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 these are being cited as 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 also shows 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, actively managed 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 underperformed, causing fluctuations in the net value of “Fixed Income+” funds.

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

A fund sales professional said, “Investors in ‘Fixed Income+’ products are mostly 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 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 “market crash” rumors.

Although the net value of “Fixed Income+” products has fluctuated noticeably recently, 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 told reporters, “The ‘Fixed Income+’ product I bought for my mother has been down for six consecutive days, with a total decline of 0.81%. In just a few days, it has wiped out half of its year-to-date gains.” 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, from a data perspective, “Fixed Income+” products have gained the trust of many investors, with their scale increasing steadily in recent years. Last year, the scale nearly doubled, surpassing 1.5 trillion yuan by the end of last year.

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

Some ETFs that previously surged have experienced net redemptions

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

Among them, the chemical industry ETF has seen the largest net redemption recently, with net redemptions for eight consecutive trading days totaling 6.21 billion yuan, ranking first in ETF net redemptions during the same period. However, from a long-term perspective, this ETF has achieved a return of 42.69% over the past year. Despite recent large outflows, 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 several billion yuan, represent a small proportion of its total scale and have limited market impact.

“High industry prosperity hasn’t prevented short-term fund 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 for several days. Wind data shows that the ETF has fallen for seven consecutive days, with a total decline of 11.73%, nearly erasing all gains made this year.

Besides the chemical ETF, the non-ferrous metals ETF has experienced net redemptions for seven days in a row, 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, these four ETFs have experienced net redemptions totaling less than 20 billion yuan, and recent net redemptions across all stock ETFs in the market are only about 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 narrative that “large-scale ETF selling causes market declines” is not supported.

A group of funds are actively supporting the market against the trend

Recently, market movements have mainly been influenced by escalating military conflicts involving the US, Israel, and Iran. 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 characteristics of reduced volume and defensive sector dominance, reflecting cautious investor sentiment.

A securities analyst said that current A-share levels are no longer suitable for further declines, and short-term trading and capital disturbances are expected to dissipate quickly, with market sentiment gradually recovering.

In fact, some funds have been actively increasing their positions against the trend to buy the dip. From the ETF perspective, the “national team” heavy holdings of broad-based ETFs 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 an eight-week net outflow trend. The Huaxia SSE 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, actively managed 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 disturbances; second, a decline in oil price volatility; third, the emergence of sustainable industry catalysts and improved risk appetite. From a long-term perspective, China’s supply chain remains stable, with ample crude oil reserves, and high oil prices have limited impact on the domestic economy, providing stronger risk resistance. After short-term emotional declines, market risks are gradually being released, and long-term funds are expected to gradually position, so excessive pessimism is unwarranted.

Invesco Great Wall International Investment Fund Manager Zhou Hanying pointed out that the current market mainly expects the war to end within a short period (less than a month). If the conflict escalates further, it could trigger risks of global stagflation and recession. Portfolio adjustments can include repositioning, allocating high-quality 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 macro environment domestically and internationally is conducive to price increases this year. As energy prices push inflation, the PPI (producer price index) may turn positive sooner than expected. Historically, during periods of rising PPI, sectors such as chemicals, steel, building materials, transportation, petrochemicals, and non-ferrous metals tend to outperform, often benefiting first. As cyclicality valuation repairs, market styles may shift from a focus on AI to a “AI + price increases” and “technology + cyclicality” dual-driven mode.