1. Report Industry Investment Rating - There is no information about the industry investment rating in the provided report. 2. Core Viewpoints of the Report - Since March, geopolitical conflicts have escalated, leading to a significant decline in the stock market. The weakening of equity assets has caused an obvious drawdown in "fixed - income +" products and increased redemption pressure [1][10]. - In the second half of 2025, institutions significantly increased their allocation to equity assets. The current increased redemption pressure of "fixed - income +" may lead to a negative feedback loop of institutional selling and accelerated asset decline [3][20]. - Through scenario testing, if there is no significant double - kill of stocks and bonds, the risk of a large - scale net value drawdown of wealth management products is limited, but there may be some active redemption pressure. First - tier and second - tier bond funds with more equity assets may face greater redemption pressure in the negative feedback, but the pressure is still controllable [4][5]. - If the redemption pressure of "fixed - income +" continues, it may lead to a reduction in equity asset allocation, a widening of the spread of Tier 2 capital bonds, and a narrowing of the term spread [6][49]. 3. Summary According to the Directory 3.1 March Onwards: Increased Redemption Pressure on "Fixed - Income +" - Since March, due to geopolitical conflicts, the global liquidity expectation has shifted, and the equity and convertible bond markets have significantly adjusted, causing the cumulative gains and losses of most broad - based indices to turn negative. The weakening of equity assets has led to an obvious drawdown in "fixed - income +" products and increased redemption pressure [1][10]. - From the beginning of the year to March 27, the cumulative yields of the short - term pure bond, medium - and long - term pure bond, first - tier bond fund, and second - tier bond fund indices were 0.45%, 0.64%, 0.65%, and 0.27% respectively. The proportions of short - term pure bond and medium - and long - term pure bond funds with negative cumulative returns since the beginning of the year were 3% and 7% respectively, while those of first - tier and second - tier bond funds were 10% and 27% respectively [1][12]. - Since the beginning of the year, medium - and short - term bonds have performed well. Most wealth management products have achieved positive returns, and the net - breaking rate is relatively low. As of March 27, 3.8% of wealth management products had negative cumulative yields, and the net - breaking rate of existing wealth management products was 1.1% [2][16]. 3.2 Background of "Fixed - Income +" Redemption: Institutional Increase in Equity Asset Allocation - In the second half of 2025, institutions significantly increased their allocation to equity assets, which may lead to a negative feedback loop of institutional selling and accelerated asset decline. - Wealth management may have increased its allocation to equity assets through public funds. Although the proportion of equity assets in wealth management assets decreased from 2.4% in the middle of 2025 to 1.9% at the end of the year, the proportion of public funds in wealth management assets increased from 4.2% to 5.1% [20]. - The proportion of pension's equity assets increased from 6.4% to 9.6%. In the second half of 2025, the net value of pension's equity assets increased by 773.5 billion yuan, while the net value of fixed - income assets decreased by 100.49 billion yuan [22]. - The proportion of insurance's stock investment increased from 8.5% to 9.7%. In the third and fourth quarters of 2025, the net asset scale of insurance's stocks increased by 552.5 billion yuan and 113.5 billion yuan respectively [26]. - In the second half of 2025, the scale of second - tier bond funds increased significantly, and the proportion of equity allocation increased from 11.64% to 13.93%. In total, institutions such as wealth management, insurance, pension, and second - tier bond funds increased their allocation to stocks by more than 700 billion yuan in the second half of 2025 [28][36]. 3.3 "Fixed - Income +" Net Value Drawdown Pressure Calculation 3.3.1 Redemption Pressure on Wealth Management Products - By assuming that non - cash - management fixed - income wealth management products have a bond - to - stock ratio of 92.5:7.5, and considering the bond's annualized coupon rate of 1.7% and a duration of 1.34 years, different market scenarios are simulated. - If bonds do not decline, wealth management products can basically maintain positive returns. Even if the stock market falls by 15%, the coupon income can generally offset the losses from the stock decline. In the case of a double - kill of stocks and bonds, wealth management products may experience a large - scale and significant drawdown. - Currently, the risk of large - scale passive redemption of wealth management products is relatively limited, but there is some active redemption pressure [4][40]. 