Banks Compete To Develop Net Worth Products More And More Like Funds.

For a long time, when people go to banks to buy financial products, they basically ask only three questions of financial managers: how long is the investment period, how much the yield is, how much money is guaranteed or not? Even third questions do not need to be asked. Because in the environment of rigid payment, financial products can basically keep capital, and the expected rate of return is almost equal to the actual yield. However, with the advance of the interest rate liberalization, the yield of closed-end financial products of banks has dropped and dropped, and banks are no longer willing to shoulder the heavy burden of implicit guarantee for financial products. The open and net value products have become an important development direction of bank financing. The spanformation of financial products from closed expected return to open net value has become the trend of the times. Thus, in the eyes of many investors, bank financing becomes more and more like an open public offering fund: the traditional investment period is replaced by the date of purchase and redemption, and the fixed expected rate of return becomes a constant net unit value. This means that when people buy financial products, they must be more rational and have a basic understanding of products. They can no longer rely on the expected rate of return to decide whether to buy or not.

The expected yield based financial products with bank credit endorsement and implicit guarantee have always been favored by investors. However, in the environment where capital is loose and interest rates are down, the annual rate of return on traditional bank financing has dropped to about 3.8%, which is not as attractive to investors as before. In this environment, the net value of financial products can provide investors with higher returns. From last year's market situation, the net value management products, especially the open net value products, are becoming the mainstream of the bank financial market.

At first, the larger banks were the main force in pushing the products. Such as Bank of communications's "Deli Bao Kai Xin series of net worth financial products", China Merchants Bank's "Yue Xin Xin progressive financial management plan", Everbright Bank's "sunny first financial management plan", Minsheng Bank's "extraordinary asset management intelligent win series", Hengfeng bank's "Hengyu Jin finance month Yue Ying (net value)" series, Gd bank's "paid net cash management plan" and so on. Among them, ICBC has the most positive attitude towards the spanformation of open and net value products. Since last year, ICBC has launched a series of open and net worth products such as "increasing profits", "respecting profits", "stabilizing profits", "sharing profits", "Treasury bonds futures", "respecting" and "following e". Currently, the management of open products has exceeded 1 trillion and 500 billion, and the net value products have exceeded 800 billion yuan. Since the beginning of this year, smaller banks and local urban commercial banks have also launched a net value management product. For example, Beijing bank's "Xin Xi series RMB JINGWAH honor financial management plan", Ningbo bank's "2016 net worth financial management plan" and so on.

According to the "China Banking financial management market annual report (2015)" issued by Clearing Corp, "the national banking financial information registration system", as of the end of 2015, 4882 open-ended financial products were retained, and the balance of funds was 10 trillion and 320 billion yuan. The proportion of the capital balance in the market was 43.91%, an increase of 9 percentage points, an increase of 5 trillion and 80 billion yuan compared with the end of 2014, with an increase of 96.95%. In all open financial products, the net balance of net worth financial products was 1 trillion and 370 billion yuan, an increase of 810 billion yuan compared with the end of 2014, with an increase of 144.64%.

The so-called "net value" financial product is similar to the fund. Its operation mode is similar to that of the fund. It is not guaranteed floating income. Investors can not predict the actual yield of the product before buying the product, but publish the net value of the product regularly on the basis of the actual investment and operation of the product. This is a product type that breaks rigid payment. Compared with traditional financial products, the net value of financial products is more mobile than before. Products usually agree on the shortest holding period, and investors can purchase and redeem them on open days every week or every month after expiry. At the same time, unlike traditional financial products with low spanparency, net worth financial products will disclose earnings regularly, and investors' operations will be more flexible.

Han Song, general manager of the Department of asset management of ICBC, pointed out that customers think that the expected yield of financial products is the actual income of customers. Banks have the duty of "implicit guarantee" and should be "rigid payment"; and the bank believes that according to the agreement, the risk of product investment should be "buyer's conceit". Both sides believe that they are not risk bearers. Once the risks are real, they will be unfavourable to both sides. Under such circumstances, banks sometimes achieve higher expected revenue through the internal spanactions of asset pools and other financial products, or through the "revenue spanmission" between financial products. At the same time, in order to control risks, banks have to give up some investment opportunities, and investors lose the possibility of obtaining high profits. The development of net value financial products is not only conducive to breaking rigid payment, but also beneficial to investors' asset allocation.

