On July 11, 2022, the first batch of 8 policy financial bond ETFs (hereinafter referred to as "Government Gold Bond ETFs") were officially approved. The index tracked by these 8 government-government bond ETFs are mainly policy financial bonds and NTD bonds, which are cross-market ETFs, covering different maturity varieties such as 0-3 years, 1-3 years, 1-5 years, 3-5 years, 7-10 years, etc. The first batch of cross-market bond government bond ETFs have been approved, which means that the development of bond ETFs may enter a period of rapid development.
In fact, in the overseas market, bond ETFs are one of the mainstream ETFs, with advantages such as low threshold, strong liquidity, diversified investment, and automatic position adjustment. In China, compared with the development of Bond Index funds, bond ETFs have developed relatively slowly, and there were no on-site version of government bond ETFs before.
China Securities Research Institute data shows that as of July 17, 2022, there were 191 bond index funds in my country, with a total scale of 563.012 billion yuan, most of which are ordinary off-market index funds, and only 13 are bond ETFs with a scale of 33.566 billion yuan, and are mainly concentrated in interest rate bond ETFs, credit bond ETFs and convertible bond ETFs.
The so-called government bond is issued by National Development Bank , China Agricultural Development Bank , China Export-Import Bank , and China Export-Import Bank , guaranteed by the central government, and is called "quasi-treasury bond". Generally speaking, except for the special circumstances, the above three banks do not absorb deposits, and government bonds are their main source of funds. Moreover, based on national credit, government bonds have extremely low default risk, and are characterized by small volatility but high long-term returns.
Wind data shows that government bonds have almost no risk of default in history, especially for the 7- to 10-year varieties, which have a long term and a higher coupon and higher long-term returns.
Judging from the number of issuances in recent years, the issuance rhythm of government bonds is stable. Except for the relatively small at the beginning of the year and the end of the year, the issuance scale is relatively average at other points, which makes it easier for investors to participate at what they think is appropriate. Wind data shows that the current scale of government bonds has reached 21.17 trillion yuan, second only to local government bonds and treasury bonds, accounting for about 15.31%. Among them, institutional investors account for 99% of government bond investment, and the proportion of individual investment is less than 1%. Among institutional investors, banks and bank wealth management are the absolute main force, which to a certain extent is related to the low risk preference of bank-related funds.
Take the first batch of approved government bond ETFs under FuF Fund (transaction code: 511520, subscription code: 511523) as an example. The closely tracked China Bond 7-10-year policy financial bond index mainly invests in varieties with a remaining maturity of 6.5 to 10 years. As of the end of June 2022, the total number of constituent bonds of the index was 34, with a total market value of 5.46 trillion yuan. From the perspective of yield, Wind data shows that as of August 2, 2022, the cumulative yield of China Bond 7-10 government bond index in the past year was 5.37%, while the cumulative yield of China Bond 7-10 Treasury bond index in the same period was 3.97%, with a relatively distinct investment value.
Multiple advantages may usher in better market demand
CICC expects that the sharp fluctuations in the commodity and equity markets this year have led to an increase in the market's demand for low-risk bond funds, and this batch of low-risk government bond ETF funds may usher in better market demand.
sorted out the two advantages of government bond ETFs: First, traditional bond ETFs adopt the operation and management model of physical redemption, but face the problem that the exchange and the interbank market have not been fully connected. Government gold bond ETFs are cross-market bond ETFs, and the underlying indexes cross the interbank and exchange markets; second, they operate in cash subscription and redemption. Compared with physical redemption model bond ETFs, they not only cover more bond varieties, but also optimize investors' redemption experience. Among them, under the physical redemption model, the basket of bonds obtained by investors after redemption may have low liquidity and poor credit quality. Cash redemption bond ETFs can help investors directly obtain cash after redemption while ensuring redemption efficiency.
In addition to the above common advantages, compared with ordinary bonds, bond funds, and other short-term indexes, the advantages of government bond ETF are also reflected in the following aspects:
is more convenient than bond assets: First of all, the trading of government bond ETF is more convenient. Bonds mainly pass through the over-the-counter market and require one-to-one inquiry. Government bond ETFs can be traded on the market, and the liquidity is better than most bonds, and T+0 transactions can be achieved; secondly, the threshold of government bond ETFs is low, meeting the needs of small investors (including individual investors) and investors who are inconvenient to open interbank bond accounts; at the same time, bond ETFs are distributed in a diversified manner by tracking indexes to reduce the investment and research costs caused by bond selection; in addition, they have tax-free advantages for proprietary funds.
is compared with ordinary bond funds: government bond ETF has higher trading efficiency. It can not only apply for redemption in the primary market, but also buy and sell in the secondary market to achieve T+0 transactions. Overall, liquidity is better; secondly, the management fee is lower than that of active funds and has higher transparency. Government bond ETF publishes subscription and redemption lists every day, which is easier to track the bond holdings .
compared with other medium and short-term indexes: government bond ETF has coupon advantages, better bottom liquidity, and low tracking error; at the same time, the tool attributes are stronger, which is conducive to the allocation of major asset classes.
