Some financial products "exit" early? Investors don’t have to be overly nervous

2024-08-12

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In recent months, some financial products have been affected by factors such as the macroeconomic situation, policy adjustments, and market interest rate fluctuations, leading to performance deviations from expectations and "early termination," causing confusion and misunderstanding among some investors. In fact, similar to public mutual funds, the "early termination" is actually the bank's wealth management institution actively adapting to the new market characteristics presented by "true net value," which is a normal phenomenon and a manifestation of protecting investors' rights and interests, and it does not affect the product's returns. Today, let's take a look at the real reasons for the early termination of bank financial products and what impacts they have on investors and institutions? As an investor, what issues should be paid attention to in the future investment and financial products?

1. Why does the early termination phenomenon occur?

It is necessary to clarify that the early termination of financial products does not mean a loss has occurred. In other words, the bank or wealth management company proactively "presses the termination button" to terminate financial products in advance, not as an act of evasion due to the product's short-term performance not meeting standards or operational management problems, but as a prudent choice made after full consideration, standing from the perspective of investors, with the core purpose of protecting investors' rights and interests.

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Generally, the product prospectus will detail that when there are force majeure events, national financial policy adjustments, changes in the credit status of invested assets, etc., that make the product unable to continue or continue to achieve the investment goals, the product manager will have the right to actively terminate the product according to the actual operation of the product funds.

Regarding the recent early termination of financial products, some bank wealth management institutions have given explanations such as "low fundraising scale," "investment projects maturing early," "profit-taking strategies based on market conditions," and "to maximize the protection of consumer interests." After the full net value of financial products, China's wealth management market is still in a stage of transformation and development. It is not difficult to find from the early termination announcements of products that there are mainly three reasons for the early termination of products, but the core is to "maximize the protection of investors' rights and interests": First, some financial products have a low fundraising scale, and to avoid the inability to conduct better investment management due to the product scale being too small, the product manager believes that it is more beneficial to terminate the product in advance than to maintain the operation of the product after comprehensive consideration; Second, the actual yield of some products has reached the agreed yield, and in the case of a significant downward trend in market interest rates affecting the future operation of the product, the product manager takes a profit-taking strategy based on market conditions, and terminates the product in advance to protect the interests of investors; Third, the underlying asset projects of some financial products mature early, and if they are reinvested in other assets, it may lower the product yield, so the financial products are terminated in advance.

2. What is the impact of "early termination"?

For the majority of investors, the early termination of financial products can protect investors' interests and provide opportunities for capital reconfiguration. On the one hand, early termination does not mean that the product has actually suffered a loss. It is a rational decision made by the product manager based on professional judgment, maximizing the interests of investors after weighing the pros and cons, and early termination can maximize the protection of investors' interests; On the other hand, investors can re-plan asset allocation plans according to the latest market trends, and invest funds into more competitive high-quality products to strive for long-term stable investment returns in the complex and changeable market environment.

For bank wealth management institutions, the timely termination of some financial products is an inevitable transformation requirement in the era of net value, which is conducive to the sustainable development of the business. First, it is conducive to the concentration of resources of wealth management institutions in the operation of high-quality products, saving energy to create leading and high-performance products, and reasonably arranging product investment directions to further meet customer needs; Second, it helps to accumulate experience in product creation and operation, and more targeted adjustments and layouts of the financial product line, creating new products that are more in line with customer needs and market trends; Third, it can focus more on internal improvements such as investment research capabilities, risk management capabilities, and the construction of professional talent teams, strengthening the core competitiveness of the institution; Fourth, it is conducive to the institution's active adaptation to new market characteristics in the "true net value" era, exploring innovative products through positive industry cooperation and competition, promoting the transformation and upgrading of financial products, refining and optimizing the product system, and promoting the high-quality development of wealth management business.

3. What issues should investors pay attention to when investing in financial products in the future?

(The translation ends here, as the original text was cut off.)The "net value" is a transformation of "eliminating the false and retaining the true" for both banking wealth management institutions and investors. The early "exit" of wealth management products may be a way and adjustment strategy for banking wealth management institutions to adapt to net value management.

In the future, investors should rationally view the situation of "early termination" and deal with the challenges of wealth management product investment through the following methods: First, choose banking wealth management institutions with strong investment research capabilities, or star wealth management products under excellent wealth management institutions, focusing on examining the underlying assets of wealth management products and maintaining the stability of the wealth management plan; Second, improve one's own financial management expertise and rational judgment ability, establish the correct investment concept, recognize the "impossible triangle" between "high return rate, principal safety, and quick exit," that is, the three cannot be obtained at the same time, and regularly or irregularly review the effectiveness and adaptability of the existing asset allocation combination, and actively manage and adjust in a timely manner with the changes in the life cycle; Third, investors should adopt a long-term value investment concept, avoid the accidental investment behavior of "chasing rises and killing falls," smooth the net value fluctuations of wealth management products by extending the investment cycle, stabilize through the economic fluctuation cycle, and actively and flexibly respond to changes in the economic environment by dynamically adjusting the investment direction of industries in the cycle and counter-cyclical.