TREE is hot, which of Bank of Communications, China Construction Bank, and Bank of China is better at customizing FOFs?

Ask AI · How does bank-customized FOF change the investment experience?

21st Century Business Herald Reporter Tang Yaohua Intern Zheng Tang

Since the beginning of 2026, the FOF market has completely heated up—the total market size has surpassed 300 billion yuan, nearly doubling compared to the same period last year, with China Merchants Bank’s TREE Changying Plan serving as the “leading driver.” Other banks like CCB and BOC have also launched similar services. A wave of customized FOF issuance led by major banks and coordinated with fund companies seems to be underway.

So, what is the essence of the asset allocation service represented by China Merchants Bank’s “TREE Changying Plan”? Can the targeted returns of over 3.5%, 4.5%, or even over 8% be achieved? Which asset allocation service performs better?

The asset allocation service represented by China Merchants Bank’s TREE is not a single blockbuster product but a systematic asset allocation scheme. The core difference from traditional FOFs can be summarized simply as shifting from a bank financial manager “selling individual products” model to providing a package plan through screening and categorization.

From “Choosing Funds” to “Choosing Packages”

Taking TREE as an example, asset allocation is simplified into four “packages” with distinct risk-return characteristics, allowing investors to “match” according to their risk tolerance and return expectations.

All FOF funds included in the TREE Changying Plan must be divided into four tiers based on maximum equity position, each with clear performance and maximum drawdown targets: for example, Stable Yield Equity Position ≤15%, with a target annualized return ≥3.5% and a maximum drawdown of ≤2%. Steady Yield Equity Position ≤25%, with a target annualized return ≥4.5% and a maximum drawdown ≤3.5%. As the equity position limit relaxes, the target return increases, and the maximum drawdown limit also loosens.

This is equivalent to China Merchants Bank customizing four “packages” in reverse according to customer needs, and the selected FOF funds must operate according to the corresponding risk-return targets.

This “reverse customization” logic is the fundamental difference from traditional FOFs.

Traditional FOFs are mostly issued independently by fund companies, mainly employing simple stock-bond allocation strategies. Bank-customized FOFs emphasize multi-asset allocation, with underlying assets covering domestic and foreign stocks, bonds, gold, REITs, QDII, and other diverse categories, achieving true risk diversification through low-correlation asset portfolios.

Moreover, banks, as a relatively dominant channel, can supervise fund companies to ensure they follow the set return and risk targets.

Comparison of “Packages” Offered by Different Banks

In fact, China Merchants Bank launched the “TREE Changying Plan” in 2024, which has recently gained attention due to frequent “hot” funds. This year, other peers like CCB and BOC have also launched similar services. The comparison is detailed in the table below:

Comparison of China Merchants Bank’s TREE Changying Plan, CCB’s Longying FOF, and BOC’s BOC Hui Investment Asset Allocation Service

From the table, it’s clear that China Merchants Bank’s TREE Changying Plan, CCB’s Longying FOF, and BOC’s BOC Hui Investment all offer four asset allocation schemes tailored to different risk preferences, essentially four customized “packages.” Both the TREE Changying Plan and CCB’s Longying FOF specify the target returns and maximum drawdowns for each “package,” and recommend specific FOF funds for investors to choose from.

However, since the products are still being launched, CCB’s Longying FOF has not yet announced target returns and maximum drawdowns for ETF-FOF and global investment-FOF.

BOC’s BOC Hui Investment is still being refined. It is found that BOC Hui Investment recommends different funds in the “Preferred FOF” section based on investors’ risk tolerance. According to BOC customer service, “Preferred FOF” is an upgrade from the original “Smart Portfolio” module, which, based on market analysis and investors’ risk preferences, uses automated systems to select high-quality FOF products.

(Example of BOC Hui Investment page tailored for different risk levels)

How Do the “Packages” Perform?

So, how do the funds included in these “packages” perform?