Not only that, it is reported that government bond ETFs are expected to be included in the pledge database in the future, which will be more conducive to its use as a tool for major asset allocation.
Overall, government bond ETF is suitable for the following three types of target customer groups: First, idle funds for individual investors and private equity products, with small fluctuations compared with stocks and stable expected returns; second, suitable for mixed stocks and bond products, allocating government bond ETFs to hedge stock market risks with ; third, major asset allocation customers need to increase bond allocation.
Structural easing is expected to continue
From the recent market trend, the post-epidemic recovery has weakened, monetary easing is expected to continue, and the pressure to stabilize growth throughout the year is relatively high. monetary policy is low probability of tightening, and the return of capital interest rates will not be achieved overnight, and structural easing is expected to continue. Before monetary policy tightens, yields do not have obvious upward space, and there is a high probability that they will still fluctuate. If the easing expectations rise again, interest rates still have downward space.
Therefore, at present, government bond ETF (trading code: 511520, subscription code: 511523) is a good investment choice, including ETFs that can trade on-site and stable investment targets. They can be held as a base position for a long time, and because of their long term and stronger elasticity, they can be used as major asset allocation tools and A-share risk hedging tools for short-term trading. Behind the government gold bond ETF is the Fuguo Fund Management operation, one of the "old ten" fund management companies. At present, Fuguo Fund has formed a development pattern of "three horses" of equity, fixed income and quantitative progress. Its fixed income team took the lead in building a three-level credit risk prevention and control system with the responsibility system of credit judges, credit research departments, and fund managers in the industry, striving to do a good job in credit bond risk prevention and control to the greatest extent.
Based on this, fixed income funds have performed well in recent years. Haitong Securities data shows that the fixed income yields in the past two and five years have been 9.79% and 29.45%, respectively, ranking third and fourth among large fixed income fund companies, and their long-distance running strength is highlighted.
In addition, the proposed fund manager of the Zhengjin Bond ETF is led by Zhu Zhengxing, who has rich experience in managing passive index bond products. It is reported that Zhu Zhengxing is a master's degree in , School of Economics and Management, Tsinghua University, with 8 years of securities experience and nearly 2 years of investment management experience. As of June 30, 2022, there are currently 5 fixed income products under management, with a management scale of nearly 11 billion yuan. On July 11, 2022, the first batch of 8 policy financial bond ETFs (hereinafter referred to as "Government Gold Bond ETFs") were officially approved. The index tracked by these 8 government-government bond ETFs are mainly policy financial bonds and NTD bonds, which are cross-market ETFs, covering different maturity varieties such as 0-3 years, 1-3 years, 1-5 years, 3-5 years, 7-10 years, etc. The first batch of cross-market bond government bond ETFs have been approved, which means that the development of bond ETFs may enter a period of rapid development. In fact, in the overseas market, bond ETFs are one of the mainstream ETFs, with advantages such as low threshold, strong liquidity, diversified investment, and automatic position adjustment. In China, compared with the development of Bond Index funds, bond ETFs have developed relatively slowly, and there were no on-site version of government bond ETFs before. China Securities Research Institute data shows that as of July 17, 2022, there were 191 bond index funds in my country, with a total scale of 563.012 billion yuan, most of which are ordinary off-market index funds, and only 13 are bond ETFs with a scale of 33.566 billion yuan, and are mainly concentrated in interest rate bond ETFs, credit bond ETFs and convertible bond ETFs. The so-called government bond is issued by National Development Bank , China Agricultural Development Bank , China Export-Import Bank , and China Export-Import Bank , guaranteed by the central government, and is called "quasi-treasury bond". Generally speaking, except for the special circumstances, the above three banks do not absorb deposits, and government bonds are their main source of funds. Moreover, based on national credit, government bonds have extremely low default risk, and are characterized by small volatility but high long-term returns. Wind data shows that government bonds have almost no risk of default in history, especially for the 7- to 10-year varieties, which have a long term and a higher coupon and higher long-term returns. Judging from the number of issuances in recent years, the issuance rhythm of government bonds is stable. Except for the relatively small at the beginning of the year and the end of the year, the issuance scale is relatively average at other points, which makes it easier for investors to participate at what they think is appropriate. Wind data shows that the current scale of government bonds has reached 21.17 trillion yuan, second only to local government bonds and treasury bonds, accounting for about 15.31%. Among them, institutional investors account for 99% of government bond investment, and the proportion of individual investment is less than 1%. Among institutional investors, banks and bank wealth management are the absolute main force, which to a certain extent is related to the low risk preference of bank-related funds. Take the first batch of approved government bond ETFs under FuF Fund
Multiple advantages may usher in better market demand
CICC expects that the sharp fluctuations in the commodity and equity markets this year have led to an increase in the market's demand for low-risk bond funds, and this batch of low-risk government bond ETF funds may usher in better market demand.
