On September 4th, Finance Association News (Reporter Gao Ping) recently, under the volatility of the bond market, the net value of some fixed-income wealth management products has experienced a significant retracement, once again attracting market attention. Some investors have reflected that after August 12th, some bank wealth management products had negative returns for a single day, and the net value of bank wealth management products saw a significant retracement around the end of August, with a significant decline in returns for the entire month of August.

Under the volatility of the bond market, fixed-income wealth management products that primarily invest in bonds are inevitably affected. Today, a wealth manager of a joint-stock bank told Finance Association News that the adjustment of the bond market in August had a temporary impact on wealth management returns. However, since September, fixed-income wealth management products and fund net values ​​directed towards bond investments have generally increased.

Looking ahead, industry insiders told Finance Association News that the bond market may continue to narrow fluctuations in the short term. In the long term, the bond market has support logic for upward movement, and the bond market is unlikely to experience a widespread and sustained decline like the "discounted tide" period. The overall improvement of the bond market is still beneficial to bank wealth management products that are anchored by fixed-income assets. Since the "discounted tide" in 2022, wealth management companies have paid more attention to the overall risk management of their products.

Some bank wealth management products experienced multiple rounds of net value retracement in August, and the annualized rate of return for fixed-income wealth management products decreased significantly in the past month.

"On August 27th, the daily return of a bank wealth management product I held showed a loss, which is also the second loss since August 12th. Looking at the entire month of August, the number of days this product had no returns significantly increased." Today, a bank wealth management investor in Beijing told Finance Association News. It is reported that this wealth management product is a fixed-income wealth management product and was established on June 4th, with a performance benchmark of 2.2%-4%. Data shows that the annualized rate of return for this wealth management product since its establishment is 2.92%, but the annualized rate of return in the past month is only 1.76%.

The loss of the above-mentioned wealth management product is mainly due to the volatility of the bond market. Research reports from brokerage firms show that from August 26th to 30th, bond market yields rose first and then fell, and the net value of wealth management products fell again. However, the retracement of this adjustment did not reach the level of August 12th. In fact, around mid-August, many investors reported significant losses in some bank wealth management products.

"In the past month, due to the decline in the bond market, many bond investment wealth management products have experienced consecutive periods with no returns or negative returns." Explaining the changes in returns for certain bank wealth management products, a bank customer manager told Finance Association News.

In this regard, Wang Yifeng, Chief Analyst of Everbright Securities Financial Industry, said that the funding situation in July continued to be relatively loose, with a significant decline in broad-spectrum interest rates, and capital gains provided strong support for wealth management performance. In early August, the market had strong expectations for further interest rate cuts, but with multiple factors resonating, such as the central bank repeatedly warning of the risks of long-term bonds, the Securities Association initiating self-discipline investigations on four rural commercial bank institutions, and some institutions selling long-term interest rate bonds, the bond market volatility increased, especially the adjustment amplitude of credit bonds was significant.

The bond market has experienced increased volatility, causing fluctuations in wealth management net asset values and a decline in wealth management returns. According to Wang Yifeng's calculations, the annualized yield of fixed-income wealth management products in the middle and late August fell below 2%. As of August 23, the annualized yield of fixed-income wealth management products in the sample for almost one month dropped to 1.4%, indicating a relatively large decline. Data from Pu Yi Standard also shows that, based on yield indicators, the annualized yield of fixed-income wealth management products in the past month has declined compared to July under the impact of the bond market decline as of August 21, 2024.

The growth of wealth management scale in August may follow a "peak and then decline" pattern. Industry insiders believe that the overall volatility of net asset values is still within a controllable range.

The changes in yield in August also put pressure on the scale of wealth management. Wang Yifeng said that considering the overall good performance of wealth management returns in the previous period, it is still possible to demonstrate good performance by showing the annualized yield since establishment through channels. The yield is expected to show good results, which is conducive to maintaining the stability of wealth management scale. "However, since the middle and late August, the impact of seasonal factors, yield downturn under bond market disturbances, and other multiple factors, the growth of wealth management scale has shown the feature of "peak and then decline."" added Wang Yifeng.

The research report from Huaxi Securities also shows that on August 26, the adjustment amplitude of credit bonds expanded, and the net asset values of medium and long-term and short-term wealth management products fell again, putting pressure on the scale of wealth management. At the same time, some of the wealth management funds may flow back to the parent bank at the end of the month, further contributing to the decline in scale. The outstanding scale from August 26th to 30th decreased by 303.6 billion yuan compared to the previous month, to 30.09 trillion yuan.

For the recent adjustment in the bond market, which has caused a retreat of net asset values in some bank wealth management products, a bank wealth management manager mentioned to Cailian Press in late August that there have been multiple occurrences in history of bond market adjustments leading to significant retreats in net asset values of certain wealth management products. In the past, this situation could last for up to two months, and in the short term, it could last for 1-2 weeks. According to researchers from Pu Yi Standard, compared with previous cases, the overall increase in bond yields this time is relatively small, the duration of the increase is short, and there has not been a significant and sustained increase in yields as during the market turmoil period, so the overall situation is still within a controllable range.

In addition, from the perspective of risk indicators, although the increased volatility in the bond market in August has to some extent increased the instability of wealth management product returns, the maximum drawdown and volatility in the past month have only slightly increased compared to the previous month. Compared with the situation during the period of market turmoil when risk indicators were "several times" higher than in August, the overall risk situation of fixed-income products in August is relatively manageable, within a normal fluctuation range. With the subsequent stabilization of the bond market, it is expected that the risk will not further expand.

Zhou Maohua, a macro researcher at Everbright Bank's Financial Market Department, also told Cailian Press that the adjustment in the bond market has affected the net asset values of fixed-income asset management products, and if some products are discovered to be at a relatively high price level, the possibility of them falling below par value might arise. However, the probability of a return of the period of widespread weak bond prices is low. The main reason is that there is still support in the domestic bond market, with measures such as the central bank launching buy and sell of government bonds aimed at avoiding the irrational development of potential risks in the bond market, promoting the return of bond market prices to a reasonable range, and facilitating the efficient allocation of market resources. Looking at the current domestic fundamentals, prices, macro policies, declining deposit rates, and global market fluctuations, the bond market is still supported.

For investors, how should they deal with the fluctuation of wealth management returns? A bank's wealth management subsidiary suggests that if investors value stability, they may consider a stable and low volatility product line in the recent period. If investors are looking for some flexibility in returns, the bond market correction may be a good opportunity for allocation. Since the beginning of this year, the bond market has continued to strengthen under the influence of various factors, but there have been several corrections during this period, which all recovered quickly and continued to rise.

Looking ahead to the future bond market, Orient Securities predicts that the bond market will continue to fluctuate within a narrow range in the short term, with the fluctuation range of the 10-year treasury yield between 2.1% and 2.3%. Pu Yi Standard believes that the bond market correction is mainly influenced by regulatory measures and does not have a basis for sustained downward movement. From a macro perspective, the current economic fundamentals have not undergone significant changes, and the cost-effectiveness of bond allocation is still high in the context of asset shortage. The bond market has upward support logic, and it is unlikely that the bond market will experience a wide and sustained decline like the period of "breaking the net".