From the hot sales of ultra-long-term treasury bonds, explore the way to win lon

2024-08-19

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Recently, China successfully issued two special government bonds with maturities of 30 years and 20 years. After designating commercial banks to open sales to individual investors, the bonds were sold out within minutes, showing investors' strong enthusiasm for purchasing. It can be seen that in the trend of continuously declining interest rates, long-term investment products with a more balanced risk and return are increasingly attracting investors' attention, and the long-term investment allocation of issuing institutions and the long-term return needs of investors are achieving a two-way approach.

I. In the era of low interest rates, are bank financial products more cost-effective?

(1) How bank financial products meet investors' stable needs

Looking at the subscription craze of the ultra-long-term special government bonds, investors in the market have a strong demand for long-term and relatively stable investment products. At the same time, against the backdrop of the downward trend of market interest rates, large banks have taken down long-term large-amount certificates of deposit and lowered the interest rates of long-term fixed deposits to alleviate the pressure on net interest margins. The range of deposit products available to investors has narrowed. Therefore, in addition to ultra-long-term government bonds, investors have also started to seek other more attractive investment products. Wealth management companies also start more from the perspective of customer needs, comprehensively assess liquidity, profitability, and safety in investment, and continuously improve their product systems to provide investors with more types of financial product supplies.

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(2) Long-term financial products have a better balance of risk and return

By comparing the yield and volatility of different maturity types of bank financial products this year, short-term products with a maturity of less than 6 months, although the volatility is controlled at 0.05%, the yield is only in the range of 2.3%-3.2%; products with a maturity of 6 months to 3 years, under the condition that the volatility is within 0.06%, have achieved a yield level of 3.5%-4.0%, and products with a maturity of more than 3 years, under the condition of approaching a 5% yield, the volatility is controlled at a lower level of 0.12%.

Therefore, in terms of combining risk and return indicators, long-term financial products have a better overall performance, and the investment return effect is more obvious. Compared with short-term financial products, long-term products have a more balanced and stable risk and return performance, not only have investment cost-effectiveness, but also can meet investors' needs for long-term asset preservation and appreciation. In this context, to enhance the long-term value-added potential of assets, investors should look further when allocating assets, establish medium and long-term financial goals, and use a long-term holding strategy to smooth out short-term market fluctuations, and achieve a stable return on the investment portfolio with a "long-term" mentality.

II. Institutions strengthen the layout of long-term financial products, and city commercial financial companies perform steadily

(1) The trend of long-term product issuance is increasing day by dayAs the advantages of risk and return balance of long-term products become evident, the trend of issuing long-term products in the financial market is also increasing. Looking at the proportion of long-term products (1-3 years (inclusive), over 3 years) in existence over the past three years, the proportion of products with a term of 1-3 years (inclusive) has risen rapidly, from 29.72% in 2021 to 37.35% in the first quarter of 2024, and the proportion of products with a term of over 3 years has also increased, by about 2%; by the end of the first quarter of 2024, the total of these two types of long-term products has accounted for more than 40%, an increase of about 10% compared to 2021, becoming a focus of layout for bank financial institutions.

(II) City commercial financial institutions' long-term products show steady performance

Market performance: By comparing the performance of long-term (1-3 years (inclusive), over 3 years) financial products from different types of financial institutions over the past three quarters in the past month's annualized return performance, the products of joint-stock financial companies and city commercial financial companies have performed better, among which the product return changes of city commercial financial companies are more stable and smooth.

Recent annualized return performance: Among the long-term financial products issued by 8 city commercial financial companies, looking at the recent annualized return performance of public financial products with longer terms (operation cycle greater than 700 days) that are suitable for long-term investment value and targeted at the general public, the longer-term products of city commercial financial companies generally perform well, with the recent one-month annualized return all maintained above 4%. Among them, Qingdao Bank Wealth Management, Nanjing Bank Wealth Management, and Hangzhou Bank Wealth Management have an average return rate of over 5%, ranking at the top with a return rate of 5.22%, 5.07%, and 5.01% respectively; the overall performance of the recent three-month annualized return is even better, with Nanjing Bank Wealth Management, Shanghai Bank Wealth Management, and Qingdao Bank Wealth Management ranking at the top. The product return data also reflects that long-term financial products have proven their stable high return value with actual performance.

Maturity redemption performance: Looking at the average redemption return of products with a term of 3 years and above that matured in the first quarter of 2024, city commercial financial companies have performed relatively well overall. Among the four institutions with a redemption return of 4%, three are city commercial financial companies. Among them, Hangzhou Bank Wealth Management and Qingdao Bank Wealth Management have the highest average redemption return, reaching 5.43% and 4.50% respectively; Xinyuan Wealth Management of joint-stock financial companies follows closely behind, with an average redemption return of 4.41%; Beijing Bank Wealth Management ranks fourth, with an average redemption return of 4.10%; while the average redemption return of state-owned financial companies' long-term products over 3 years is relatively lower.