Recently, reporters have noticed that after a significant drawdown in the net value of some fixed-income wealth management products in late September, there has been a recent trend of recovery. Affected by the fluctuations in the bond market, many fixed-income wealth management products have seen a consecutive adjustment in net value since late September. Some investors have reported that the fixed-income wealth management products with relatively lower risk levels they hold showed negative returns on the eve of the National Day holiday. Although the net value has rebounded at present, it has not yet returned to the level of mid-September.

Industry insiders have indicated that the underlying assets of low-risk fixed-income products are primarily bonds, hence they are greatly affected by the recent bond market volatility. In the short term, the current adjustment of the bond market has not yet ended, but the adjustment space is relatively limited. In the medium term, the main logic supporting the bond market has not changed, and the fundamental and monetary policy environment remain favorable for the bond market. Investors should diversify their asset allocation according to their own risk preferences.

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Rebound in Wealth Management Product Net Value

Reporters have found that the net values of many fixed-income wealth management products showed a significant adjustment around September 26th and have been gradually recovering since October 9th.

Wind data shows that before and after the National Day holiday, the net values of more than 1,300 fixed-income wealth management products fell, with some products experiencing a net value drawdown of more than 1%, involving several leading wealth management companies.

Some investors have reported that their fixed-income wealth management products with relatively lower risk levels, such as R1 and R2, showed negative returns on the eve of the National Day holiday. Although the net value has rebounded at present, it has not yet returned to the level of mid-September.

Interviews with staff from several banks and wealth management companies revealed that the recent fluctuations in wealth management product net values are mainly related to adjustments in the bond market.

The main underlying assets of low-risk fixed-income products are bonds. Data shows that as of the end of June this year, the asset allocation of wealth management products was mainly fixed-income assets, with balances invested in bonds, non-standardized credit assets, and equity assets of 16.98 trillion yuan, 1.78 trillion yuan, and 0.85 trillion yuan, respectively, accounting for 55.56%, 5.82%, and 2.78% of the total investment assets. The significant correction in the bond market in late September directly affected the stability of returns for fixed-income wealth management products.

However, many bank wealth management managers have told reporters that the current drawdown in product net value only represents floating losses and does not mean actual losses.

Zhang Jiawei, a wealth management manager at a branch of Postal Savings Bank in Beijing, told reporters: "The current decline in the net value of some products is not equivalent to actual losses. The net value of wealth management products changes with market conditions, the prices of underlying assets, and other factors. Short-term net value declines may lead to floating losses, but as long as the holding shares have not yet matured, there is still a possibility for the product net value to rise in the future."Bank of China's wealth management staff also told reporters that since the implementation of the new regulations on asset management, wealth management products have fully shifted to net value-based products, and their net values will be adjusted daily according to market conditions. Wealth management products are mainly invested in fixed-income assets such as deposits and bonds. The prices of bonds fluctuate due to changes in market interest rates, macroeconomic environment, and other factors, and these fluctuations will affect the net value performance of wealth management products to a certain extent.

Affected by the adjustment of the bond market

When it comes to the recent fluctuations in the net value of wealth management products, many industry insiders believe that as unexpected policy benefits continue to be implemented, investors' risk preferences have rebounded, and funds have begun to flow from the bond market with low risk preferences to the equity market with high risk preferences. At the same time, the adjustment of the central bank's monetary policy has also had a certain impact on the bond market, thereby affecting the net value of wealth management products.

ICBC Wealth Management analyzed that the bond market experienced a certain degree of adjustment before and after the National Day holiday, and the maturity yield of Treasury bonds of all maturities rose across the board, and the bond market fluctuated more intensely. However, the market quickly returned to normal. At the same time, benefiting from further relaxation of the money supply, the bond market is gradually attracting the attention and capital inflow of investors.

Industry insiders believe that the adjustment space of this round of bond market is relatively limited. China Merchants Bank Wealth Management judged that in the short term, this round of bond market adjustment has not ended, but it should not be too pessimistic. The wealth effect of the stock market driven by this round has a certain sustainability in the short term, and the overall market trading sentiment puts a certain pressure on the bond market. However, after excluding market sentiment factors, current factors such as money interest rates, economic development pace, and policy orientation are unlikely to cause a large adjustment in the bond market.

Looking at the medium and long term, the performance of the bond market will eventually return to rationality. Industry insiders believe that the main logic supporting the bond market has not changed, and the basic face and monetary policy environment are still favorable to the bond market. Economic development is in the transition period of new and old momentum conversion, and it still needs time to verify from policy introduction to actual improvement. Coupled with the monetary policy that is still supportive, the bond yield center does not have a significant basis for rebound.

It is expected that the impact is controllable

Industry insiders believe that wealth management products may face certain redemption pressure in October. CICC calculated that since October, the cumulative withdrawal of wealth management scale has been 191.1 billion yuan. Although the withdrawal scale is not large, it should be a stage where deposit rush funds obviously flow back at the beginning of the quarter. Considering the seasonal pattern, the scale of this round of wealth management redemption is 600 billion yuan. CICC believes that the main driving factors for wealth management product redemption include: the impact of the stock market's money-making effect, some customers with higher risk preferences redeem wealth management to increase stock allocation; bank deposits face the pressure of outflow, and some banks have reduced the intensity of guiding customers to allocate wealth management products in order to save deposit scale; the bond market callback leads to the withdrawal of wealth management net value and a slight increase in the net value ratio.

Looking forward, many wealth management companies analyzed that although the adjustment range of this round of bond market is relatively large, the impact on wealth management products is limited, and it is expected that the risk of wealth management products is generally controllable.

The person in charge of Minsheng Wealth Management told the reporter: "From a medium-term perspective, it is expected that the bond market adjustment will not last too long, and the trend of interest rates falling in the medium and long term will not change. In the next six months, the bond market is still in a trend of stabilizing and repairing and rising, which is the stage where the policy of reducing reserves and interest rates gradually produces effects in the real economy field, and interest rates themselves need to remain low. After the short-term stock market allocation flood, it is expected that the bond market will return to the wide money pricing trend."ICBC Wealth Consultant Zhang Chenguang suggests that investors need to develop an awareness of asset allocation. Based on their own risk preferences, they can reasonably diversify their funds into different types of products such as financial products, funds, deposits, and government bonds.