3.3.2 Redemption Pressure on Funds - First - tier and second - tier bond funds with more equity assets may face greater redemption pressure in the negative feedback, but the pressure is still controllable. - In the most extreme scenario (the stock index falls by 20% and interest rates rise by 40bps), the proportion of second - tier bond funds with a drawdown of more than 5% is 32%, with a scale of about 2.4 trillion yuan, and the proportion of those with a drawdown of more than 3% will exceed 70%, reaching 3.6 trillion yuan. Even if bond interest rates remain unchanged, if the stock market retraces by 10%, 11.9% and 4.3% of second - tier bond funds will have drawdowns of more than 3% and 5% respectively, with scales of 726.3 billion and 158.4 billion yuan [5][44]. 3.4 Risks of "Fixed - Income +" Redemption - If the redemption of "fixed - income +" continues, it may lead to a reduction in equity asset allocation, a widening of the spread of Tier 2 capital bonds, and a narrowing of the term spread. The redemption of "fixed - income +" will directly lead to the selling of equity assets, which is a further negative for the stock market. Due to the strong liquidity of Tier 2 capital bonds, they are likely to be sold off in the market adjustment, leading to a widening of the spread. In addition, during periods of high redemption pressure, public funds may sell short - term and highly liquid bonds first, causing short - term interest rates to rise and the term spread to narrow [6][49].

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the fixed income plus (固收加) fund market in China, focusing on its performance, growth, and strategies for different investor segments [1][2][3]. Core Insights and Arguments - **Performance and Growth**: The fixed income plus fund market is expected to see significant excess returns from 2023 to 2025, particularly when equity benchmarks rise. The total market size is projected to grow by nearly 1 trillion RMB, reaching 2.735 trillion RMB by 2025, with net subscriptions concentrated in a few star products [1][4][2]. - **Investor Preferences**: Institutional investors favor products with high Sharpe ratios and strong position control. The flexibility and risk management capabilities of primary bond funds are highlighted as superior to standalone equity or bond investments [1][6]. - **High Net Worth Client Behavior**: High net worth clients show low participation in public fixed income plus funds, preferring private products due to their flexible strategies. In contrast, middle to high net worth clients have decreased their engagement with public fixed income plus funds since 2022 [1][9]. - **K-Shaped Demand Trend**: The fixed income plus asset management ecosystem is expected to exhibit a K-shaped demand trend, with public funds primarily targeting next-high net worth clients while traditional savings clients invest in low-volatility products [1][10]. - **Regulatory Impact**: Regulatory policies are pushing public fixed income plus products towards yield-enhancing strategies, which will motivate B-end clients to invest more in these funds [1][12]. Important but Overlooked Content - **Star Products and Managers**: The influence of star products and managers is significant, with a notable concentration of funds flowing to key account managers. The top ten managers now hold 48.1% of the market share, indicating a shift in rankings [1][5]. - **Market Dynamics**: The behavior of different institutional investors varies, with primary bond funds primarily attracting bank proprietary investments, while secondary bond funds see more interest from wealth management, insurance, and trust companies [1][8]. - **Future Strategies**: Recommendations for B-end clients include growth-oriented, high-elasticity growth, and barbell strategies, while C-end clients are advised to consider low-volatility products and macro-timing strategies [1][20][21]. Conclusion - The fixed income plus fund market is poised for growth, driven by regulatory changes and evolving investor preferences. Strategies must be tailored to meet the distinct needs of B-end and C-end clients, with a focus on risk management and yield enhancement to attract more investments [1][22].