sorted out the two advantages of government bond ETFs: First, traditional bond ETFs adopt the operation and management model of physical redemption, but face the problem that the exchange and the interbank market have not been fully connected. Government gold bond ETFs are cross-market bond ETFs, and the underlying indexes cross the interbank and exchange markets; second, they operate in cash subscription and redemption. Compared with physical redemption model bond ETFs, they not only cover more bond varieties, but also optimize investors' redemption experience. Among them, under the physical redemption model, the basket of bonds obtained by investors after redemption may have low liquidity and poor credit quality. Cash redemption bond ETFs can help investors directly obtain cash after redemption while ensuring redemption efficiency.
In addition to the above common advantages, compared with ordinary bonds, bond funds, and other short-term indexes, the advantages of government bond ETF are also reflected in the following aspects:
is more convenient than bond assets: First of all, the trading of government bond ETF is more convenient. Bonds mainly pass through the over-the-counter market and require one-to-one inquiry. Government bond ETFs can be traded on the market, and the liquidity is better than most bonds, and T+0 transactions can be achieved; secondly, the threshold of government bond ETFs is low, meeting the needs of small investors (including individual investors) and investors who are inconvenient to open interbank bond accounts; at the same time, bond ETFs are distributed in a diversified manner by tracking indexes to reduce the investment and research costs caused by bond selection; in addition, they have tax-free advantages for proprietary funds.
is compared with ordinary bond funds: government bond ETF has higher trading efficiency. It can not only apply for redemption in the primary market, but also buy and sell in the secondary market to achieve T+0 transactions. Overall, liquidity is better; secondly, the management fee is lower than that of active funds and has higher transparency. Government bond ETF publishes subscription and redemption lists every day, which is easier to track the bond holdings .
compared with other medium and short-term indexes: government bond ETF has coupon advantages, better bottom liquidity, and low tracking error; at the same time, the tool attributes are stronger, which is conducive to the allocation of major asset classes.
Not only that, it is reported that government bond ETFs are expected to be included in the pledge database in the future, which will be more conducive to its use as a tool for major asset allocation.
Overall, government bond ETF is suitable for the following three types of target customer groups: First, idle funds for individual investors and private equity products, with small fluctuations compared with stocks and stable expected returns; second, suitable for mixed stocks and bond products, allocating government bond ETFs to hedge stock market risks with ; third, major asset allocation customers need to increase bond allocation.
Structural easing is expected to continue
From the recent market trend, the post-epidemic recovery has weakened, monetary easing is expected to continue, and the pressure to stabilize growth throughout the year is relatively high. monetary policy is low probability of tightening, and the return of capital interest rates will not be achieved overnight, and structural easing is expected to continue. Before monetary policy tightens, yields do not have obvious upward space, and there is a high probability that they will still fluctuate. If the easing expectations rise again, interest rates still have downward space.
Therefore, at present, government bond ETF (trading code: 511520, subscription code: 511523) is a good investment choice, including ETFs that can trade on-site and stable investment targets. They can be held as a base position for a long time, and because of their long term and stronger elasticity, they can be used as major asset allocation tools and A-share risk hedging tools for short-term trading. Behind the government gold bond ETF is the Fuguo Fund Management operation, one of the "old ten" fund management companies. At present, Fuguo Fund has formed a development pattern of "three horses" of equity, fixed income and quantitative progress. Its fixed income team took the lead in building a three-level credit risk prevention and control system with the responsibility system of credit judges, credit research departments, and fund managers in the industry, striving to do a good job in credit bond risk prevention and control to the greatest extent.
Based on this, fixed income funds have performed well in recent years. Haitong Securities data shows that the fixed income yields in the past two and five years have been 9.79% and 29.45%, respectively, ranking third and fourth among large fixed income fund companies, and their long-distance running strength is highlighted.
In addition, the proposed fund manager of the Zhengjin Bond ETF is led by Zhu Zhengxing, who has rich experience in managing passive index bond products. It is reported that Zhu Zhengxing is a master's degree in , School of Economics and Management, Tsinghua University, with 8 years of securities experience and nearly 2 years of investment management experience. As of June 30, 2022, there are currently 5 fixed income products under management, with a management scale of nearly 11 billion yuan.
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