Under the large-scale losses, many investors who don't know the truth choose irrational redemption, and some products are redeemed by more than 70% in just a few days, even with liquidity risk. Many financial subsidiaries and fund companies of banks have also issued "a letter to investors", hoping to appease panicked customers. Whether investors, asset management institutions or wealth management institutions are suffering at the moment.
This phenomenon is not the first time. In March of this year, there were also thousands of bank wealth management products with negative returns. At that time, it also caused investors' incomprehension, complaints and redemption.
Regrettably, after half a year, the familiar script was staged again. But from another perspective, it's not a bad thing. Investors, asset management institutions and wealth management institutions can better understand the essence of bank wealth management and short-term debt funds, and it is also a stress test for the wealth management industry to adapt to the transformation of new asset management regulations.
0 1
In the past, bank wealth management products catered to a large number of low-risk preference investors by virtue of the "advantages" of rigid redemption and guaranteed income. However, rigid redemption violates the essential laws of the asset management industry and accumulates a lot of risks in the financial system. Therefore, the new asset management regulations take "breaking the rigid exchange" as the primary goal. According to the requirements of the new asset management regulations, all wealth management products, including bank wealth management, should be "sellers are responsible, buyers are responsible" net worth products.
In order to avoid a big impact on the market, the new asset management regulations issued in April 20 18 should have completed the transition by the end of 2020, and finally extended the transition period to the end of 200218. Supervision also hopes to give the market and investors enough buffer and adaptation time to change the past management strategies, sales methods and investment expectations.
But after these stress tests and inspections, it seems that everyone still hasn't adapted.
The time train is rolling forward, but the people on it are still intoxicated with the illusion of the past. In order to meet the "deep-rooted" expected demand of investors, asset management institutions and wealth management institutions label low-volatility net-worth products as "financial substitution" and "steady income" and sell them to ordinary customers by showing performance comparison benchmarks, annualized income since its establishment and income in the latest year. However, most customers still regard such products as substitutes for deposits and have clear expectations for guaranteed income.
The risk of this mismatch is subject to market fluctuations, and it is easy to turn into a crisis due to huge redemption.
02
In fact, no matter from the vertical or horizontal comparison, this round of bond market fluctuations are not particularly large.
Vertically, taking the "China Bond Comprehensive Wealth Index" as an example, the current market has fallen by 0.7 1% since June, which is actually far less than the 2.06% during the debt disaster in 20 16 and the/kloc-0 in May-July 2020. Horizontally, taking the United States as an example, since the Federal Reserve began to raise interest rates this round, the US 10-year treasury bonds have risen by more than 250BP in the past year, while the yield of China 10-year treasury bonds has only risen by 20-30BP this round.
The first two major bond market adjustments seem to have less impact on investors than this one. The disturbance caused by the "violent" interest rate hike in the United States to American investors seems to be a bit calm.
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Then this bond market adjustment is not a special heavyweight. Why did it cause such a big negative feedback in the market? Konoha believes that after the implementation of the new asset management regulations, it is a very important reason that asset management institutions and wealth management institutions have not managed customers' expectations within the reasonable scope of the financial profession.
According to the requirements of the new asset management regulations, except for a few assets that meet the requirements, most assets should be valued at market prices. Market valuation means there are ups and downs. In fact, bond investment under market valuation is not just as simple as charging a stable coupon. Bond prices are influenced by macro-environment, market interest rate, monetary policy, fiscal policy, inflation and many other variables, and it is inevitable that bond prices will fluctuate up and down. However, asset management institutions have been unable to "stabilize" the actual rate of return of products on the rate of return displayed to customers through the past methods of "separate pricing, rolling issuance and maturity mismatch". This leads to the problem of what you see is what you get.
In the new era, what customers see is what they get; In the era of net worth, what you see is not necessarily what you get. Neither asset management institutions nor wealth management institutions can guarantee customers to make money or earn enough money. The investment result is always a question of probability. The shorter the time, the greater the uncertainty. Wealth management products are different from ordinary commodities, and their effects are obvious and uncertain.
After seeing this, it is obvious that the uncertain expectations that may not be obtained have not been effectively transmitted to investors. On the contrary, some wealth management institutions cater to the "obsession" of investors in order to increase sales. By showing certain values, such as performance benchmark, income since its establishment, income in the past year, etc. Investors have a strong and unreasonable "certainty" expectation of guaranteed returns. This is true for banks with historical burdens, and short-term debt fund products without historical burdens and complete net worth have also been inserted into the wings of the Internet and are regarded as substitutes for bank wealth management.
When the market is stable, asset management institutions, wealth management institutions and investors go in three directions, which are peaceful and ownership rises. The continuous abundance of funds has also led to the crowding of the credit bond market. With the increasing shortage of assets, bond yields have been repeatedly depressed and risks have accumulated.
Once in trouble, this trust based on unreasonable expectations is easy to collapse and bite back. When "products that should be profitable" produce losses, ordinary investors who lack effective expectations can easily choose panic redemption. In order to cope with the huge redemption, product managers passively realized bonds at a discount, which led to the stampede of the bond market, which in turn led to a further decline in the net value of products and a vicious circle.
At the beginning, investors loved as much as they loved. When the aura of guaranteed income was broken, how much pressure would the wealth management products that "fell off the altar" bear? The rate of return and the amount of possession accumulated through hard work for half a year are all returned in just a few days.
