The weather won't always be good, and people won't eat the wind all the time. ”
This is what Uncle Fanhua said, and today, 30 years later, it is still very appropriate.
In the first week of the year, there was a chill; In the second week, there was a slight warmth. Cold and warm are intertwined, this is the short-term "weather" situation of the a** field. In the same way, the weather won't be bad all the time, and people won't eat the wind all the time. In the current obscure "weather" environment, what kind of assets can bring some warmth to the guest officer? Yesterday's ** recommended by Fu Er (aligned with the granularity of 2024 ***), the domestic bonds that I want to recommend today, etc., can all be options for investors with low and medium risk appetite.
Why bonds?
Last year, the bond market performed very well. Wind data shows that as of January 10, the yield of the short-term pure bond** index in the past 1 year was 326%, and the yield of the medium and long-term pure debt** index is 365%, and the yields of Wind All A and CSI 300 Indices were -11 in the same period64%，17.81%。
Note: Data from wind, as of January 10, 2023.
The performance of the index alone cannot fully demonstrate the "warmth" of pure bonds.
Looking at the actual performance, statistical wind data shows that as of the end of December 2023, there are 2,000 pure bonds** in the whole market, including short-term pure bonds** and medium and long-term pure bonds**, of which 256 have yields of more than 5%, accounting for 128%；There is only 1 loss-making net debt**.
In addition to the absolute return of the heart, volatility is also a matter of concern to the guest officer, in the past year, the bond trend is certainly not a flat horse, no waves, the overall trend presents an "M-shaped", from the interest rate situation, the low point appeared at the beginning of the year and the end of the year and around July, the relative high, appeared in February-March and October.
Note: Data from wind, as of January 10, 2024.
For example, the 10-year Treasury yield fluctuated by 2 last year54% to 294%, with a high in mid-January and a low in mid-to-late August. From the perspective of the whole year, the overall trend of the bond market has shown an upward trend, and the upward strength is very obvious.
After reading the performance, fluctuations, and overall trendsThe allocation of bonds seems to be the logical choice.
After all, who would say no to such a heartwarming option as pure debt?
Back to the key question, how to choose the length of pure debt?
How to understand the short-term and long-term of bonds, understand from the perspective of maturity, the guest officer can easily get.
The term is different for the two:Short-term bonds usually have a maturity of less than 1 year, generally between 1 month and 1 year. Long-term bonds usually have a maturity of more than 1 year, which can be years, tens of years, or even decades.
From the perspective of investment classification, pure debt** includes short-term pure debt** and medium- and long-term pure debt**.
The biggest difference between them is the difference in the remaining maturity of the bond.
Short-term debt**
The investment objects are mainly fixed income**, including treasury bonds, central bank bills, financial bonds, etc., and warrants are not available. In general, most of the funds are used to allocate short-term bonds with a remaining maturity of no more than 3 years.
Medium to long-term pure debt**
Pure debt types that do not have a clear remaining maturity limit can be classified as medium and long-term pure bonds**, and the scope of investment objects is basically the same as that of short-term pure bonds**.
In general, the longer the maturity and duration of a bond, the more sensitive it is to interest rates and the more volatile it is.
When the weather was bad, the bond market continued the "warm sunny day" since the end of last year, and the 10-year Treasury bond interest rate fell to 249%, the lowest since May 2020. The yield on the 30-year Treasury bond has also been compressed to 278% level. (Data**: Wind, as of January 10).
On the question of how to allocate bonds, we need to pay attention to one phenomenon - the gradual flattening of the curve, which is an atypical state.
Especially since the end of 2023, the curve spread has further narrowed, and the curve is crowded at both ends of the curve. On the one hand, the ultra-long-end transaction heat hit a record high, the interest rate of 30Y Treasury bonds fell rapidly, and the 10-year Treasury bonds exceeded 2After 7%, it briefly fell below 250%, the lowest since May 2020, and the one-year Treasury yield was 211%。On the other hand, the short end has also been on a rapid downward trend in recent weeks, with 1-year CDs priced back within a reasonable range. Why is this happening? The core reason is that the market is rushing to cut interest rates, both on the long end and on the short end.
Looking at the 10Y-1Y Treasury bonds, the spread was compressed to 25bp in mid-December, and is currently at 39bp, which is at a historically low level.
Note: Data from wind, as of January 10, 2024.
Focusing on the present, from the perspective of fundamentals, the overall economy is still in a state of weak recovery, and the changes in fundamentals are not achieved overnight, and there is still support for the bond market in the short term. From the perspective of capital, whether it is monetary policy to escort stable growth, or in the environment of debt, the need for a relatively low interest rate environment to cooperate, the capital side is still the biggest confidence in the bond market, and the market is currently rushing to cut interest rates.
Overall, the bond market is still promising. In the structure, considering that the overall curve is flattening, the short end may be relatively more cost-effective. Because, under the flattened curve, there is not much difference in coupon returns between the short end and the long and short ends, but the shorter duration of the short end makes the potential volatility in the future smaller.
