A few days ago, many commercial banks and bank wealth management subsidiaries including Bank of China Wealth Management , China Merchants Bank Wealth Management, Everbright Wealth Management, and Bank of Communications Wealth Management issued financial product announcements, lowering the performance benchmarks of multiple wealth management products, with the product reduction range ranging from 20 to 50 BP.
At the same time, the average performance benchmark for financial product issuance has also shown a downward trend in the recent period. Huabao Securities Research Report shows that from the performance benchmark for the issuance of net value wealth management products in September, the performance benchmark for fixed income products fell by 14BP year-on-year, and the performance benchmark for mixed products fell by 6BP year-on-year.
downgraded the performance benchmark. Industry insiders believe that the returns of wealth management products are affected by market volatility, and lowering the performance benchmark will help guide investors to have reasonable expectations for returns.
In the context of net value transformation, how should investors view performance benchmarks and their changes?
1 Financial management net value fluctuates, lowering the benchmark to guide expectations
Since October, more than 5 banks have announced on their official websites that they have lowered the performance benchmarks of some of their financial management products.
Taking Bank of China Wealth Management as an example, the company issued an announcement on the adjustment of the performance benchmarks of three wealth management products, including "BOC Wealth Management-Stable Wealth (Quarterly Gain) 012". The announcement stated that "according to changes in market conditions", it is planned to adjust the performance benchmark of the product from October 13, 2022. Among them, the performance benchmark of "BOC Wealth Management-Stable Wealth (Quarterly Gain) 012" was adjusted from "from 2.85%-4.15% to 2.6%-3.8%", and the other two products were both reduced by 30 basis points.
This year, according to incomplete statistics from Yinshi Finance, Bank of China Wealth Management has lowered the performance benchmark for more than 40 wealth management products.
In October, many wealth management products of China Merchants Bank have also announced new performance benchmarks. Taking the "China Merchants Bank Wealth Management New Enhancement Strategy for New Enhancement Strategy for Season 1 Mixed Financial Management" as an example, the newly released third investment cycle performance benchmark is 2% to 4%, while the previous 2nd period was 2.5% to 3.5%, which was downgraded to 50BP this time.
"The performance benchmark is calculated by the product manager based on the investment scope, investment strategy, asset allocation plan of the financial product, and comprehensively considering factors such as the market environment." In the financial product manual, Bank of China Wealth Management pointed out that the performance benchmark is expressed by the annualized rate of return, which is the investment target set by the product manager for the product based on factors such as "product nature, investment strategy, past experience". It is only used to evaluate investment results and calculate performance rewards, and does not represent the future performance and actual returns of the product, and does not constitute the product manager's commitment or guarantee for the returns of this financial product.
"Recent market interest rate movement and equity market fluctuations will affect the income level and net value fluctuations of wealth management products." Zhou Maohua, a macro researcher at the Financial Markets Department of Everbright Bank, said that the bank's lowered performance benchmarks are mainly related to recent market fluctuations. Specifically, the recent decline in market interest rates may lead to a decline in the return on stable assets allocated in financial management plans. At the same time, the stock market fluctuated and the new stocks broke the issue price seriously, and many stocks, funds, etc. that may be allocated in financial products were also in losses.
Judging from the net value of wealth management products in September, Yinshi Finance, according to the incomplete statistics of Tonghuashun iFinD data, among the wealth management products issued by bank wealth management subsidiaries, there were 5,393 wealth management products with unit net value at the end of September than the unit net value at the end of August, accounting for 34.6%. The net asset value of bank wealth management products ushered in another wave of decline.
"After the transformation of wealth management net value, the net value of wealth management products is greatly affected by the market environment. Institutions adjust the income benchmark according to changes in the market environment, guide investors to make reasonable expectations, and also help reduce individual wealth management returns deviating from the reference benchmark and being complained by investors." Zhou Maohua said that institutions should provide product introductions to allow investors to truly understand the meaning of net value; strive to ensure that the appropriate products are recommended to the right investors, and strengthen investor education.
2 You cannot just look at the performance benchmark.
With the transition period of the new asset management regulations ending, the net value of wealth management products has been transformed into a comprehensive net value, and the traditional "expected rate of return" has gradually been replaced by the "performance benchmark".
Before the implementation of the new asset management regulations, bank wealth management products were rigidly redeemed. Even if there were losses and overdue returns were not achieved, product managers helped investors "guaranteed" and repay principal and returns as agreed, that is, "guaranteed principal and profits". Therefore, investors are accustomed to purchasing products with high "expected rate of return", and the financial market cannot play the role of optimizing resource allocation. The performance benchmark is the future income "target" of net value wealth management products, not a profit commitment.
Puyi standard data shows that among the 12,380 closed products that have disclosed performance benchmarks due in the first half of 2022, nearly 1,200 products have failed to meet the performance benchmark, accounting for 9.42%.
There is a certain deviation between financial products and "performance benchmarks". How should investors view "performance benchmarks"?
Xiao Jiang, financial manager of a joint-stock bank, said that when choosing a financial product, investors should look at the performance benchmark based on the product's investment direction, term and risk level.
She said that customers first conduct risk assessment and choose within a product range suitable for risk levels. The higher the product risk and the higher the performance benchmark, the greater the profits may deviate from the performance benchmark. Secondly, should choose products with the right investment period based on the idle time of funds. Long-term and short-term investment has different periods of underlying targets. Overall, the longer the time is, the more profits will be included in the performance benchmark.
Xiao Jiang pointed out that in addition to the performance benchmark, historical yields, recent range yield fluctuations, etc. should also be referred to. "We must pay special attention to investment varieties and investment strategies. Products with lower risk levels such as R1R2 have more fixed income wealth management products. Compared with this, investors with higher risk levels of should pay more attention to the proportion of high-risk assets allocated by wealth management products, and independently judge whether to buy based on market conditions."
Xiao Jiang believes that the performance benchmark is an important reference indicator. Although the performance benchmark is not a product income commitment, the product manager will ensure that the deviation between the actual income and the benchmark is in a controllable range as much as possible. However, " investors should always keep in mind that the performance benchmark does not equal the actual rate of return. They should combine the product's investment strategy and market conditions to have reasonable expectations for future returns. ."
This article is from Yinshi Finance
