New offerings have been added to the personal pension fund product category, and two types of fund companies are expected to be the first to benefit.

Recently, multiple fund companies have received the Notice on Properly Implementing the Work of Including Equity-laden Secondary Bond Funds and Debt-biased Hybrid Funds into the Catalogue of Personal Pension Fund Products issued by the regulatory authority. The notice states that to further enrich the product portfolio of personal pension funds and better meet the demands of different investors, qualified equity-laden secondary bond funds and debt-biased hybrid funds will be included in the Catalogue of Personal Pension Fund Products.

Following pension target funds and index funds, the range of investable fund categories for personal pensions will be further expanded.

According to information obtained by *Caijing* New Media from industry insiders, multiple fund companies recently received the Notice on Properly Implementing the Work of Including Equity-laden Secondary Bond Funds and Debt-biased Hybrid Funds into the Catalogue of Personal Pension Fund Products (hereinafter referred to as the "Notice") issued by the regulatory authority.

The notice states that to further enrich the product portfolio of personal pension funds and better meet the demands of different investors, qualified equity-laden secondary bond funds and debt-biased hybrid funds (including ordinary debt-biased hybrid funds and debt-biased hybrid FOF funds) will be included in the Catalogue of Personal Pension Fund Products.

The Quantitative and Fund Research Team of CITIC Construction Investment pointed out that all the newly expanded categories of personal pension fund products this round fall into the "fixed income +" category, with prominent robust attributes. Compared with pure bond funds, equity-laden "fixed income +" products retain the space for equity enhancement on the premise of controlling volatility, which is expected to generate higher returns than pure bonds in the long term; compared with equity-biased funds, their bond underlying positions provide a significant safety cushion, with more controllable drawdowns.

"It is this feature that balances robustness and enhancement, which fits the allocation demand of the medium and low risk tiers in personal pensions," the Quantitative and Fund Research Team of CITIC Construction Investment stated.

Six Inclusion Criteria

For the inclusion criteria of equity-laden secondary bond funds and debt-biased hybrid funds, the Notice has clarified six thresholds.

First, the product has been established for 3 full years and is a product that allows daily subscription.

Second, the size of the product at the end of the latest 4 quarters is no less than 500 million yuan.

Third, the average equity-biased asset (including stocks, equity-biased funds, etc.) position of equity-laden secondary bond funds and debt-biased hybrid FOFs at the end of the latest 8 quarters is no less than 5%, and the average equity-biased asset position of ordinary debt-biased hybrid funds at the end of the latest 8 quarters is no less than 10%. Meanwhile, the sum of the average equity-biased asset position and convertible bond position of equity-laden secondary bond funds and ordinary debt-biased hybrid funds at the end of the latest 8 quarters is no higher than 20% and 30% respectively.

Fourth, the maximum drawdown of the product in the past 3 years is better than the median level of similar products.

Fifth, the total share proportion held by institutional investors of the product is no higher than 80%, and the total share proportion held by the top five institutional investors does not exceed 50%.

Sixth, the latest classified evaluation result of the public offering fund manager is not C.

In the initial stage, each public offering fund manager can include 1 product that meets the criteria. If multiple products meet the criteria, factors such as product style strategy, volatility level, and profitability shall be comprehensively considered to select the best one for inclusion application.

The Notice states that after the completion of the first batch of product inclusion, the screening and inclusion of equity-laden secondary bond funds and debt-biased hybrid funds will be carried out on a quarterly regular basis. Public offering fund managers whose related products meet the above inclusion conditions and have not yet had any equity-laden secondary bond funds or debt-biased hybrid funds included can apply for inclusion within 1 month from the end of each quarter.

In addition, a dynamic assessment and incentive & punishment mechanism will be established in the follow-up. For public offering fund managers whose included products have standardized operation, good performance, and sound growth of Y-share size, they can be allowed to appropriately increase the number of includable equity-laden secondary bond funds and debt-biased hybrid funds.

In terms of fee rates, public offering fund managers and custodians are supported to implement preferential fee rates for the management fees and custodian fees of Y shares of related products in accordance with market-oriented principles and referring to previous practices.

Two Types of Fund Companies May Benefit

The first time that public offering funds were included in the investable list of personal pensions dates back to 2022.

On November 18, 2022, the China Securities Regulatory Commission announced the first batch of the Catalogue of Personal Pension Investment Fund Products, with 129 pension target funds under 40 fund managers selected.

In the following two years, the expansion was centered on the pension target fund category. Until the Notice on the Full Implementation of the Personal Pension System was issued on December 12, 2024, which clearly included national debt, specific pension savings, index funds and other product types in the scope of investment products.

On the same day, the official website of the China Securities Regulatory Commission updated the Catalogue of Personal Pension Funds, adding 85 index funds to the product list, including 78 broad-based index products and 7 dividend index products.

According to statistics from a research report of CITIC Securities, as of September 6, the number of public offering personal pension funds was 323, including 107 passive index and index enhancement funds, 90 debt-biased hybrid FOF funds, 80 target date FOF funds, 37 balanced hybrid FOF funds, etc.

"The proportion of medium and high volatility products is relatively high, and the medium and low risk options are mainly concentrated in debt-biased hybrid FOF funds that generally set a one-year holding period," the research report believes. The inclusion of public offering "fixed income +" funds is expected to increase the supply of medium and low risk investment tools, and the inclusion of "fixed income +" funds with different equity centers will further enrich the risk gradient coverage of personal pension funds and broaden the investment scope.

From the perspective of this research report, this expansion of personal pension funds provides development opportunities for two types of fund companies.

On the one hand, the expansion of product categories provides a "track change competition" opportunity for large "fixed income +" manufacturers with relatively weak layout of some index products and FOF products in personal pension funds. In an environment where the static returns of pure bond products are insufficient, they are expected to attract personal pension investors with medium and low risk preference by virtue of the long-term excellent performance of "fixed income +" products.

On the other hand, the products included this time set an upper limit of 80% on the share proportion held by institutional investors. As of the 2026 semi-annual report of public offering funds, the overall institutional-held share proportion of public offering hybrid bond secondary funds has reached 74.98%, which means that some products that "focus on institutional business and neglect retail business" are difficult to meet the inclusion requirements, and "fixed income +" fund managers that deeply cultivate retail business are expected to take the lead in benefiting.

The Quantitative and Fund Research Team of CITIC Construction Investment stated that equity-laden secondary bond funds and debt-biased hybrid funds can be used as a robust underlying position for pension asset portfolios, which is especially suitable for people with low risk preference. Meanwhile, participants can enjoy the deferred tax preference: the payment amount is deducted before tax according to the actual amount within the annual limit of 12,000 yuan, no tax is levied during the investment link, and the tax is levied separately at a low rate of 3% when receiving. For participants applicable to a higher marginal tax rate, the individual income tax deduction in the payment link can generate considerable immediate tax saving effects. In addition, the management fee and custodian fee of Y shares are usually 50% off and the sales service fee is exempted, with a significant long-term compound interest effect.

"It should be noted that 'fixed income +' is not principal guaranteed and return guaranteed. Stock and convertible bond positions will still bring certain net value fluctuations, and investors should choose prudently according to their own risk tolerance," the Quantitative and Fund Research Team of CITIC Construction Investment reminded.

This article is from the WeChat official account "Caijing" (ID: mycaijing), written by Jiang Jinli, and published with authorization from 36Kr.