Deposit relocation in progress: Penghua Low-Volatility "Fixed Income+" product line offers a new stable destination for funds

Ask AI · How does Penghua Fund’s low-volatility product line meet the needs of different risk preferences?

Since the beginning of this year, the scale of “Fixed Income+” funds has continued to grow, with multiple products surpassing 10 billion yuan. However, in March, short-term market volatility intensified, and fund flows showed clear differentiation—products with stable long-term performance and good drawdown control experienced relatively smooth redemption and subscription, while more volatile products faced increased redemption pressure during net value declines. When market uncertainty rises, investors’ demand for “holdable” products becomes more urgent than ever.

So, who is actually seeking these products? The answer points to a growing group—“wealth management upgrade” investors.

Wealth Management Upgrade Investors: Funds are flowing from deposits into “Fixed Income+”

This type of investor profile is very clear: they have long been accustomed to buying bank wealth management products or holding deposits, with a natural preference for “stability.” But in recent years, deposit interest rates have continued to decline, and traditional wealth management yields have shrunk; at the same time, they are hesitant to easily switch to stocks or equity funds, fearing excessive risks and principal losses. Behind this mindset is a pursuit of “certainty”—they need not short-term high elasticity, but peace of mind during long-term holding. This is a true reflection of the phrase “holdable.”

From the flow of funds, the demand from these investors is being accelerated. Tianfeng Securities pointed out that since the second half of last year, amid strengthening equities and high-interest deposits maturing in batches, attention to “moving deposits” has increased significantly. The current changes in deposit structure mainly stem from divergence in residents’ risk preferences:

On one hand, residents’ risk appetite has marginally improved, but the recovery is limited, showing a “not strong nor weak” state. Some funds are flowing out of deposits seeking higher returns, but since risk appetite has not significantly increased, funds tend to enter equity markets indirectly through “Fixed Income+” and mixed wealth management products with options.

On the other hand, low-risk-averse funds still favor low-volatility, stable assets. But after bond market interest rates declined and deposit rates were cut multiple times, the cost-effectiveness of fixed-term deposits weakened. Residents prefer to shorten deposit terms and shift toward flexible, stable products that balance liquidity and yield. This demand profile aligns well with the positioning of “Fixed Income+” products: they use bonds as a foundation, enhanced by stocks or convertible bonds, offering yield flexibility on a stable basis. Especially for low-risk-averse funds, low-volatility “Fixed Income+” products control drawdowns strictly, limiting volatility within tolerable ranges. This “steady foundation with moderate enhancement” feature makes them a high-quality choice for asset allocation in a low-interest-rate era.

Why focus on low-volatility “Fixed Income+” now?

For “wealth management upgrade” investors, the current market turbulence highlights three dimensions of value in allocating to low-volatility “Fixed Income+” products:

First, coping with a low-interest-rate environment. Deposit rates keep falling, traditional wealth management yields shrink. Low-volatility “Fixed Income+” products generate basic returns through bond holdings and moderately enhance via convertible bonds or stocks, providing a hedge against declining rates.

Second, smoothing market fluctuations. As equity markets become more volatile, single assets struggle to perform well alone. Low-volatility “Fixed Income+” products combine stocks and bonds, controlling drawdowns within tolerable limits, allowing investors to hold long-term despite market ups and downs.

Third, capturing long-term compound growth. The value of low-volatility “Fixed Income+” products lies not in short-term bursts but in long-term accumulation. For investors seeking steady appreciation, this “slow is fast” compound effect is an effective path to achieving long-term goals.

So, what kind of low-volatility “Fixed Income+” products can truly meet these needs? They must withstand tests in three dimensions: risk controllability, long-term performance, and manager stability—are drawdowns within acceptable ranges? Has performance persisted through bull and bear markets? Is the investment approach proven through market cycles?

Penghua Fund’s Bond Investment Department General Manager Zhu Song, along with the Multi-Asset Investment Department General Manager Wang Shiqian and Co-General Manager Fang Chang, manage the typical representatives of this low-volatility “Fixed Income+” product line, embodying this strategic direction.

Zhu Song: Building a benchmark of low-volatility “Fixed Income+” through discipline, value investing, and contrarian thinking

With 20 years of securities experience and over 12 years managing funds, Zhu Song is the General Manager of Penghua Fund’s Bond Investment Department and a fund manager. His investment career is characterized by discipline, value investing, and contrarian thinking—these also directly address the three key metrics investors care about when choosing funds.

Discipline is Zhu Song’s core principle throughout his career. For example, in his flagship product Penghua Industrial Bonds, according to annual reports, convertible bond positions are strictly limited to 0-20%, with equity risk exposure tightly controlled. This discipline has kept the maximum drawdown of Penghua Industrial Bonds within about 2% over the past 12 years, including during the 2015 stock market turbulence and the 2016 circuit breakers.

