Core Viewpoint - The article discusses the recent rise in yields of money market funds, with some reaching close to 2%, driven by "interest subsidy" strategies employed by various wealth management companies [1][2]. Group 1: Interest Subsidy Mechanism - The "interest subsidy" phenomenon is primarily manifested through "money enhancement" strategies, which leverage time differences in fund settlement to create additional returns [3]. - By purchasing funds on Thursday, the funds remain in the sales agency's custody for four days, generating interest that is fully subsidized to the wealth management company, allowing for an annualized yield of approximately 1.96% when combined with the base yield of 1.5% [3][6]. - This additional yield is essentially borne by existing fund holders, leading to a dilution of their returns by about 0.3% annually [3]. Group 2: Market Dynamics and Regulatory Environment - The rise of this strategy is attributed to increasing deposit competition among banks and the lack of clear regulatory prohibitions, placing it in a compliance gray area [3]. - However, major state-owned banks typically avoid such practices due to the potential risk of harming other investors' interests [3]. Group 3: Sustainability and Risks - The sustainability of the subsidy strategy is questionable, as it relies on high-interest custodial accounts from smaller banks, which may not be maintainable long-term [7]. - Regulatory scrutiny is increasing, with potential violations of existing regulations regarding promised returns, which could impact the viability of these strategies [8]. - There are concerns about fraud risks associated with high-yield investments, as highlighted by previous warnings from regulatory bodies [9]. Group 4: Investor Strategies - Investors are advised to scrutinize product descriptions for terms like "subsidy" or "interest return" and to be cautious of products with "T+2" interest commencement clauses, which may indicate potential for interest subsidy [11]. - High yields above market averages should prompt careful risk assessment, as excessive returns often come with significant risks [12]. - It is recommended to avoid short-term speculative investments, as they may lead to additional fees and dilute returns for those holding positions for less than a month [13]. - Choosing reputable purchasing channels and products with clear underlying assets is crucial to mitigate risks associated with ambiguous labels like "money enhancement" [14].

Core Insights - The article discusses the balance between innovation and risk in the financial management sector, particularly in response to the ongoing trend of "deposit migration" as deposit rates decline [1][7] - Financial institutions are adopting various strategies to attract funds, including lowering fees, introducing floating fee rate products, and offering customized financial products [2][3][6] Group 1: Market Trends - A significant increase in non-bank deposits was reported, reaching a near ten-year high in May, indicating a shift of funds from traditional bank deposits to financial products [1][7] - The bank wealth management market is experiencing structural changes, with a notable growth in the scale of bank wealth management products, which increased by 340 billion yuan to 31.6 trillion yuan by the end of May [7] Group 2: Product Innovations - Floating fee rate products are being introduced, linking management fees to performance, which has garnered positive market response, as evidenced by the rapid sell-out of such products [2][3] - Customized financial products are emerging, designed to minimize volatility while maintaining competitive returns, appealing to high-net-worth clients and institutional investors [6][7] Group 3: Competitive Strategies - Financial institutions are adjusting single-account holding limits to attract high-net-worth clients, with some products increasing limits from 5 million yuan to 100 million yuan [3][7] - The "currency enhancement strategy" is gaining popularity, allowing financial companies to achieve higher yields through timing differences in fund settlement, potentially increasing annualized returns by around 30 basis points [5][6] Group 4: Risks and Challenges - Some innovative strategies, such as "interest subsidies," may pose risks to other investors, as they can lead to conflicts of interest and potential liquidity risks in the market [8][9] - The introduction of floating fee rates requires enhanced investment research and risk management capabilities from financial companies, which may face challenges in adapting to this complexity [9]