03
Investors' expectations do not match the performance of product income, which induces fund redemption. From the perspective of asset market, the change of investor structure in bond market and the change of investor behavior caused by it have also become risk amplifiers.
In the past, bank financing was the main participant in the bond market, and the investors of bond funds were mainly institutions. Under the background of amortization cost valuation and rigid redemption, investors in bank financing will not perceive the fluctuation of the bond market, and bank financing will not need to deal with the redemption pressure brought by the fluctuation of net value, but can appear as a force to stabilize the market when the bond market fluctuates. Among debt-based investors, institutions account for the majority. Institutions are relatively more rational. Even if they need to redeem, they will generally communicate with the manager in advance to minimize the impact on the liquidity of investors.
After the net value, these situations have changed.
First of all, because the fluctuation of bond price after the change of net value will be reflected in the net value of products, bank wealth management has to face the redemption pressure brought by the fluctuation of net value. Redemption disturbance at the capital end is finally transmitted to the investment at the asset end, and bank financing also appears as a seller in bond transactions, or indirectly sells bond assets through redemption of bond funds. With the compression of non-standard assets, the proportion of standardized bonds in the investment composition of bank wealth management is increasing, and the proportion of credit bonds has exceeded 50%. The sell-off brought by redemption will inevitably put pressure on the liquidity of credit bonds.
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Secondly, in bond funds, especially short-term debt funds, with the blessing of internet channels, the proportion of individual investors is also equivalent to that of institutional investors. Limited by risk tolerance, professional background and emotional influence, individual investors are more likely to make irrational behaviors. Buy in droves in prosperity and disperse in a hubbub in fluctuation. For example, this time, many short-term debt products, mainly retail investors, fell by more than 50% in just a few days. Bond funds have also become sellers of this round of bond market adjustment.
Third, in order to make the net-worth products meet the income expectations and ranking needs of ordinary investors in the past, in the absence of high-yield blessing of non-standard assets, asset management institutions can only increase investment income as much as possible by extending the term, sinking credit and improving leverage. But this kind of operation will also increase the risk, and it will face greater net value fluctuation when selling.
Another worry is that in the past, the financial liabilities of banks were relatively stable, and the allocation of credit bond assets was mainly from holding to maturity, with few transactions and relatively insufficient liquidity of credit bond assets. In the case that the debt end is no longer stable, whether the liquidity of the credit bond market and the trading ability of participants can support the trading demand brought about by redemption has not been fully tested.
It can be said that due to the intervention of individual investors who did not form reasonable expectations, the market risk was amplified to some extent.
The irrational behavior of retail investors brought about by market fluctuations is finally transmitted to the bond market. Under the pressure of redemption, the institutions involved in bond investment can only smash and sell at no cost, resulting in stampede. The longer the duration, the worse the qualification, the higher the leverage and the greater the loss.
It is worth mentioning that this adjustment is only caused by market risk factors, and there is no credit risk event. In fact, due to the imperfect pricing system of China's credit bonds, the rating results and valuation of bonds are distorted under the blessing of various "beliefs". The current bond price does not truly reflect the credit risk of bonds. If both market risk and credit risk events are encountered in the future, the crisis will be more serious.
04
Over the past four years since the promulgation of the new asset management regulations, the asset side has basically completed the transformation of net worth, but as an investor and wealth management platform on the capital side, it still has not got rid of the past path dependence.
The preference of the capital side will also be passed on to the asset manager of the investor. In order to cater to unreasonable expectations, it leads to movement deformation and returns to the old road. Every time unreasonable expectations fail, it will lead to poor customer investment experience and distrust of the wealth management industry. Judging from the recent market tests, it is hard to say that the wealth management industry has succeeded in coping with the transformation of the new asset management regulations.
How to help customers establish reasonable expectations in line with financial laws is the key and source for the wealth management industry to cope with this transformation.
"Customer-centric" is also a cliche topic of wealth management institutions in recent years. But "customer-centric" does not mean blindly catering to customers' unreasonable needs and expectations. When customers' expectations of products are unreasonable, what they should do is to guide customers to have a clearer understanding and expectation of the characteristics of product risks and benefits. Instead of simply labeling it robust and labeling it with a figure of yield.
For example, short-term debt funds have obvious risk-return characteristics, have investment allocation value, and short-term fluctuations are normal. However, from the perspective of lengthening the cycle, there is a high probability of making a profit after holding it for one year. If the customer can withdraw the data by paying attention to the fluctuation of the product, hold the profit probability index for a certain period of time, and form a reasonable cognition before investing, the customer will be more calm and rational when encountering fluctuations, rather than redeeming at once.
Of course, showing more risk indicators may not be conducive to the sales and transformation of products to a certain extent, which involves the balance between short-term interests and long-term interests. However, short-term benefits are actually easy to return. How unrealistic the beauty before sale is, how much energy and cost will it take to maintain after sale.
Bank financing, the decline in the net value of debt base and huge redemption are all good alarm bells for investors, asset management institutions and wealth management institutions. I believe that after paying the tuition fee this time, industry participants can learn from it, and when the next market test comes, they can deal with it more calmly.
Misfortune depends on happiness, and happiness depends on misfortune. During an avalanche, not a snowflake is innocent.