Flocking to buy public funds, bank wealth management products "borrow the channel" to increase returns
The public fund allocation scale of six institutions, including China Merchants Bank Wealth Management, ICBC Wealth Management, Industrial Bank Wealth Management, CITIC Bank Wealth Management, Huaxia Wealth Management, and Bank of Communications Wealth Management, all exceeded 100 billion yuan. Among them, China Merchants Bank Wealth Management ranked first with 166.2 billion yuan, followed by ICBC Wealth Management and Industrial Bank Wealth Management with 146.1 billion yuan and 130.9 billion yuan respectively.
In May, Liu Fang plans to increase the public fund allocation ratio by another 5 - 8 percentage points.
As an investment manager in the asset allocation department of a city - commercial bank wealth management company, she has tasted the "sweetness" of increasing public fund holdings.
In the first quarter of 2026, she increased the public fund allocation ratio of the five fixed - income wealth management products she managed from 10% to 16%. Subsequently, the annualized yields of the five fixed - income wealth management products all exceeded 3.7% in April, outperforming the average annualized yield (3.42%) of similar wealth management products in the same month.
Therefore, she intends to bet on the idea that "increasing public fund allocation can bring ideal excess returns."
This is not an isolated case. Facing the increased volatility of the stock and bond markets this year, public funds have become a new means for bank wealth management companies to promote diversified asset allocation and achieve considerable returns.
On April 17, 2026, the "Quarterly Report on the Chinese Banking Wealth Management Market (First Quarter of 2026)" (hereinafter referred to as the "Report") released by the Banking Wealth Management Registration and Custody Center showed that in the first quarter of this year, the allocation amount of bank wealth management companies to public funds increased by 130 billion yuan to 1.95 trillion yuan. The allocation ratio jumped from 5.1% at the end of last year to 5.7% at the end of the first quarter of this year. Both the allocation amount and the allocation ratio reached the highest levels since statistics began.
A report released by the research department of CICC showed that leading bank wealth management companies were the main force in allocating public funds in the first quarter. The public fund allocation scale of six institutions, including China Merchants Bank Wealth Management, ICBC Wealth Management, Industrial Bank Wealth Management, CITIC Bank Wealth Management, Huaxia Wealth Management, and Bank of Communications Wealth Management, all exceeded 100 billion yuan. Among them, China Merchants Bank Wealth Management ranked first with 166.2 billion yuan, followed by ICBC Wealth Management and Industrial Bank Wealth Management with 146.1 billion yuan and 130.9 billion yuan respectively.
Reporters from Economic Observer noticed that the public fund products that bank wealth management companies are keen to increase their holdings of are bond - type funds.
The "Report" showed that as of the end of the first quarter of 2026, among the fund - type assets heavily held by bank wealth management companies, bond - type funds accounted for as high as 83.5%, money - market funds accounted for less than 8%, and the proportions of hybrid funds and stock funds were both less than 4%.
"Recently, through communication with investment managers of many bank wealth management companies, I found that they also plan to continue to increase their holdings of public funds as a new tool to increase the returns of wealth management products and improve product liquidity management." She said.
Setbacks in Increasing Holdings
"There are different voices within the company regarding the large - scale increase in bond - type fund holdings." Liu Fang admitted. The investment research department of the bank wealth management company she works for believes that the investment strength of bank wealth management companies lies in bond assets, while the investment strength of public funds lies in stock assets. Now, for bank wealth management companies to increase their holdings of bond - type funds on a large scale is a bit like "abandoning one's own advantages."
In addition, policy implementation and changes in the market environment have also had a significant impact on the public fund holdings of bank wealth management companies.
Since January 1 this year, the "Regulations on the Management of Sales Fees for Publicly Offered Securities Investment Funds" (hereinafter referred to as the "New Regulations") have been officially implemented. It has arranged differential terms for the redemption fees of bond - type funds and index - type funds. Fund managers can make more flexible fee arrangements after institutional investors have held bond funds for more than 30 days.
In addition, the "New Regulations" have also established a long - term holding reward mechanism. Except for money - market funds, no sales service fees shall be charged for the shares of stock - type, bond - type and other funds held by investors for more than one year.
Initially, the risk control department of the bank wealth management company where Liu Fang works was worried that the short - term purchase and redemption of bond - type funds by investment managers would face relatively high redemption fees, and suggested that investment managers reduce the allocation of bond - type public funds.
"However, after evaluation by our investment department, we found that the 'New Regulations' are actually beneficial for wealth management companies to increase the allocation of bond - type public funds." Liu Fang revealed that usually, bond - type funds are used as the bottom - position assets of wealth management products, and the allocation period exceeds one year. This means that bank wealth management companies no longer need to pay sales service fees, which can in turn increase the overall yield of wealth management products.
Since mid - February, she quickly increased the allocation ratio of bond - type public funds in five fixed - income wealth management products to 14%.
Liu Fang admitted that her action of increasing holdings was "a bit late." After confirming that the "New Regulations" were beneficial for bank wealth management companies to increase their holdings of public funds, investment managers of many bank wealth management companies had increased the allocation ratio of bond - type public funds to 15% - 20% in early February.
A research report released by Tianfeng Securities pointed out that after the implementation of the "New Regulations", the purchase intensity of bond - type public funds by bank wealth management companies reached a new high in February.
The continuous decline in market interest rates has led to a continuous decline in the yields of the traditional bond - holding - to - maturity strategy of bank wealth management companies. This has forced bank wealth management companies to urgently find other ways to increase the returns of fixed - income allocation by increasing their holdings of bond - type public funds.