Value investing is another steadfast principle. “My understanding of value investing is not about how much you earn, but about not losing too much money.” This obsession with safety margins underpins the product’s risk control. Contrarian investing is Zhu Song’s distinctive style. For instance, during the 2014-2015 bull market, he sold out of convertible bonds at over 4,000 points, successfully avoiding the sharp decline afterward; in late June, amid market panic, he added positions early on, capturing subsequent rebounds.

Based on these principles, Zhu Song’s team has built a clear product matrix tailored to different risk preferences:

Ultra-low volatility “Fixed Income+” products: Strict limits on equity holdings, portfolio duration, and bond types, aiming for maximum drawdown ≤1.5%. These are especially suitable for highly risk-sensitive investors. Representative products include Penghua Fengze (C class 160618), Penghua Yongsheng One-Year Open-End Bond (003662).

Low-volatility “Fixed Income+” products: Higher operational frequency on small cycles and individual bonds to capture structural opportunities, with convertible bond positions strictly under 20%, aiming for maximum drawdown ≤2%. Examples include Penghua Industrial Bonds (A class 206018), Penghua Fengcheng (A class 009021), Penghua Yongtai 18-month (004503).

Among Zhu Song’s product lineup, Penghua Industrial Bonds is a benchmark in the industry. According to fund reports, it has achieved 12 consecutive years of positive annual net value growth from 2014 to 2025. As of the end of 2025, its 10-year cumulative growth rate was 58.21%, ranking 10th among 86 comparable bond funds (source: Galaxy Securities). Its 2025 performance was 5.21%, with a maximum drawdown of -1.25%.

This 12-year streak of positive returns in a volatile market is especially valuable. It means that regardless of market fluctuations, holders of this fund have experienced positive returns every year—making this “certainty” a rare and valuable trait for conservative investors.

Wang Shiqian: Flexible multi-asset allocation, building a complete product matrix covering low, medium, and high volatility

While Zhu Song focuses on deep specialization in low-volatility strategies, Wang Shiqian, General Manager of Penghua Fund’s Multi-Asset Investment Department, leverages his experience across equities, convertible bonds, and pure bonds to construct a comprehensive “Fixed Income+” product matrix across different risk levels—offering investors a full spectrum from defensive to aggressive solutions.

Wang Shiqian’s representative low-volatility “Fixed Income+” product is Penghua Fengli (A class 160622), a first-tier bond fund that does not directly invest in stocks but constructs a portfolio through “bonds + convertible bonds.” According to reports, its convertible bond holdings are maintained between 10%-30%. Data from Wind shows that, except for 2022, its maximum historical drawdown has been kept within 2%, aiming to generate slightly higher returns than pure bonds with limited volatility, suitable for conservative investors valuing stability and experience.

Performance-wise, as of the end of 2025, Penghua Fengli’s A class achieved annualized returns of 6.12%, 18.38%, and 26.80% over 1, 3, and 5 years, respectively, outperforming the respective benchmarks (0.10%, 13.49%, 23.99%) under strict drawdown control. Its 2025 return was 6.12%, with a maximum drawdown of -1.48%.

Fang Chang: Achieving strategic offense and defense through macro asset allocation, creating a resilient low-volatility “Fixed Income+”

Fang Chang, Co-General Manager of Penghua Fund’s Multi-Asset Investment Department, specializes in using macro asset allocation to balance offense and defense, aiming to enhance portfolio returns. His representative low-volatility “Fixed Income+” product is the second-tier bond fund Penghua Steady Growth (A class 018080), with a maximum target drawdown set at 2%, equity exposure not exceeding 10%, mainly investing in sectors like broad dividends, cycles, and Hong Kong tech. As of the end of 2025, its six-month, one-year returns were 1.25% and 3.13%, respectively, with benchmarks at 1.11% and 2.57%. Its 2025 performance was 3.13%, with a maximum drawdown of -0.81%.

In terms of drawdown control, Penghua Steady Growth balances equity investments by diversifying across stable, high-operating-margin assets with high valuation safety margins; bond investments are actively managed in duration and sector to hedge risks from equity positions. Data from Wind shows that as of March 25, 2026, its year-to-date and one-year maximum drawdowns are both -0.97%, better than the peer averages of -2.25% and -2.73%.

Conclusion: In volatile markets, choosing products you can “hold on to”

Amid increasing market turbulence, the low-volatility “Fixed Income+” product lines managed by Penghua Fund’s Zhu Song, Wang Shiqian, and Fang Chang offer valuable options for investors seeking to capture market opportunities while controlling volatility. Whether it’s wealth management upgrade investors looking for deposit alternatives or conservative funds seeking a “ballast,” they can find suitable solutions within this product line.

Source: Penghua Fund