Public funds claim that "Fixed Income Plus" redemptions have limited impact on A-shares; a batch of capital is rushing to support the market against the trend

Securities Times Reporter Wu Qi

In recent days, the A-share market has experienced consecutive adjustments due to external market pressures. At the same time, rumors have circulated that “‘Fixed Income+’ redemptions triggered a pullback,” “public funds were forced to sell stocks, convertible bonds, and ETFs,” and other claims, which are said to be the main reasons for the decline in A-shares. In response, an industry insider from public funds told Securities Times that recently some “Fixed Income+” products and several ETFs have experienced net redemptions, but the impact has been limited and not sustained.

Meanwhile, the market has also shown some positive signals. Broad-based ETFs heavily held by the “national team,” such as the Southern CSI 500 ETF and Huatai Bairui CSI 300 ETF, have seen net capital inflows over the past week. Additionally, since March, active equity funds have raised a total of 28.532 billion yuan, which will inject incremental funds into the A-share market.

Limited Impact of “Fixed Income+” Scale Changes on A-shares

Recently, the equity market has performed poorly, causing fluctuations in the net asset value of “Fixed Income+” funds.

Wind data shows that products with equity allocations between 10% and 30% are defined as “Fixed Income+” products. Currently, the median return of over 1,000 such public offerings in the market over the past week is -0.86%. Only 11 products achieved positive returns, indicating a broad decline.

A fund sales professional said, “Most investors in ‘Fixed Income+’ products are low-risk preference groups. The recent weakness in the equity market has dragged down the performance of ‘Fixed Income+’ products. While investors are under some pressure, redemptions are concentrated among a small group and there has been no large-scale redemption.”

Regarding rumors that “insurance funds selling ‘Fixed Income+’ triggered a chain reaction,” a securities broker’s non-bank financial analyst stated that some insurance funds have reduced holdings of “Fixed Income+” products due to solvency pressure, which is a normal industry adjustment. Moreover, such reductions account for a very small proportion of overall funds and are unlikely to impact the stock market significantly, contradicting the rumor of a “market crash.”

Despite recent fluctuations in the net value of “Fixed Income+” products, their overall performance this year remains resilient. Wind data shows that over 70% of these products have achieved positive returns this year, with a median return of 0.68%, outperforming the average return of pure bond funds and approaching the 0.9% year-to-date return of mixed equity funds.

A fund investor said, “The ‘Fixed Income+’ product I bought for my mother has been declining for six consecutive days, with a total drop of 0.81%, erasing half of its year-to-date gains in just a few days.” She added that the product still has a 0.82% return this year, higher than most pure bond funds, and she has no plans to sell.

In fact, data shows that “Fixed Income+” products have gained the trust of many investors, with their scale rising sharply in recent years. Last year, the scale nearly doubled, surpassing 1.5 trillion yuan by the end of last year.

Although the “Fixed Income+” scale exceeds one trillion yuan, its equity allocation remains between 10% and 30%. At the end of last year, the market value of equity holdings was less than 300 billion yuan. This indicates that even if “Fixed Income+” products experience short-term concentrated redemptions, their impact on the A-share market is minimal.

Redemptions in Some ETFs with Recent Large Gains

Regarding rumors that “public funds were forced to sell stocks, convertible bonds, and ETFs,” the reporter learned that only a few ETFs with high recent returns have shown signs of profit-taking, mainly concentrated in industry-themed ETFs and convertible bond ETFs. There has been no large-scale redemption across the entire ETF market.

Among them, the chemical industry ETF has seen the highest net redemption recently, with net redemptions for eight consecutive trading days totaling 6.21 billion yuan, ranking first in net redemption among ETFs during the same period. However, from a long-term perspective, this ETF has achieved a return of 42.69% over the past year. Despite large net outflows recently, it still saw a net inflow of 21.7 billion yuan over the past year, growing from 1.4 billion yuan at the end of Q2 last year to a peak of 37.8 billion yuan in early March. This shows that the recent redemptions, amounting to tens of billions, represent a small proportion of its total scale and have limited market impact.

