It Is Expected That The Annualisation Of More Than 5% Is Not Easy, And High Yield Needs To Take Risks

More than a month since the year of the ox, the A-share market has been greatly shaken, and equity funds have suffered "Waterloo".

The "fixed income +" fund, which is regarded as "both attack and defense", has been favored by a large number of investors.

However, people in the industry are worried that the "fixed income +" fund will become another trap for the people because of the insufficient understanding of the "fixed income +" fund.

In fact, when the stock market is not good, it may not be a good time to allocate "fixed income +". "Fixed income plus" is actually the allocation of some equity products on the basis of the allocation of fixed income products such as bonds. Therefore, the main investment opportunity of "fixed income +" is to allocate when the market is going well. " Yang Delong, chief economist of Qianhai open source fund, said.

If only in the short term, such as this year, when the stock market falls sharply, the "fixed income +" fund may not be able to match the fixed income products such as bond funds, "fixed income +" may become "fixed income -", but from the perspective of historical data, when the time is extended to three years, five years and ten years, the "fixed income +" fund has achieved significantly higher returns than fixed income products.

The focus of attention in this period is: when the equity market is not good, turning to "fixed income +", is it really possible to "+"?

"Fixed income plus" phenomenon of "money loss"

The so-called "fixed income plus" strategy is an investment strategy that began to flourish last year, that is, the main investment in fixed income, supplemented by equity to strengthen portfolio income. However, in fact, the "fixed income plus" strategy appeared more than ten years ago, but there was no such name at that time.

Liu Youhua, research director of private placement network, explained that the essence of the "fixed income plus" strategy is to allocate some equity products on the basis of allocating fixed income products such as bonds under the premise of controllable overall risk, so as to achieve the effect of increasing income.

"When the market is good, equity investments such as stocks can contribute excess returns to the" fixed income + "strategy, while when the market is not good, the return brought by the" fixed income + "strategy can reduce the loss of the equity market to a certain extent, which is an aggressive and defensive strategy." Liu Youhua said,

In the investor's impression, "fixed income +" funds, both in terms of income and withdrawal, are higher than fixed income funds and lower than equity funds.

In fact, many people think that "fixed income plus" is "a fund with a little higher income than the one-year bank financing", and it should have at least 5% of the annual income.

Is that right?

According to an analysis by a senior fund person, in terms of long-term returns, for example, from the wind's mixed fund index of partial debt, the average annual compound growth rate of the past 10 years is 6.67%, which is indeed higher than the current one-year bank financing, but the "fixed income +" fund is also cyclical, just like the partial equity fund. For example, in the past two years, the yield of the mixed fund index of partial bonds has exceeded 10% for two consecutive years, but in 2018, the return rate of the mixed fund index of partial bonds is only 0.22%. Although it is still a fund meeting the requirements of absolute return, it is certainly two concepts with the annual stability of more than 5% in the minds of the public.

"If you think that the fixed income plus fund must have a yield of more than 5% this year, this expectation itself is wrong. For example, if the bond market is performing normally this year, and the return is 4%, but the stock market is not performing well, it is likely that the stock market will cause some damage to the original four points of return. For example, the final yield of 3.5% and 3% will change the "fixed income +" into "fixed income -" The Fund said.

In fact, since the year of the ox, a large number of "fixed income +" funds have become "fixed income -". Judging from the performance of "fixed income +" funds this year, it is likely that they will not achieve the expected return of more than 5% of many investors.

Before we further explain "fixed income +", we need to do some popular science on the classification of "fixed income +".

According to Zhang Ting, chief strategist of GESHANG financial management, "fixed income +" can be divided into different directions according to the assets and proportion of "+":

1) Pure bond fund mainly adopts "fixed income + convertible bond";

2) The secondary bond base mainly adopts "fixed income + convertible bond + stock";

3) Partial bond hybrid fund mainly adopts "fixed income + convertible bond + common stock + stock index futures / treasury bond futures", etc.

Find out the ability to control the withdrawal

"Generally speaking, the volatility of partial bond hybrid funds is the largest, followed by secondary bond base, and pure bond fund is the lowest." Zhang Ting said.

According to the above classification, we select the partial bond hybrid fund which is the most popular among ordinary investors in the "fixed income +" fund as the research object, and take it as a typical example of Equity Fund -- partial stock mixed fund, and the typical representative of Fixed Income Fund -- medium and long-term pure bond fund, to make a comparison of return and withdrawal.

The data shows that since the year of the ox (2021-2-18 to 2021-3-24), the average return of partial bond hybrid fund is - 2.92%, and the average return of partial bond hybrid fund is - 0.43% since the beginning of this year (from the beginning of the year to March 24).

However, the average return of partial bond hybrid funds -- from February 18, 2021 to March 24, 2021 -- has decreased by 15.21% since the year of the ox and by 6.45% since the beginning of this year (from the beginning of the year to March 24).

