Multiple bank wealth management subsidiaries send letters to investors: Short-term market fluctuations do not change long-term value

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Reporter: Yang Jie

Recently, due to multiple factors, the bank wealth management market has undergone a phase adjustment, with the net value of products containing rights under short-term pressure. Several bank wealth management subsidiaries, including ICBC Wealth Management, Bank of Communications Wealth Management, Everbright Wealth Management, Xingyin Wealth Management, and Hangzhou Bank Wealth Management, have issued “letters to investors” or investment response guidelines.

Overall, the aforementioned institutions generally believe that, in the short term, risk appetite may continue to be under pressure, and short-term market volatility may persist. However, in the long term, the current domestic policy continues to maintain an active orientation, with production, consumption, and investment data continuously improving, and the logic for a long-term positive market remains unchanged, thus maintaining firm confidence in the medium to long-term performance of A-shares. Short-term fluctuations should be viewed rationally, and long-term allocation logic should be adhered to.

For example, ICBC Wealth Management mentioned in its letter that the complexity of the international situation and the sustained high level of international oil prices put tremendous pressure on global market sentiment, exacerbating the volatility of major asset classes. However, market fluctuations are normal, and rationality and patience are key forces to navigate through cycles.

Xingyin Wealth Management believes that although the market will experience volatility due to short-term overseas shocks, this is merely a period of fluctuations in a slow bull market, and the market adjustment is a good opportunity to lay out quality equity assets.

From the perspectives of multiple institutions, short-term market fluctuations are inevitable, but they also nurture future recovery space. The resilience of the Chinese economy and the potential for transformation and upgrading support the long-term foundation of the market. Investors need to remain rational and not be disturbed by short-term market sentiment, adjusting their allocation rhythm appropriately.

Xue Hongyan, a special researcher at Suzhou Commercial Bank, told Securities Daily that based on the current short-term fluctuations and the steady improvement of the long-term fundamentals in the wealth management market, investors should abandon emotional short-term operations, face the normality of fluctuations, and should not be overly anxious or blindly follow trends in redemption due to the decline in the net value of wealth management products. They should consider their own funding duration and risk tolerance, avoid putting short-term funds into high-volatility products, prioritize choosing products that match their risk appetite, and adhere to long-term allocation thinking. Through long-term holding and balanced allocation, they can smooth the impact of phase adjustments and wait for market recovery and value return.

In the face of recent market fluctuations, the aforementioned institutions respond with professional research and investment capabilities as well as adaptive products. For example, Xingyin Wealth Management has set strict withdrawal control targets for each product line, and many of its series products have shown excellent withdrawal control and income resilience during fluctuations, with the maximum withdrawal of the series kept within 100 BP (basis points). ICBC Wealth Management has built a quality control management mechanism based on “layered withdrawal targets” on the product side.

It is worth noting that, in a fluctuating market environment, the allocation value of “fixed income +” products is becoming more apparent. The stable income provided by the “fixed income” part, combined with the elastic potential contained in the “+” part, will collectively form an upward force, accumulating strength for the next stage of returns.

A relevant person from Everbright Wealth Management introduced that deeply cultivating the “fixed income +” field is an inevitable choice to cope with the “low interest rate era.” Against the backdrop of a potential decline in the central long-term interest rate, the return space provided by pure bond assets is limited. By introducing diversified assets such as equities and derivatives for “enhancement,” it strives to help investors obtain returns that exceed traditional fixed income while maintaining stability.

In Xue Hongyan’s view, bank wealth management subsidiaries should first build a solid base of stable fixed income assets, and then refine and optimize the enhancement part with low volatility: strictly control the proportion and structure of equity allocation, diversify and allocate low-volatility auxiliary assets, optimize portfolio duration, and establish dynamic rebalancing and risk hedging mechanisms, allowing the “+” to shift from a single pursuit of yield enhancement to moderate yield enhancement under a stable premise, while considering the ability to resist volatility and alleviating issues such as poor investor experience caused by significant withdrawals.

		Sina's statement: This message is a reprint from Sina's cooperative media. The publication of this article on Sina.com is for the purpose of conveying more information and does not imply agreement with its views or confirmation of its descriptions. The content of the article is for reference only and does not constitute investment advice. Investors operate at their own risk based on this.

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Editor: Gao Jia