Net value products can be like Bond Fund That is entirely estimated by the market value method, and it can also be estimated by the 7 day annualized rate of return. For example, suppose that the net value of the product purchased by investors is 1. To the next open day, if the net value of the product is changed to 1.1, the income of the investor is 1.1-1=0.1, that is, 10%; if the net value is 0.9, the yield is 0.9-1=-0.1, that is, the loss is 10%. The bank will issue a net value on fixed days such as daily, weekly or monthly according to the agreement signed with investors, and investors can make inquiries about net value.

However, the profit models of each net worth financial product are not the same. Investors must read the product brochures carefully before buying them. Take ICBC's global robust series of open value financial products, which are being sold in July 16th, for example. The calculation method is that the RMB performance benchmark is 3% to 3.5% (annualized), and the cumulative net growth rate of the product exceeds 3.5% (annualized). Performance benchmarks can be adjusted according to market conditions and information disclosure. After deducting the sales charges, custodian fees and fixed management fees of the industrial and Commercial Bank of China, if the yield of the open product investment cycle exceeds 3.5% (annualized), the remaining part will exceed the benchmark of performance. Fifty percent of the residual income is owned by the customer, and fifty percent of the residual income is the performance reward of the investment manager. That is to say, more than 3.5% of the excess return of the expected return can only be half of the investors, and the remaining half will be returned to the bank. However, the recent performance of the product is very general. In July 5th, the net value of the unit was only 1.0141, which is equivalent to only 1.4% of the yield. It has not reached the benchmark of 3% to 3.5%, and even more about the excess return.

In the same period, the bank sold "ICBC wealth entrusted series of convertible bonds financial products", "ICBC wealth consigned, mixed type balanced income management plan", "industry preferred non fixed term net value financial products" and treasury bond futures series products are good. Among them, the unit net value of the convertible bond financial products of the Bank of commerce is 1.3801, which is equivalent to the expected annual yield of 38%, much higher than the benchmark 6% of the product issued in July 1st. The industry preferred product was released in July 11th with a net value of 1.1223, and its current earnings are also higher than its benchmark 5.5%, and cash dividends are paid regularly. The net value of treasury bond futures enhanced financial products in July 1st was 1.0924, the current yield is higher than the performance benchmark 5.2%, but the product stipulates that 80% of the 80% part of the performance benchmark is the excess return of customers, so the actual return rate of investors should be 5.2+ (9.24-5.2) *

The vast majority of net worth financial products There is no purchase and redemption fee, but investors need to pay bank custodian fees, such as the Bank of China's net value of the financial management fee rate of 0.1%/ subscription amount. Although the net value product can enable investors to get the excess return that the expected revenue type product can not match, but as a non guaranteed floating income financial product, the investment profit and loss of the net value financing is borne by investors. For example, the net value of two products of a bank is 1.4367 yuan and 0.6921 yuan respectively, and the investor who buys the latter may lose 30%.

In fact, the regulatory authorities to guide bank financing to return to the essence of information management is one of the important driving forces to promote the spanformation of bank financing. As early as the end of December 2014, the China Banking Regulatory Commission issued the "Regulations on supervision and management of commercial banks' financial services", and clearly pointed out that in the future, we should strive to break the "implicit guarantee" and "rigid payment", and guide commercial banks to issue open-end net worth financial products. Meanwhile, the new regulation requires 50% of expected revenue products. Risk reserve The issuance cost of such products will increase significantly, which will affect the yield of products, while the risk reserve ratio of net worth products is only 10%, and the issue cost will be greatly reduced. So last year, some banks began to substantially reduce the size of the guaranteed financial products incorporated into the table, and began to introduce an increase in net worth financial products and non guaranteed structured financial products to ease capital pressure.

Wei Jiyao, a researcher at Puyi standard, pointed out that for banks, the net value spanformation of financial products is not equal to the elimination of closed expected revenue products. The more accurate expression should be the complementation of product line richness, and more precise product matching for different risk preferences and different types of customers. From the nature of the product itself, the traditional expected revenue products exhibit certain "bond characteristics", while the net value products have more obvious characteristics of "equity products". The two types of products have their own characteristics, and there is no difference between them. For the expected revenue products, since the first financial product was born in 2005, its development process has been carried out for ten years, and the product development is more mature. It ensures that the risk division method of the income type, the guaranteed floating income type and the non guaranteed floating income type is more reasonable, while the pressure on the bank and liquidity management is much smaller. In comparison with net worth products, although the open type net value products are usually more mobile, there is no necessary connection between the two elements of open and net value. Therefore, from the product itself, financial products are not necessarily all net worth.