The recent buzzing activity in the bond market reveals the notable trend of 'bear short, bull long', predominantly showcased through investment products being launchedIn the public fund issuance sector, those funds that have concluded their fundraising prematurely are almost entirely bond fundsThis is primarily due to the strong and often unexpectedly good performance of bond funds, which have become a sought-after option for investors.
As we delve into the state of bond funds this year, the overall performance has been propelled by a strengthening bond marketIndeed, yield rates for these funds have been impressive, with about 90% of bond fund products generating positive returns as of nowConversely, the A-share market saw a surge in activity after the National Day; however, many equity funds, even those managed by renowned fund managers, have struggled to compete with the high yields offered by bond funds
One notable case is a mid-sized public fund's 30-year treasury bond ETF which has achieved a yield exceeding 20% this year, leading its asset size to skyrocket from less than 300 million yuan in September 2023 to a remarkable 4.2 billion yuan, marking a staggering 16-fold increase within a yearIn another instance, a mini bond fund from a smaller public fund company started with just 10 million yuan in assets; due to its annual yield of approximately 16%, it managed to pull itself from the brink of liquidation to surpass the 10 billion yuan mark by the end of September.
Recent data indicates that the total scale of bond funds has increased by over 150 billion yuan in just the month of November, pushing the total approximate scale under incomplete statistics close to 6 trillion yuan, amidst a total public fund scale of around 32 trillion yuanThe debt fund issuance market has been exceptionally busy towards the end of the year, with leading funds and smaller public fund groups rolling out new bond offerings that wrapped up their fundraising ahead of schedule
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This rush can be attributed not only to institutional clients eager to build positions in bond funds before the year ends but also to the prior history of high-quality holding experiences that bond funds have offered to their investors, clearly signifying a reliable option amidst market fluctuations.
It is important to acknowledge that this year's bond market performance has not merely been on an uptrend; rather, it experienced its share of ups and downsIn April and October, significant corrections were noted, triggering considerable impacts on public bond funds and bank wealth management productsSuch fluctuations led to a wave of redemptions among holders who were intolerant of downturns, exposing some fund managers to genuine liquidity crisesNevertheless, despite these challenges, the bond market overall has continued to reflect bullish sentimentsThose who weathered through the corrections without 'jumping ship' were rewarded with stable growth throughout; the rapid rebounds afterward certainly uplifted their spirits, fostering a resilient determination to endure future volatility.
When juxtaposed with the constantly fluctuating stock market, many investors remain optimistic about the bond market’s performance over the next six months to a year
A significant factor contributing to this optimism is the shift in China's monetary policy back to a stance of 'moderate easing' after a decade, which acts as a core support for the favorable bond market conditions.
For fund managers, while equity funds boast relatively higher management fees that could yield notable profits for their firms, they are prone to repercussions during market fluctuationsIn reality, the stability of a fund’s scale can often feel as precarious as a sandcastleConsequently, bond funds are coming to be recognized as the strongest lever for positioning within the rankings among public fund companiesA fund company without bond fund scale may find it challenging to get established among mid-to-large public fund groupsIn light of recent slower approvals of new bond fund applications and limitations on investment scopes, optimizing existing bond fund resources and improving their performance has become a top priority for many firms.
Interestingly, while mini-equity funds often pose headaches for managers, mini-bond funds have morphed into hidden treasures, drawing in client inquiries and emerging as popular products
Even the smallest fund companies have been quick to realize the growing traction of mini-bond funds, witnessing moments of unexpected growth.
With a wave of public funds exploring the boundless possibilities within the bond fund sector, many investors, notably those sourced from internet-based fund distribution platforms, have begun to scrutinize bond funds closelySome are now diving into the nuances of bond funds, which can be categorized into first-level bond funds inclusive of convertible bonds, second-level funds including equities, interest rate bond funds confined to purchasing fixed-rate debt, credit bond funds permitting credit-related instruments, as well as bond index funds matching varying durations and bond ETFs traded in the secondary marketThe key takeaway here is that bond investments fundamentally revolve around debt, meaning as long as there isn't a catastrophic default, the earnings vary quantitatively but remain safe
No further explanation is needed about equity funds; while the potential for upward movement vastly exceeds that of bonds, the downward risks can deeply undermine an investmentNumerous equity fund investors have faced the frustrations that arise from seeking high returns too hastily, ultimately looking toward bond fund investors - who enjoy the ‘assured happiness’ of consistent, albeit smaller, returns that resemble receiving daily 'little eggs' of profitUltimately, it boils down to matching the right product at the right time to the right investor; although the timing and demand may evolve, this principle remains unchanged.
As China’s economy transitions to higher quality growth and enters a phase of deep reforms, many investors are now re-evaluating the sustainability of their asset increments, as well as their asset allocation strategies and the proportionality of various products