So, in this context, take "short" or make up for "long"?
Short and short is good!
To resist fluctuations, it is necessary to make up for the "short" in a timely manner
On the whole, as the central bank's open market funds return to easing, short-term bonds still have good allocation value. In addition, short-term bonds** have better liquidity due to the shorter maturity of the bonds.
Looking at past performance, since 2010, short-term pure debt** indices have generally had positive returns per year historically, and most of them have been higher than the 1-year time deposit rate.
Good liquidity, but also take into account the yield. Therefore, it is good to have a short term, and for investors with low and medium risk appetite, in 2024, short-term debt is still a good tool for bottom position allocation.
Note: Data from wind, as of 2023-12-31. **There are risks and investment should be cautious. Historical data is not indicative of the future and does not constitute a guarantee of future earnings. There is still a risk of loss of principal in pure debt**.
There are so many pure bonds in the market, how do we choose? If you want to choose, choose the old one, which has been established for a long time, has excellent performance, and has a more calm style.
Such a **, the representative work of the rich two pure debts is it-
Wells Fargo Pure Bond Bonds strive to achieve positive yields year after year
The net value curve has gradually risen, and the cumulative return has exceeded 50%.
Wells Fargo Pure Bond A B (**100066) has achieved positive returns every year in history, creating long-term returns for investors over time.
Since its inception**5804%, with a benchmark yield of 5893%。
Note: The net value chart is from the ** regular report, as of 2023-09-30, Wells Fargo Pure Bond A B was established in 2012 11 22, and the performance comparison benchmark is the China Bond Composite Index. The net growth rate from 2013 to 2022 and the first half of 2023 is positive, respectively. 87%（4.12%), successive managers (nearly 5 years): Zhong Zhilun 2015-03 to 2018-07, Wang Jiliang 2016-02 to 2018-07, Fan Lei 2016-11 to 2018-07, Wu Lei 2018-07 to 2019-11, Zhu Mengna 2019-11 to 2023-03, Zhang Yang 2020-05 to present, Lv Chunjie 2021-12 to present, data**: regular report. All cited data are **ab shares. Past performance is not indicative of future performance. The market is risky, and investors need to be cautious.
Is there any merit in long-term debt?
Of course! The bottom warehouse configuration is also very important to take the "long".
In the longer term, long-term pure debt** has higher yields than short-term debt** in most years of history. Based on the bar data above, it can be found that the wind data shows that since 2014, the medium and long-term pure debt** has significantly outperformed short-term bonds (except for 2017), and the difference is only in whether it has outperformed more or relatively less.
The core point of short-term debt vs long-term debt is interest rate. Medium- and long-term bonds are more sensitive to interest rates than short-term bonds, and they are relatively volatile, which is a good reflection of higher yields and higher risks.
In the current interest rate environment, the value of medium and long-term bond allocation is still considerable, and it may be more likely to seize the opportunity in advance.
How to choose medium and long-term pure debt**?
In this field, Fu Erjia has a number of excellent products to choose from.
Wells Fargo Xiangli one-year A, Wells Fargo Credit Bond A, Wells Fargo Industrial Bond A, Wells Fargo Target Qili One Year and so on. Galaxy** data shows that the performance of these products in the past three years ranks in the top 1 3 of the same kind.
In the past 3 years, the performance has ranked in the top 1 4 of the same kind of ** list
Note: The above ranking data is from the long-term performance list of China Galaxy** and China Public Offering**, as of December 31, 2023. The market is risky, and investors need to be cautious. **The Manager's past performance is not indicative of the future and does not constitute a guarantee of the performance of other products; Past performance is not equal to future earnings, and other performance managed by the manager does not constitute a guarantee of this performance. The above ranking results are based on the comprehensive judgment of the evaluation agency based on the past performance of the manager, and do not constitute future investment recommendations for the ** manager or a single product.
In the 2024 investment layout, if there is a type of asset in the bottom position of the guest officer as the bottom position allocation, then pure debt assets are a good choice.
As for the choice of short and long, it is very suitable to learn from each other's strengths. After all, adults don't have a choice, and bond-type ** can be both long and short.
Investment is risky, ** investment should be cautious.
Before investing, investors are requested to carefully read the "** Contract", "Prospectus" and other legal documents. **Equity may be lower than the initial par value and losses may occur. The Manager undertakes to manage and use the assets in a manner of honesty and trustworthiness, diligence and responsibility, but does not guarantee a certain profit or a minimum return. Past performance and its net worth are not indicative of future performance. The performance of other ** does not constitute a guarantee of the performance of this **.
The above information is for reference only, if you need to purchase relevant products, please pay attention to the relevant regulations on investor suitability management, do a good job of risk assessment in advance, and purchase ** products with matching risk levels according to your own risk tolerance.