First, comparing the risk-return profiles of China Merchants Bank’s “Stable Yield” and CCB’s “Low Volatility Multi-Asset FOF,” over the past year, the representative funds of “Stable Yield” have generally met the performance and drawdown requirements. For example, “Huaxia Yingrui Steady Choice 6-Month Holding Hybrid (FOF)” has a slightly higher yield, with a return of 5.49% as of March 16, and a larger drawdown of 1.26%.

Performance of some FOFs recommended in China Merchants Bank’s “Stable Yield”

Since CCB only launched Longying FOF this year, we can only refer to the historical performance of some representative funds. As of March 16, “Huaxia Ju’an Preferred 3-Month Holding Hybrid” had a one-year return of 2.83%, slightly below the 3% target. Whether it can meet the target in the future remains to be seen.

Performance of some funds recommended in CCB’s Longying “Low Volatility Multi-Asset FOF”

Looking at the similar risk-return profile of China Merchants Bank’s “Steady Yield” and CCB’s “Low Volatility Multi-Asset FOF,” the fund “E Fund Ruyi Ancheng 6-Month Holding Hybrid (FOF)” achieved a 6.82% return over the past year, with a maximum drawdown of 1.52%, meeting the corresponding requirements.

Performance of some recommended funds in CMB’s “Steady Yield”

Since CCB’s Longying “Low Volatility Multi-Asset FOF” has a short service launch time, only historical performance before inclusion can be referenced. Funds like “Yinhua Huafeng 3-Month Holding Hybrid (FOF) A” and “Hua Xia Ju Jia Preferred 3-Month Holding Hybrid (FOF) A” have nearly met the “Low Volatility Multi-Asset FOF” criteria over the past year. “CITIC Fortune Peace An Tai Hybrid (FOF) A” had a maximum drawdown of 5.54% over the past year, exceeding the 3% target, but with a higher return of 7.19%. Whether future maximum drawdowns can be controlled within the target range remains to be seen.

Performance of some recommended funds in CCB’s Longying “Low Volatility Multi-Asset FOF”

****Funds recommended by China Merchants Bank’s TREE plan are not 100% meeting the standards either. For example, “Fuguo Yinghe Zhenxuan 3-Month Holding Hybrid (FOF) A” recommended in “Anxin Ying,” had a one-year return of 6.44%, below the benchmark of 8.06% as of March 17.

Regarding whether the “packages” will be adjusted in the future, customer service from China Merchants Bank indicated possible adjustments based on market conditions. CCB’s customer service stated that the system automatically screens and will perform periodic updates.

Investment Reminder: Cold Reflection Amid the Hot Market

Amid the enthusiasm, a few points deserve attention:

First, the target set by bank asset allocation “packages” may not be achievable, let alone guaranteed. The past year’s good performance of stocks and gold helped some FOFs meet their targets. However, in case of significant market volatility, returns may fall short of expectations, and risks may exceed expectations.

Second, liquidity needs to be planned in advance. Most funds in the pool are short-term holding period FOFs, with holding periods of 3 or 6 months. Investors must hold until the end of the period to redeem. China Merchants Bank also recommends holding periods—for example, “Stable Yield” suggests 6 months, “Steady Yield” and “Anxin Ying” recommend over 1 year, and “Yanyi Ying” suggests long-term holding.

Third, bank asset allocation services are free, but investors should be aware of “double fees” in FOFs. FOF products charge management and custody fees, and investors also indirectly bear the underlying fund expenses within the portfolio.

Fourth, bank recommendations are for reference only. Investors should select based on their own needs.

Special note: The products listed in this article are based on publicly available market information for illustrative purposes only, aiming to provide investors with product type references and understanding of features. This does not constitute any investment recommendation or trading advice. Investment involves risks; investors should make independent judgments based on their financial situation and risk tolerance, and decide whether to participate in related products. The author and publisher are not responsible for any losses resulting from investment actions based on this information.