The returns of this type of financial products are low, are there any substitute
2024-07-08
99 CommentsCash management financial products have experienced a "double decline" in both quantity and price. Data from Puyi Standards shows that as of the end of June, the scale of cash management financial products in existence reached 7.49 trillion yuan, a decrease of about 80 billion yuan from the end of May, marking a continuous decline for two consecutive months. At the same time, according to media reports, the average 7-day annualized return of cash management financial products has been on a continuous downward trend since April.
1. What are the reasons for the monthly decline in the yield of cash management financial products this year?
According to data from Puyi Standards, as of the end of May 2024, the average level of the near-1-month annualized yield of cash management financial products has broken through the 2.00% mark, and the decline did not stop in June. Looking at asset allocation, cash management products are mainly invested in deposits, bonds, and other assets. Faced with consecutive cuts in deposit interest rates and the downward trend of the yields of 10-year and 30-year long-term government bonds, the yield of these products is inevitably affected.
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2. Despite the average return of money market funds being less than that of cash management financial products, the scale of money market funds has continued to rise throughout the year, while the scale of cash management financial products has been continuously declining since May. What are the reasons for this divergence?
Under the background of consecutive cuts in deposit interest rates and wide fluctuations in the equity market, some funds have flowed into bank wealth management and public funds. However, affected by regulatory pressure, declining yields, and factors such as end-of-quarter balance sheet adjustments, the scale of cash management products has continued to shrink since May.
3. Compared with money market funds, what are the advantages and disadvantages of cash management financial products? What measures can cash management financial products take to attract customers and achieve continuous scale expansion?
4. With the migration of deposits, what should investors who want to choose these two types of products pay attention to?Firstly, in accordance with relevant regulations, commercial banks and wealth management companies should implement scale control for cash management products that are accounted for using the amortized cost method. As of the end of April, the total market size of cash management products has exceeded 8.5 trillion yuan, which may be very close to the scale limit set by the regulatory authorities, leaving little room for further growth in the short term.
Secondly, since the beginning of this year, the yield centers of cash management products and money market funds have continued to decline, and the yield gap between the two has been narrowing, leading to a relative decrease in the attractiveness of cash management products.
Lastly, entering mid-June, affected by the end-of-quarter financial fund re-entry disturbance, the scale of various types of financial products has generally decreased, among which the decline in cash management products is the most significant, accelerating the downward trend of these products.
3. Compared with money market funds, what are the advantages and disadvantages of cash management financial products? What measures can cash management financial products take to attract customers and achieve continuous scale expansion?
Compared with money market funds, cash management financial products:
1. In terms of returns, cash management financial products still have a slight advantage currently, and the overall fee level is lower;
2. In terms of standardization, banks and wealth management companies generally lag behind fund companies in investment research capabilities. In terms of product operation and information disclosure standardization, cash management financial products are slightly insufficient, while money market funds have certain advantages;
3. In terms of sales channels, cash management financial products benefit from the endorsement of banking institutions and have a strong investor base, but money market funds have broader sales channels, including third-party internet channels that cash management financial products cannot access.
To attract customers and increase scale, cash management financial products can take the following measures:
1. Temporarily reduce fees to attract new funds;2. Enhance the product's return level and stability of returns through asset allocation adjustments and smoothing fluctuations;
3. Improve the standardization of product operations and the completeness and timeliness of information disclosure.
4. Under the scenario of deposit migration, what should investors who wish to choose these two types of products pay attention to?
Given that the returns of these two types of products are generally low, only when investors commit a larger amount of capital, reaching tens of thousands of dollars or more, can a significant difference in returns between different products be observed. At this time, one can prioritize selection based on the product's recent performance. It is important to be cautious not to blindly trust products with exceptionally high returns, as these products may have started with a small scale and allocated a small amount of high-yield assets. As additional funds come in, the returns will quickly revert to average levels.
For smaller amounts of capital, one can prioritize convenience in operation or usage, such as products that can be directly purchased on existing accounts. Alternatively, one might choose products like Yu'e Bao or Zero Money Pass to enhance the liquidity of funds.
Wealth management carries risks, and investment should be approached with caution.