Bond funds lose income by a year and a half in one day Bank’s wealth management subsidiaries sent letters to placate investors
What happened to the continued decline in the profitability of bond funds and asset management products?
Xiao Zhao, a post-95 investor in Hangzhou, has been a little unhappy recently. The net worth of the bank’s wealth management products he bought is declining. “Since October 24, my wealth management account has practically never made any money. In 16 trading days, only two The net value of the account in one trading day is positive and the rest of the trading days it either loses or does not gain .”
In the past two days, many banks’ wealth management branches have sent a letter to investors on their official WeChat accounts, explaining the reasons for the recent decline in yields of banks’ wealth management products. the bond market.
Bond-related asset management products, bond funds
Yields drop sharply
The bank’s wealth management product Xiao Zhao bought is related to bond assets, and the expected annualized rate of return is about 3% when he buys it. It should be said that it is a relatively stable wealth management product. But in recent days, it is precisely these relatively stable bond asset management products and bond funds that have experienced relatively large fluctuations.
According to Wind data, after excluding products without asset data in the last six months, as of November 18 there were 34,421 asset management products on the market (including those issued by banks and those issued by asset management subsidiaries), of which accumulated net unit value is less than 1 There are 2093 net broken products, accounting for 6.08%, an increase of 254 compared to November 17th.
Indeed, not only bond-related asset management products, but also many bond funds have recently experienced a relatively noticeable retracement.
On November 14, 4,007 basic bond yields decreased, equal to 94.59%, with an average decrease of 0.3%. Among them, the product with the largest decline in a single day was Baoying Rongyuan Convertible Bond C, which fell by 3.15% in a single day. Debt foundations that fell by more than 3% also included Baoying Rongyuan Convertible Bond Bond A and Ping An Convertible Bond A/C, which were -3.14%, -3.09% and -3.09% respectively. The 10-year Treasury ETF also fell 0.78%, which wiped out the first half of the year’s proceeds in one day (the fund was up 0.52% in the first half of the year) .
So what caused the continued decline in returns on bond-related asset management products and bond funds? The reason is that government bond yields continue to rise.
Here’s a small point of popular science knowledge. Bond yields are generally inversely proportional to prices. That is to say, when interest rates go up, bond prices go down; when interest rates go down, bond prices go up.
How do you figure it out? Suppose you spend 100 yuan to buy a bond with a one-year interest rate of 4%, and after one year you pay back 104 yuan with interest; it just so happens that you just bought this bond in front of you, and the bond the yield in the back foot increases, the current market interest rate is 5%, and after one year you can get 105 yuan with principal and interest. In this case, the previous 4% interest rate bond will become unattractive. In extreme cases, investors will choose to Pay Off Old Debts and Buy New ones.
So, for bond issuers, how to restore investors? To meet investors’ expectations for a 5% yield, the bond with a maturity of 104 yuan can only be sold for 99 yuan, which drives down the bond’s price. And this is the main cause of the recent decline in yields of asset management products and bond-linked bond funds.
The chief financial officer of the related Hangzhou joint-stock bank added, “Bonds have two forms of income. One is the interest income on the maturity of the bond, and the other is the price difference formed by the fluctuation of the bond market. The interest rate of the issued bond is fixed Yes. The market interest rate increases and the interest rate of the issued bonds remains unchanged, which reduces the attractiveness of market funds Recently, the interest rate of treasuries is increased significantly, which will certainly have an impact on old bonds and some financial products and bond funds related to them. In addition, there is a certain “see-saw effect” between the bond market and the stock market, i.e. when the stock and market rise, funds flow out of the bond market, causing the bond market to weaken and vice versa. Recently, there has been a wave of obvious recovery in A+H stocks, which has also caused a relatively sluggish bond market to some extent, thus affecting the performance of related products.
