Worrying about the weak debt position due to a run on redemptions, the stock market quickly rises and then corrects with haste.

If you ask where the funds go? Asset allocation comes to the rescue!

The market trend came too fast, like a tornado. It is said that three bullish candlesticks can change one's faith, and the three bullish candlesticks before the National Day holiday led many investors to choose to shift funds from the bond market to the stock market. On the first trading day after the holiday, the bond market fluctuated under the pressure of redemption concerns; on the second trading day, the stock market experienced a correction.

Both stock and bond markets fluctuated one after another, so how should funds be allocated? For individual investors, it is a dilemma on both ends. Whether it is holding stocks or bonds, holding gold or other assets, heavily investing in a single type of asset may yield high returns in the short term, but profits and losses come from the same source. The intense returns may also be given back in more severe fluctuations and retracements.

Therefore, compared to studying the unpredictable short-term market trends and being entangled in heavily investing in a single type of asset, we suggest that investors start from the medium and long term, use the concept of asset allocation to tackle multiple fronts, and scientifically grasp the opportunities in the capital market with the art of allocation. Instead of being entangled in whether to choose stocks or bonds, consider a multi-asset strategy of "fixed income +".

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The encounter of high elasticity and low volatility: "Fixed Income +" funds

What is "fixed income +"? Looking at the underlying assets, this is a hybrid product that includes different sub-assets such as stocks, credit bonds, interest rate bonds, convertible bonds, and funds. Generally, it refers to stock-bond hybrid funds represented by bond-mixed funds and secondary bond funds.

The rich underlying assets give "fixed income +" funds a unique advantage of pursuing both offense and defense in different market environments: when the stock market trend comes, it has higher offensiveness than pure bond funds; when the stock market fluctuates or leans bearish, the maximum drawdown is less than that of stock funds, and it has higher "anti-fragility" than pure equity assets.

In the long term, "fixed income +" funds have achieved cost-effective performance. Wind data shows that over the past decade, the maximum drawdown of the mixed bond secondary index and the bond-mixed fund index is at a lower position on the vertical axis, while the returns are at a middle position, achieving a good balance between risk and return.Return and Maximum Drawdown Chart of Different Fund Indices Over the Past Decade

In terms of annual win rates over the past decade, both the mixed bond fund index and the secondary bond fund index have maintained a win rate of 70% or above. Regardless of whether it is the maximum annual increase or the minimum annual fluctuation, they have consistently been at the mid-to-upper level among major fund indices (excluding QDII and alternative investments). Specifically, the mixed bond fund index has achieved positive returns in 8 out of the past 10 years, with the maximum annual increase reaching 18.74%, and the maximum single-year loss being only 3.78%.

Table of Annual Return Performance of Different Fund Indices Over the Past Decade

After discussing the long term, let's talk about the performance of "fixed income +" funds under the recent rebound of the equity market.

Benefiting from the contribution of the "+" part of the returns, the performance of "fixed income +" funds has also improved significantly, with the overall performance warming up this year. According to the research statistics of Cai Xin Securities, affected by the secondary market, the median performance of "fixed income +" type funds in the first three quarters of 2024 is 3.72%, surpassing the median performance of fixed income funds in the whole market during the same period, which is 2.81%.

The Meeting of Timing and Ability: High-Performing "Fixed Income +"

Above, we have seen that the overall performance of "fixed income +" is quite good, so how should investors choose products suitable for themselves? The approach of "fixed income +" is to use pure bond returns as the base and enhance equity returns, pursuing better returns on the basis of controlling drawdowns. Therefore, the strategy or style of the fund manager in the "+" part will greatly affect the risk-return characteristics of the product. Recently, the rise of the equity market has provided investors with a window of time to examine the fund manager.

According to the fund tertiary classification of Galaxy Securities, we have counted the "fixed income +" funds that have performed well this year (the specific range is mixed funds, secondary bond funds, convertible bond funds, and ordinary bond funds that can invest in convertible bonds under the tertiary classification of Galaxy Securities, with stock investment not exceeding 30%).After excluding some products with net value fluctuations due to redemption and other reasons, it was found that as of September 30th, a total of 27 "fixed income +" funds have achieved returns exceeding 10% in the first three quarters of this year. Among them, there are 4 funds that belong to Guangfa Fund, which is also the fund company with the most "fixed income +" funds with returns exceeding 10% in the first three quarters of this year.

Guangfa's "fixed income +" funds with performance exceeding 10% since the beginning of this year:

Observing the net value changes of the above four products, Guangfa Xinyu Mixed has the strongest offensive elasticity in this wave of A-share rebound. Public information shows that this product is managed by two fund managers, Yao Qiu and Liu Zhihui. Among them, Yao Qiu is the co-general manager of the Mixed Asset Investment Department of Guangfa Fund, with 14 years of experience in the securities industry and more than 9 years of experience in managing public fund portfolios.

The same source data shows that including Guangfa Xinyu Mixed, all the mixed stock and bond funds managed by Yao Qiu (5 funds) have achieved returns greater than 5% since the beginning of this year. In the past year, the Guangfa Hengyue Bond A, Guangfa Xinyu Flexible Allocation Mixed A, and Guangfa Wenrun One-Year Holding Period Mixed managed by him were ranked in the top 15%, top 25%, and top 25% of the same category respectively. (The same category is ordinary bond funds (secondary) (Class A), flexible allocation funds (benchmark stock ratio 0-30%), standard debt-oriented funds (stock upper and lower limits 10%-30%) (Class A), with specific rankings of 52/429, 15/66, and 11/48)

How does Yao Qiu manage "fixed income +"? According to public reports, he has shared his investment insights - aiming for absolute returns as the investment goal, arranging positions based on the risk-return ratio of various assets and dynamically adjusting, effectively obtaining the cumulative returns of different assets such as stocks, pure bonds, and convertible bonds.

If everyone is confused at the moment and feels it is difficult to grasp the market trend, they might as well consider "fixed income +" funds managed by professional investors. In the process of searching for materials, we found that Yao Qiu has a new fund in issue recently - Guangfa Wenxin 6-month holding period mixed (Class A 021795; Class C 021796), which is a mixed debt fund, with the combined investment ratio of equity assets, convertible bonds, and exchangeable bonds accounting for 10%-30% of the fund's assets.

The stock market is generally rising, the bond market is experiencing short-term fluctuations, and it is also a period when policies are closely introduced. Choosing a new fund may be a good choice. For investors who do not want to bear large fluctuations and want to increase the elasticity of returns, they might as well pay attention to the new fund managed by Yao Qiu, Guangfa Wenxin 6-month holding period mixed (Class A 021795; Class C 021796), and seize the opportunities in stocks and bonds.