“High industry prosperity hasn’t prevented short-term selling,” said an investor holding the chemical ETF. From an institutional perspective, the chemical industry is currently in a large-scale destocking cycle globally, and there is potential for profit improvement as oil prices stabilize and chemical spreads widen. The investor believes that the long-term fundamentals of the chemical sector are positive, and recent outflows are mainly driven by market sentiment, causing the ETF to decline consecutively. Wind data shows that this ETF has fallen for seven straight days, with a total decline of 11.73%, nearly wiping out all gains made this year.

Besides the chemical ETF, the non-ferrous metals ETF has experienced net redemptions for seven consecutive days, totaling 4.521 billion yuan; the oil ETF has seen nine days of net redemptions, totaling 4.482 billion yuan. Additionally, the Bosera Convertible Bond ETF has experienced net redemptions on nine of the last ten trading days since March 9, with total redemptions exceeding 3 billion yuan.

Overall, the four ETFs mentioned above have a total net redemption of less than 20 billion yuan, and recent net redemptions across all stock ETFs only amount to 27 billion yuan. Compared to the daily trading volume of 20 trillion yuan in the A-share market, these outflows have limited impact, and the idea that “large-scale ETF selling causes market declines” is not supported.

Funds Supporting the Market Against the Trend

Recently, market movements have mainly been driven by escalating military conflicts involving the US, Iran, and others. As the conflict intensifies, global risk aversion has sharply increased.

The market generally believes that the core trading logic of the recent A-share market is a dual shock from geopolitical risks and liquidity expectations. Under this background, the market has shown features of reduced volume and defensive sectors outperforming, reflecting strong investor caution.

A securities analyst said that current A-share levels are no longer suitable for further declines. Short-term trading and capital disturbances are expected to quickly subside, and market sentiment will gradually recover.

In fact, many funds have been increasing their positions against the trend to bottom fish. From the ETF perspective, broad-based ETFs heavily held by the “national team” have seen renewed capital inflows. Over the past week, the Southern CSI 500 ETF and Huatai Bairui CSI 300 ETF received net inflows of 4.45 billion yuan and 4.33 billion yuan, respectively, ending eight weeks of net outflows. The China Asset Management CSI 50 ETF also saw a net inflow of 3.056 billion yuan, ending ten weeks of net outflows. Additionally, the Fuquan SSE Composite ETF, Huaxia SSE STAR Market 50 ETF, and Southern CSI 1000 ETF each received over 1 billion yuan in net inflows, indicating active capital deployment.

Since March, active equity funds have raised a total of 28.532 billion yuan, continuing to bring incremental funds into the A-share market.

Regarding when the market might resume an offensive stance, Great Wall Fund stated that three key factors should be observed: first, the easing of geopolitical tensions; second, a decline in oil price volatility; and third, the emergence of sustainable industry catalysts and improved risk appetite. In the long term, China’s supply chain remains stable, with ample crude oil reserves, and high oil prices are relatively limited in their impact on the domestic economy, providing stronger risk resistance. After short-term emotional declines, market risks will gradually be released, and long-term funds are expected to gradually deploy, so excessive pessimism is unwarranted.

Invesco Great Wall International Investment Fund Manager Zhou Hanying pointed out that the current market mainly expects the short-term end of the war (less than one month). If the conflict escalates further, it could trigger risks of stagflation and recession globally. Portfolio adjustments can include repositioning, allocating high-cash-flow assets, and high-ROE (return on equity) assets, combined with “HALO” (heavy assets, low淘汰率) assets to cope with market volatility.

Fuguo Fund Manager Zhang Shengxian analyzed that the current macro environment domestically and internationally is conducive to price increases. As energy prices push inflation, the PPI (producer price index) in China may turn positive sooner than expected. Historically, during periods of rising PPI, sectors such as chemicals, steel, building materials, transportation, oil and petrochemicals, and non-ferrous metals tend to outperform, often benefiting first. As cyclically valued sectors recover, market style may shift from a focus on AI to a “AI + price increases” and “technology + cyclicals” dual-driven mode.