Key points of investment

The impact of recent lack of intermediary quotes on credit bonds and opportunities for corporate bond ETFs

Money broker data has ushered in strong supervision, and the lack of intermediary quotes has caused a huge shock in the fixed income industry. The recent incident where intermediary quotations stopped triggered a huge shock in the fixed income sector. This originated from the regulatory authorities stepping up the rectification of currency brokerage business in the context of data security considerations. Behind this was the issue of confirmation of currency brokerage companies' quotation data. Although the current turmoil has abated, it has had a profound impact on the bond market, especially credit bonds.

There is no major risk in the bond market in the short term+ “asset shortage” that may be difficult to mitigate in a short period of time, and the strong performance of credit bonds may continue. However, in the long run, under the influence of changes in institutional behavior, the structural differentiation of credit bonds may become more obvious.

In the above context, corporate bond ETFs that are simple, transparent, efficient, convenient, and track the indices of medium and high-grade credit bonds on exchanges have ushered in new development opportunities, and have also conveyed their clear product position to the entire market: the main type of corporate bond trading in the market.

Investment value analysis of China Bonds - Medium and High Level Corporate Bonds Spread Factor Index

The index is based on Shanghai Stock Exchange corporate bonds rated AAA for the principal and debt. For the first time, an implied rating index for China bonds was introduced into the bond index, and implied ratings were used to further screen constituent securities and strengthen credit risk control over constituent securities.

Index characteristics: The distribution of the securities industry is balanced. It mainly invests in short to medium term bonds, and safety and liquidity are more guaranteed.

Judging from history today, the index's historical performance has been excellent. Since the release of the China Bonds - Medium and High Level Corporate Bonds Spread Factor Index, earnings have surpassed similar indices, and the risk characteristics of earnings are cost-effective.

Based on the present, the favorable credit spread environment index performance. Currently, credit spreads are high since 2020, and interest spreads are highly compensated for credit risk; by analogy with history, interest rate spread trends are expected to help credit bonds surpass the excess returns of relative interest rate bonds.

The Ping An China Bonds - Medium and High Level Corporate Bond Spread Factor ETF (511030) tracks the China Bonds - Medium and High Level Corporate Bonds Spread Factor Index and was listed and traded on March 22, 2019. It is the main type of corporate bond trading in the market.

With ETF Dongfeng, product trading advantages are obvious. Compared with holding a single credit bond, ETF products in the investment market have many advantages such as low investment threshold, low investment costs, high efficiency in the use of capital, more flexible transactions, diversification of investments, and protection of long-term returns. Relying on the ETF product format, the Ping An Medium and High Level Corporate Bond Spread Factor ETF combines the advantages of low fees, high flexibility, and high liquidity.

There are various ways to increase thickness, and there is plenty of room for profit. As the first Smart Beta bond ETF in China, the Ping An Medium and High Level Corporate Bond Spread Factor ETF can obtain excess income through active investment, which has also further enriched market investment tools. The Ping An Medium and High Level Corporate Bond Spread Factor ETF adopted diversified strategies to track targets and further select merit, including bond indexation investment strategies, other bond investment strategies, SME private equity bond investment strategies, asset-backed securities investment strategies, derivatives investment strategies, etc.

Risk warning: This report is a historical data analysis report and does not constitute a recommendation or recommendation for the sector. Monetary policy tightens risks.