56% respectively, and the benchmark growth rate of fund performance in the corresponding range is 2.26% and 2.53% respectively, and the return rate of return since the establishment of the fund is (A/C%) 8.84%/8.29% respectively, and the benchmark growth rate is (A/C%) 6.31% in the same period.
SPDB AXA Short and Medium Term Bond Securities Investment Fund Class A/C was established on 2018-10-25, the fund risk level is R2-medium and low risk, and the benchmark of fund performance is the return rate of China Bond Total Wealth (1-3 years) index * 80% + one-year time deposit interest rate (after tax) * 20%. According to the fund's regular report, as of 2023/12/31, the cumulative net value return of the fund's class A/C shares in 2023-2019 is 3.47%/3.36%, 2.10%/2.00%, 3.29%/3.19%, 3.01%/2.86%, and 3.88%/3.68%, respectively, and the benchmark growth rates of fund performance in the corresponding range are 2.60%, 2.48%, 3.27%, 2.37%, and 3.39% respectively Since the inception of the fund, the return rate has been (A/C) 17.63%/16.84%, respectively, and the benchmark growth rate over the same period is (A/C) 16.08%.
Risk Warning: Funds are risky, and investment should be cautious. The fund manager promises to manage the fund assets diligently and responsibly in accordance with the principle of integrity and rigor, but does not guarantee that the fund will be profitable, nor does it guarantee a minimum return. Past performance of the Fund is not indicative of its future performance and does not constitute a guarantee of investment income or investment advice. Mainland funds have been in operation for a relatively short period of time and do not reflect all stages of market development. To understand the details of the fund, please be sure to carefully read the "Fund Contract" and "Prospectus" and other legal documents. If you need to purchase funds, please pay attention to the relevant regulations on investor suitability management, do a good risk assessment in advance, and purchase fund products with matching risk levels according to your own risk tolerance. The opinions and comments provided in this material are for informational purposes only and do not constitute any operational advice or recommendation of the securities mentioned. The opinions expressed in the material are current and for informational purposes only.