"Facts", a book that teaches you how to avoid emotional decision-making, written by Swedish Hans Rosling, and has been sold in 20 countries since its publication. The author believes that only by recognizing emotional instincts can one get rid of irrational troubles. In work and life, data should be used as effective as possible to get close to the truth and let the data speak by itself.
Commander feels that this should be more the case in investment. Whether it is facing a bear market in "finding the bottom" or a bull market in "flying", we should not play with emotion to compete for winning or losing, but should also pay attention to the combination of stocks and bonds and flexibly adjust the position ratio of the two types of assets. In this way, only by investing can you be free to attack and defend.
Among several types of pure bond funds, medium and long-term pure bond funds have the distinctive characteristics of "low risks and stable returns", and are an important product for allocating low-risk assets. Wind data shows that as of April 16, 2022, the average annualized return of the medium and long-term pure bond fund index (885008.WI) since 2013 was 4.9%, and the annualized Sharp ratio was 2.1. Among all types of funds, the Sharp ratio is much higher than other types of funds (except money funds); the cumulative yield in the past three years was 11.3%, with a maximum drawdown of 1.7%, and the risk-return ratio indicator is also better.
So, when we usually choose medium- and long-term pure bond funds, what effective historical data do we need to focus on? Today, the commander will teach you how to quickly select excellent medium- and long-term pure bond funds from 4 simple and easy-to-understand indicators.
indicator 1: High annual win rate
Judging from the historical performance of the bond market, there have been three times in the past decade that the annual yield performance has been poor. In mid-2013, due to the central bank's tightening beyond expectations, the yield on treasury bonds continued to rise, resulting in a general decline in bond prices. The yield on the bond fund index that year was only 0.97%; in 2016 and 2017, the overall performance of bond funds was also poor, up 0.39% and 2.01% respectively. As a stable medium- and long-term pure bond fund, no matter whether the bond market is in a bull market or a bear market, it should at least achieve positive returns.
Indicator 2: Control and withdrawal excellent
Why do investors need to allocate bond assets? The main reason is that the risk is low, and we also hope that long-term yields can outperform CPI inflation. Therefore, when choosing bond funds, most investors not only pursue performance returns, but actually pay more attention to the performance of drawdown control. If there are two bond funds, one has a historical annualized yield of 10%, with a maximum drawdown of 3%; the other has a historical annualized yield of 8%, with a maximum drawdown of 1.5%, I believe most people will prefer the latter.
Indicator 3: Average annualized high
After comparing the above two indicators, let’s compare the historical annualized rate of return. It should be noted that when comparing the average annualized rate of return, try to put it in the same time dimension as possible, rather than comparing it based on the product since its establishment. The commander has also analyzed that the bond market in 2013, 2016 and 2017 is generally poor. If Bond Fund A was established on February 14, 2013 and Bond Fund B was established on June 14, 2016, we will compare the average annualized yields in the five-year period from 2017 to 2021.
Indicator 4: High volatility assets account for
Finally, let’s compare the proportion of high-band assets. Senior investors all know that in addition to factors such as bond duration, credit risk level, bond leverage, etc., convertible bonds and even a small amount of stocks (such as secondary bond funds/mixed bond funds). Generally speaking, the total allocation of stocks and convertible bonds accounts for less than 5%, and it can also be considered as a broad pure bond fund. Therefore, when choosing medium- and long-term pure bond funds, you may wish to compare the proportion of high-volatility assets to better match your own risk-return ratio.
For example, in the figure below, Penghua Fenglu Bond Fund's 2021 annual report shows that the stock investment portfolio accounted for 0% during the reporting period; while Fuguo Xintianfeng Bond Fund, the cumulative purchase amount in 2021 exceeded the initial net asset value of the fund or the top 20 stocks, including Xinfengming, Zijin Mining and Huali Steel, accounting for 1.59% of the fund's net asset value at the beginning of the period, and the cumulative selling or the top 20 stocks accounted for 1.73% of the net asset value at the beginning of the period. Both are medium and long-term bond funds, the proportion of high-volatility assets of Fuguo New Tianfeng is slightly higher.
Tips: configures a very small number of high-volatility assets, which does not mean that the drawdown control is definitely not good, but it will increase the yield elasticity of bond funds.
In addition to the above two excellent pure bond funds, the commander then selected a few equally excellent medium- and long-term pure bond funds for reference based on the above four simple and easy-to-understand indicators. Let’s take a look at their historical risk and return characteristics. The following data sources: Choice, fund annual report; if there are multiple categories of shares, all take Class A as an example, the data is as of April 21, 2022.
Penghua Fengrong Fixed Bond (000345)
was established on November 19, 2013. It is a one-year regular open fund. The next opening period is from April 25 to April 29, 2022. Since its establishment, all the 8 complete years have positive returns, with the annual yields in 2014-2021: 10.54%, 9.37%, 2.92%, 4.81%, 16.79%, 11.29%, 5.80%, and 4.91%, with an average yield of 8.30%. The maximum drawdown in the past five years is 0.71%, and the return drawdown in the past year is 14.72. In 2021: Convertible bonds account for 1.51% of the fund's net asset value, and stock portfolio accounts for 0%.
China Merchants Industrial Bond A (217022)
was established on March 21, 2012. Since its establishment, all of the 9 complete years have positive returns, of which the annual yields in 2014-2021 are: 21.42%, 11.85%, 4.17%, 3.02%, 8.64%, 6.71%, 4.17%, and 6.50%, with an average yield of 8.31%. The largest drawdown in the past five years is 1.39%, and the return drawdown in the past year is 15.07. In 2021: Convertible bonds account for 0.35% of the fund's net asset value, and stock portfolio accounts for 0%.
GF Pure Bond Bond A (270048)
was established on December 12, 2012. Since its establishment, all of the 9 complete years have positive returns, of which the annual yields in 2014-2021 are: 19.24%, 15.32%, 0.88%, 1.79%, 6.57%, 2.63%, 4.46%, and 5.72%, with an average yield of 7.08%. The largest drawdown in the past five years is 1.87%, and the return drawdown in the past year is 8.22. In 2021: Convertible bonds account for 0% of the net asset value of the fund and 0% of the stock portfolio.
Morgan Stanley Enhanced Bond A (000024)
was established on March 26, 2013. Since its establishment, all of the 8 complete years have positive returns. The annual yields in 2014-2021 are: 14.53%, 11.54%, 3.95%, 2.01%, 6.32%, 5.94%, 6.33%, 3.82%, and the average yield is 6.80%. The maximum drawdown in the past five years is 0.77%, and the return drawdown in the past year is 5.43. In 2021: Convertible bonds account for 1.42% of the fund's net asset value, and stock portfolio accounts for 0%.
Galaxy Leading Bond (519669)
was established on November 29, 2012. Since its establishment, all of the 9 complete years have positive returns, of which the annual yields in 2014-2021 are: 14.25%, 12.41%, 3.16%, 4.55%, 6.82%, 4.16%, 3.85%, and 4.55%, with an average yield of 6.72%. The largest drawdown in the past five years is 1.22%, and the return drawdown in the past year is 8.36. In 2021: Convertible bonds account for 1.29% of the net asset value of the fund, and the stock portfolio accounts for 0%.
is OK. Combined with the above 4 simple and easy-to-understand indicators, you can select high-quality pure bond funds. Have you learned it? As long as you give enough time, every grass can grow into a towering tree. The same is true for the wealth path. Do not be eager for quick success or instant profit. When the stock market is not good, it will develop lewdly.
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