In the first quarter of this year, Liu Fang also thought about improving bond trading capabilities to increase returns. However, after a period of experimentation, she found that the trading team of the bank wealth management company lacked sufficient operational experience in seizing bond trading spread arbitrage opportunities. During the period of increased bond price volatility, many bond transactions of the trading team ended with stop - loss operations of buying high and selling low.
As an investment manager of "fixed - income +" products of a joint - stock bank wealth management company, Zhu Chao also found that in the first quarter of this year, many bank wealth management companies increased their holdings of public fund assets on a large scale. Firstly, they valued the ability of public funds to take advantage of bond market pricing deviations and liquidity differences to obtain considerable spread returns. Secondly, through the diversified allocation of fixed - income assets, they could reduce the risk of crowded trading of popular treasury bond varieties.
Zhu Chao also increased the public fund allocation ratio of the four "fixed - income +" products he managed by 7 percentage points to about 16% in the first quarter. Among them, the proportion of increased holdings of bond - type funds reached 85%, and the remaining 15% was allocated to hybrid funds.
Data from Puyi Standard showed that affected by the adjustment of the stock and bond markets, the average annualized yield of "fixed - income +" products in March was only 1.17%. However, the annualized yields of the four "fixed - income +" products managed by Zhu Chao still remained above 1.4% in that month.
However, instead of "increasing positions", Zhu Chao had to "take profits". The reason was that the adjustment of the stock and bond markets in March led to a decline in the overall yield of wealth management products. Bank wealth management companies were worried that the redemption pressure would come again and required investment managers to cash out some assets first to deal with the potential redemption wave.
At the beginning of April, Zhu Chao had to reduce his holdings of about 30% of public fund assets, most of which were bond - type funds.
However, the market played a joke on him. In April, the redemption wave did not occur. Instead, more funds flowed into wealth management. According to the calculation data of Huayuan Securities, as of the end of April 2026, the scale of the wealth management market reached 34.5 trillion yuan, a month - on - month increase of 2.6 trillion yuan compared with the end of March.
Zhu Chao also found that the four "fixed - income +" products he managed had a total net inflow of more than 500 million yuan in April, which put him under greater pressure of fund allocation.
"Currently, I have not only replenished the public fund assets sold at the beginning of April but also increased the allocation of bond - type fund assets by about 30 million yuan." Zhu Chao revealed. Behind this is the consensus formed among investment managers of bank wealth management companies: in the context of investors' pursuit of low - volatility and stable returns, bond - type public funds, with their good net - value management, high liquidity and tax incentives, have become an important choice for wealth management funds to seek performance enhancement and risk control.
Plan Ahead
Li Yan is a product manager of a city - commercial bank wealth management company, managing six fixed - income wealth management products. She admitted that the reason for increasing the allocation of public fund assets is also a preventive measure under the new regulations on the self - discipline management of inter - bank time deposits.
Since the third quarter of this year, the new regulations on the self - discipline management of inter - bank time deposits will be implemented. The new regulations set the upper limit of the inter - bank time deposit pricing at "Shanghai Inter - bank Offered Rate (Shibor) for the same term + 10 basis points", and require that the scale of inter - bank time deposits with high interest rates (i.e., interest rate pricing exceeding Shibor for the same term + 10 basis points) should not exceed 10%.
Li Yan estimated that the implementation of the new regulations will have a significant impact on the yields of the six fixed - income wealth management products she manages. Firstly, the proportion of high - interest inter - bank time deposits in the six fixed - income wealth management products will drop from the current 25% to less than 15%, dragging down the actual yield of the products by 3 to 4 basis points. Secondly, the reshaping of the pricing upper limit will also depress the overall return, causing the yield of wealth management products to drop by about 2 basis points.
In the context of the continuous decline in market interest rates, Li Yan has tried her best to maintain the overall annualized yield of the six fixed - income wealth management products between 1.7% and 1.8%, barely reaching the expected yield of the products. She is worried that once the implementation of the new regulations leads to a decline in the product return rate, she may be unable to ensure that the products "meet the performance targets". For this reason, she once resorted to hasty and ill - considered actions, buying convertible bonds or preferred stocks that she was not familiar with, trying to increase returns through stock price increases. However, she soon found that the increased volatility of the stock market increased the risks of such assets, and rashly buying them would instead increase the risk of unexpected retracement of the product net value.
Later, Li Yan also turned her attention to bond - type and hybrid public funds, intending to increase returns by increasing her holdings of more public fund products.
Since May, she has visited four public funds. She found that in order to attract more wealth management funds, public funds not only provide back - end support services such as fund share registration, valuation, and accounting but also provide customized special - account entrusted investment cooperation according to the different risk control and return requirements of bank wealth management companies.
Currently, Li Yan is negotiating customized special - account cooperation with two of the public funds. The latter will construct an investment portfolio of bond - type + hybrid public products according to the return target, maximum drawdown limit, risk control requirements, and asset allocation direction set by her. Subsequently, Li Yan will submit this cooperation plan to the risk control department of the bank wealth management company for review. Once the bank wealth management company deems this feasible, she plans to allocate about 10% of the funds of the six fixed - income wealth management products to this special account and entrust the public fund to manage it.
Puyi Standard believes that there is still much room for improvement in the allocation ratio of public fund assets by bank wealth management companies in the future. Against the background of policy guidance for long - term funds to enter the market, bank wealth management companies will also actively increase the allocation of equity - type assets through public funds.
(At the request of the interviewees, Liu Fang and Li Yan are aliases)
This article is from the WeChat official account "Economic Observer", author: Chen Zhi, published by 36Kr with authorization.