Preserving Value in Public Fund Bonds Amid Low Interest Rates

Do bond funds have eggs today? This is a popular and everyday topic in the bond discussion areas of major internet fund sales platforms. In the past two years, the public's enthusiasm for the bond market has continued to rise.

Shanghai Securities' research report shows that since the comprehensive implementation of the new regulations on asset management, a large amount of retail customer funds have been attracted to public stable-type products. From 2022 to 2023, the average holding ratio of individual investors in such products has risen from 25.61% to 27.48%.

This reflects the urgent demand of individual investors for stable financial management, and may also be a footnote to the retailization wave of bond fund sales.

The natural desire for "stability"

The era of comfortably enjoying principal-guaranteed and yield-guaranteed products has passed. The reality of net value has once again expanded the blue ocean of residential financial management. In terms of stable financial management, ordinary people have started to make more refined and self-directed choices: some people move up along the risk-return curve and choose fixed income + funds with greater expected risk and returns; some people prefer short-term debt products with flexible redemption; some people advocate bond products of credit bonds and urban investment bonds, and some people stick to money funds, striving for stability.

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Faced with the needs of thousands of people, how to provide a package of products to adapt to the investment needs at different stages and with different goals, and how to improve the stable output of a platform, while also having the productivity of research depth and performance strength, has become a question that every asset management institution needs to answer.

"Provide asset allocation tools for the people, and let investors who are not familiar with major asset categories also have the ability to go through the cycle through the management of bond portfolios by fund managers." This has always been the simple original intention of public funds. Harvest Fund has given a layout with its own unique recognition: to solidify the core of asset allocation with stable fixed income, and to provide investors with financial investment solutions with a higher "stability quotient".

The urgent demand for "better products"

Statistics from China Merchants Bank show that by the end of 2022, the total scale of individual investable assets in China reached 278 trillion yuan; by the end of 2024, the total scale of individual investable assets is expected to exceed 300 trillion yuan. The demand for wealth management in China is still huge, and good products that combine both returns and holding experience are still scarce.

Faced with thousands of people, what public funds need to do is to provide a rich variety of fund products to adapt to the investment needs at different stages and with different goals.Public mutual funds are continuously seeking breakthroughs.

In the ongoing upgrade of investment research strategy, Jia Shi's fixed income investment system focuses on core tracks such as currency, short-term debt, pure debt, and "fixed income +". In August 2023, to meet the different needs of investors for risk preference and time limits in steady investment, Jia Shi Fund continues to introduce the concept of three types of money for steady investment, breaking down the steady investment account into liquid money, surplus money, and long-term money. It focuses on the three types of money to create a boutique shelf, starting from the end and running through the whole process.

Recently, Jia Shi's liquid money financial shelf has been updated. Jia Shi's pure debt fund with a holding period of 3 months (Class A 022056/Class C 022057) will be launched on September 2. It provides a brand new liquid money "financial partner" for investors who are looking for steady financial management, especially those who have idle money for more than three months.

So far this year, Jia Shi Fund has 28 bond fund products with a return rate of more than 3%. In the past 3 years (from June 30, 2021, to June 30, 2024), more than 20 fixed income products under Jia Shi Fund have a return rate of more than 10% during the period. The good-yielding products shown on Jia Shi Fund's fixed income boutique shelf are supported by the ability to deeply study customer needs and accurately match asset allocation solutions.

Higher requirements for "investment research capability"

Entering the era of low interest rates, the traditional fixed income investment research system must change. Richer investment strategies and asset allocation are the future direction.

The wealth management needs of residents also determine that public mutual funds need to expand and strengthen their fixed income business. It is necessary to establish a fixed income investment research platform with a wide range of strategies, comprehensive product layout, and highly specialized talents.

Jia Shi Fund's fixed income investment research platform is based on two aspects. One is to improve the investment research capability of fixed income, and the other is to keep pace with the development of the industry and focus on the needs of investors.

As one of the earliest companies in the industry to focus on multi-strategy and multi-asset allocation in the "large fixed income" field, Jia Shi Fund has accumulated a cornerstone fixed income platform, laying a solid ability foundation for steady fixed income business. This is reflected in many aspects, such as large asset allocation, credit research, trading, and market risk response capabilities.

Taking credit research capability as an example, Jia Shi Fund was the first in the industry to establish a credit research team. Credit research covers different industries and categories, and has established strict credit review standards for individual bonds, maintaining a full process of research, analysis, and tracking. At Jia Shi, credit research should be supported by systematic and solid fundamental analysis, regular credit investigation and early warning, preventing the bottom line of risk, and playing defense well. At the same time, credit research should be transformed into value discovery, looking for risk premium optimization above the risk bottom line.The continuous internal strengthening of public mutual funds is the most important thing at this juncture. Amidst ongoing market fluctuations, central bank policies, economic fundamentals, and changes in monetary policy, public mutual funds need to focus more on investment research to provide investors with more mature products and continuously accumulate trust.