News from the Associated Press of Finance and Economics on April 24 (editor Li Xiang) Benefiting from the good bond market, pure bond funds will shine in 2023. Since the first quarter, the scale of pure bond funds has expanded again, with a quarter on quarter increase of 8.52% to 7.04 trillion yuan, of which the scale of medium and long-term pure bond funds is larger, 5.85 trillion yuan.
Although the consistency of the fund managers' long-term gains is strong, the overall risk appetite of the institution still has some changes from the perspective of the size of the bond base positions in the first quarter. Some institutions believe that due to the current low yield level, most institutions choose to revert to their preference for high-grade corporate bonds, or to reduce valuation volatility, except for a few that have moderately sunk in urban investment.
The excess return of pure bond funds comes from the allocation of urban investment bonds
According to Wind data, there will be 2272 pure debt funds in the first quarter of 2024, with an overall scale of 7.04 trillion yuan, up 8.52% quarter on quarter. Among them, there are 1934 medium - and long-term pure debt funds with the size of 5.85 trillion yuan; The scale of short-term pure debt funds is 1.19 trillion yuan, with 338 funds.
From the performance data, the pure bond fund products of Orient Fund rank first with an average yield of 5.34% in 2023. Its heavy position bonds are mainly urban investment bonds or financial bonds. Some products have obvious credit decline when selecting the target of urban investment bonds. The issuer of some heavy position bonds is rated AA or even BBB+.
For example, the 18 month A (003324) of Dongfang Yongxing managed by Dongfang Fund, as a medium and long-term pure debt variety, recorded an annualized return of 10.54% in 2023, and the cumulative annualized return reached 5.75%, ranking top. From the information disclosed in the 2023 annual report of the fund, its mining of excess returns is partly from the allocation of a certain proportion of short-term and medium-term urban investment bonds, and a certain amount of credit has been sunk.
From the perspective of its investment varieties, the top five varieties whose fair value accounts for the proportion of net worth at the end of the reporting period in 2023 are urban investment bonds, respectively 23 Jiaxing Hi tech MTN001 (AA+), 21 Huicheng Railway (AA), 23 Huaibei Construction Investment MTN009 (AA -), 22 Jinyu Water Resources MTN003 (AA), 21 Heze Investment MTN001 (AA+).
However, according to the data disclosed in the latest quarterly report, although the top five varieties of the product whose fair value accounts for the proportion of net worth are still urban investment bonds, and the moderate sinking strategy is maintained to win profits, the holding proportion has declined, and the allocation of industrial bonds and secondary capital bonds has been appropriately increased. Its net worth growth rate in the first quarter exceeded 2%, which was better than the benchmark yield of 0.56%, showing that the position adjustment strategy of urban investment bonds was relatively effective.
In the first quarter, the position of bond base in urban investment bonds did not change from pure bond base to long bond base
Sun Shuna, an analyst at Warburg Securities, believes that from the high-frequency data on the duration of pure debt funds, it can be seen that pure debt funds generally have a longer duration, and the degree of duration divergence has declined, indicating that the bond market views are more consistent.
However, from the changes in the positions of the public offering bond base in the first quarter, the overall risk appetite of the institution also changed slightly. Yan Ziqi, chief of Hua'an fixed income, believes that compared with the 2023 annual report, the size of the heavy position of the bond base in urban investment bonds in the first quarter of 2024 continues to decline slightly, either because of the current low income level of urban investment bonds, and some investors choose to reduce their positions for the need of profit control or risk control. In addition, in addition to a few moderate dips in urban investment, there are still many institutions returning to their preference for AAA high-grade principal bonds, or to reduce valuation volatility.
However, insiders pointed out that under the support of the current fundamentals, it is difficult for the medium and long-term bond market to show reversal signals. In terms of pure debt base selection, it is still possible to continue to excavate the coupon value by appropriately sinking in the medium duration dimension or continuing to extend the duration.
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