In the year of A-share market correction, the performance of partial bond hybrid fund is obviously better than that of partial stock mixed fund.

From the withdrawal point of view, the largest withdrawal of partial bond funds this year is 3.50%, while the maximum withdrawal of partial equity funds this year is 16.42%. There is also a huge difference between them. When A-share performance is not good, the withdrawal performance of partial bond funds is obviously better than that of partial equity funds.

However, if the "fixed income plus" fund is compared with the fixed income fund, it is another situation.

Take the medium and long-term pure bond funds of fixed income funds as an example. Since the year of the ox (2021-2-18 to 2021-3-24), the average return of medium and long-term pure bond funds is positive, which is 0.47%. Since the beginning of this year (from the beginning of the year to March 24), the average return of medium and long-term pure bond funds is 0.58%. Medium and long-term pure bond funds have achieved positive returns in both regions.

And since this year, the largest withdrawal of medium and long-term pure bond funds is only 0.41%.

In this regard, Yang Delong said: "recently, the A-share market has fallen sharply, and the performance of" fixed income + "funds has also seen a relatively large withdrawal, which reflects the risk of" fixed income + "funds. That is, "fixed income plus" does not mean that there is no risk of loss. It is just that compared with equity funds, the risk of loss is smaller; however, compared with fixed income products, the risk of loss is greatly increased, so investors should choose the appropriate "fixed income +" products according to their own risk tolerance. "

The logic of "fixed income +" in long-term investment

For many investors, "fixed income +" funds are not worth investing if they can not realize the annual return of bank financial products which are higher than that of principal guaranteed income. At present, the expectation of "fixed income +" is about 5% per year.

In fact, since this year, the performance of "fixed income plus" funds has not been satisfactory to investors - after all, compared with fixed income funds, it has greater volatility, but it has lower returns - but in the long run, there is a great probability that "fixed income +" funds can really achieve "fixed income +", that is, higher returns than fixed income products.

From a longer time dimension, we can see the typical "fixed income +" strategy -- the medium and long-term performance of partial bond hybrid funds.

According to wind data, the average return of partial bond hybrid funds is 12.96% in the last one year, 21.68% in the last two years, 26.21% in the last three years, 36.04% in the last five years and 95.76% in the last 10 years.

According to the above data, no matter take the recent one year, two years, three years, five years and ten years, the average annual return of partial bond hybrid funds is more than 7%.

However, this does not mean that "fixed income +" funds can achieve an average return of 7% every year. For example, in 2018, the average return of partial bond hybrid funds was - 0.42%. That year was the poor performance of the stock market and the biggest withdrawal of equity products except 2015.

Compared with the extremely poor situation in 2018, the average return of partial bond hybrid fund in 2019 and 2020 will reach 11.87% and 14.47% respectively, and the average return for two consecutive years is more than 10%.

In fact, the performance of "fixed income +" funds is closely related to the equity market. 2018 is a bear market for a shares, and the performance of "fixed income +" funds is also poor. In 2019 and 2020, it is a bull market for a shares, and the performance of "fixed income +" funds is also very good.

In response, a fund source said: "you need to have a pendulum thinking. If you lock the fixed income plus fund for three years, there is a considerable probability that it can give you the value of good asset allocation."

This year, it is possible that "fixed income +" will face difficulties in achieving the expected return of investors.

From the data point of view, the first quarter is coming to an end, the average return of partial bond hybrid fund is still negative.

So, is it worth investing in "fixed income plus" funds?

From the perspective of three years, in the history of the past 10 years, there has been a bull bear conversion between debt bull and stock bull, debt bear and stock bear within three years. In the process of conversion, the "fixed income +" fund will play a better defense and offensive "both offensive and defensive" role.

Compared with the fixed income plus fund, the three-year and five-year financial insurance products are not as good as the fixed income plus fund in terms of long-term return.

"If you buy a fixed income plus fund now, it may be 6 months or 12 months. I suggest you look at it as a 36 month lock period. You don't have to look at it. If you buy it for three years, I think there is a considerable probability that it can give you the value of asset allocation The Fund said.

Liu Youhua believes that "the fixed income plus" strategy is a good investment choice for investors who are willing to take medium and low risks and want to obtain medium returns. "

He Jinlong, general manager of Meili investment, said, "we believe that" fixed income plus "is worth holding and investing for a long time. On the whole, the risk return ratio of "fixed income +" is relatively high. On the one hand, the "fixed income +" products are characterized by debt bottoming and equity gain, which are both offensive and defensive, and match the risk tolerance of prudent investors; on the other hand, in addition to equity bonds, the "fixed income +" products can also obtain diversified benefits from the fields of innovation, fixed value-added, convertible bonds and commodities. In the market shock correction, choosing the "fixed income +" strategy with both offensive and defensive characteristics, committed to pursuing absolute returns and striving to strictly control the withdrawal, is one of the sharp tools that can help you cross the bull and bear. "