Summary of Key Points
The financial management market in the first half of the year experienced a stark contrast between extreme success and failure: Equity-based products showed a significant divergence in performance. Products that tapped into technological trends such as AI and computing power achieved annualized returns of over 200%, while those heavily invested in traditional industries suffered losses of more than 30%. Fixed-income products, which account for 97% of the market, were affected by the weak bond market, causing many “fixed-income+” (products designed to offer a combination of stable returns and some equity gains) to turn into “fixed-income-” (products that actually resulted in losses). Most financial management companies lowered their performance benchmarks, while a few smaller banks raised them against the trend. Financial management firms are now faced with the challenging task of balancing both returns and risk mitigation, with investment research capabilities becoming a critical factor.
I. Equity-Based Financial Management: Technology Trends Drive Success, Traditional Investments Face Failure
The returns on equity-based financial products in the first half of the year were as different as two completely opposite worlds:
- Product Success: Huaxia Finance’s AI computing power index product achieved an annualized return of 229% (meaning a investment of 100,000 yuan would generate over 110,000 yuan in half a year), and the storage chip-themed product also had a return of 218%. These products focused on leading semiconductor companies like Baiwei Storage and SMIC, capitalizing on the global AI boom.
- Traditional Investments Fail: Products targeting traditional industries (such as AI in healthcare, self-care economy, and home building materials) suffered losses of more than 15%, with Huaxia Finance’s AI healthcare-themed product losing 30% (annualized return of -50%). These traditional investments missed the year’s hot trends, leading to continuous declines in stock prices and resulting in losses for the products.
In simple terms: Choosing the right investment track can lead to substantial gains, while choosing the wrong one can result in significant losses.
II. “Fixed-Income+” Products: Not What You Think They Are
Many people purchased “fixed-income+” products with the hope of earning a stable additional return, but this year, many of them ended up losing money:
- Weak Bond Market: The bond market performed poorly overall, causing even R2-level (medium to low risk) products to experience net value declines. For example, an investor’s fixed-income+ product from a certain joint-stock bank lost 1.76% in the past month, falling short of the expected 2.2%-3% return and performing worse than even cash management products.
- Extreme Cases: Some products, such as those from China Merchants Bank and China CITIC Bank, lost nearly 45% and 25% respectively. This is far from “adding value”; it’s more like a complete loss.
The reason? The fixed-income portion (bonds) generated lower returns, and the added equity components failed to capitalize on any hot trends, resulting in double losses.
III. Performance Benchmarks: Most Companies Lower Their Benchmarks, Fewer Banks Raise Them
Recently, many financial management companies have lowered their “performance comparison benchmarks” (the expected return ranges for their products), but a few smaller banks have raised them:
- Why lower the benchmarks? Overall interest rates are low, and fixed-income assets are generating less profit. Companies need to lower their expectations to avoid discrepancies between what they promise and what they actually achieve.
- Why raise the benchmarks for smaller banks? Smaller banks face greater pressure: Their deposits are being drawn away by larger banks and other financial products. Raising expected returns is a way to attract customers or to differentiate themselves through higher targets. However, this also carries risks—if they fail to meet these expectations, customers will be even more dissatisfied.
IV. The Challenge for Financial Management Companies: Balancing Returns and Risk
Financial management firms are currently facing difficulties:
- Declining Fixed-Income Returns: The returns on stable assets like bonds are decreasing, so they need to add equity components to boost returns, but equity is highly volatile and can cause significant net value declines.
- Investment Research Is Key: To balance returns and risk, companies need strong investment research skills, such as identifying the right technology trends or using quantitative strategies to manage risks. Joint-venture financial management firms like BlackRock Jianxin and Goldman Sachs ICBC perform well because of their robust investment research capabilities.
In simple terms: They need to ensure their products generate profits without causing customers’ net values to drop too much.
Tips for Ordinary Investors:
1. Don’t Blindly Follow Hot Trends in Equity-Based Products: While AI investments were profitable this year, the trends may change next year, and chasing high returns could lead to losses.
2. “Fixed-Income+” Is Not Necessarily Stable: Before investing in “fixed-income+” products, carefully consider the proportion of equity components. If your risk tolerance is low, opt for pure fixed-income options.
3. Don’t Rely Solely on Benchmarks: Benchmarks are just expectations; actual returns can vary significantly. Look at the product’s historical performance and the underlying assets.
In summary, this year’s financial management market has been volatile. Be cautious when choosing products and don’t let high returns blind you to potential risks.