Core Viewpoint - The article discusses the growth and performance of "fixed income +" funds in the Chinese market, highlighting their increasing share and the dynamics of their issuance and performance from 2019 to 2025 [4][5][6][7]. Fund Classification - "Fixed income +" funds primarily include first-level bond funds, second-level bond funds, mixed bond funds, and convertible bond funds, with a total share of approximately 2.05 trillion units by the end of 2025, accounting for 6.5% of the total public fund market, while pure bond funds represent 20.4% [4]. Issuance Aspects - The years 2020 to 2022 saw a concentrated issuance of "fixed income +" funds, peaking in 2021; the focus for 2024 and 2025 will be on second-level bond funds, followed by first-level bond funds [5]. Stock and Bond Allocation - By the end of 2025, the share of "fixed income +" funds increased by 1.46 trillion units compared to the end of 2019, with contributions from first-level bond funds (17.6%), second-level bond funds (72.3%), mixed bond funds (8.8%), and convertible bond funds (1.3%), with second-level bond funds being the major contributor [6]. Performance Overview - The performance of "fixed income +" funds from 2019 to 2025 can be divided into three phases: 1. From 2019 to 2021, convertible bond funds consistently outperformed the other three types of "fixed income +" funds 2. In 2022-2023, all types of "fixed income +" funds performed poorly, although first-level bond funds maintained positive returns while convertible bond funds recorded negative returns for two consecutive years 3. In 2024-2025, all types of "fixed income +" funds achieved positive returns, with mixed bond funds performing best in 2024 and convertible bond funds excelling in 2025, while first-level bond funds underperformed [7]. Asset Structure - The asset allocation of "fixed income +" funds between stocks and bonds showed fluctuations without a clear trend; by 2025, first-level bond funds, second-level bond funds, and mixed bond funds increased their stock asset allocation while reducing bond asset allocation [8].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints The report focuses on the "Fixed Income +" funds from 2019 - 2025, including their types, issuance, performance, and asset structure. It reveals that the issuance of "Fixed Income +" funds was relatively intensive from 2020 - 2022, peaking in 2021. In recent years, secondary bond funds have been the issuance focus. The share and scale of "Fixed Income +" funds have increased significantly from 2019 to 2025, with secondary bond funds playing the leading role. The performance of different types of "Fixed Income +" funds varies in different periods, and in 2025, the asset allocation of some funds has changed. [1][2][19] 3. Summary by Directory 3.1 "Fixed Income +" Fund Types - "Fixed Income +" funds should have bond assets as the basis and use non - bond assets (mainly equity or equity - related assets) to enhance returns, with controllable return drawdowns. The main types include first - tier bond funds, second - tier bond funds, partial - debt hybrid funds, and convertible bond funds. [10][11] - First - tier bond funds mainly increase returns through convertible bond investments. Second - tier bond funds can invest in convertible bonds and stocks, with bond and cash assets accounting for at least 80% and stock investment below 20%. Partial - debt hybrid funds have a bond investment ratio of at least 60% and a stock investment ratio of 0 - 40%, with more strategies to enhance returns. Convertible bond funds mainly invest in convertible bonds and balance risks and returns. [11] - Flexible allocation funds and partial - debt FOF funds are not included in the scope of "Fixed Income +" funds in this report. As of December 31, 2025, the total share of partial - debt FOF funds was 1.804 billion, accounting for 0.1% of the total public fund share. [13] 3.2 2019 - 2025 Four "Fixed Income +" Fund Observations 3.2.1 Issuance - From 2020 - 2022, the issuance of "Fixed Income +" funds was relatively intensive, peaking in 2021 with 326 funds issued and a share of 401.25 billion. In 2025, 177 funds were issued, with a share of 65.22 billion, more than in 2024 but less than from 2020 - 2022. [19] - From 2019 - 2025, second - tier bond funds and partial - debt hybrid funds were the issuance focus. Since 2022, the issuance scale of second - tier bond funds has significantly exceeded that of partial - debt hybrid funds. In 2023 - 2025, no new convertible bond funds were issued. In recent years, second - tier bond funds have been the issuance focus, followed by first - tier bond funds. [20] 3.2.2 Stock - At the end of 2025, the total share of "Fixed Income +" funds was 2.2 trillion. Second - tier bond funds accounted for 57.0%, followed by first - tier bond funds (31.5%), partial - debt hybrid funds (10.0%), and convertible bond funds (1.4%). [25] - Compared with the end of 2019, the share of "Fixed Income +" funds increased by 1.46 trillion at the end of 2025, with second - tier bond funds accounting for 72.3% of the increased share. The share change can be divided into three stages: significant increase in second - tier bond funds and partial - debt hybrid funds from 2020 - 2021; continuous reduction in partial - debt hybrid funds and scale contraction in second - tier bond funds from 2022 - 2024; and mainly second - tier bond funds' share growth in 2025. [2][26] 3.2.3 Performance - From 2019 - 2021, convertible bond funds' returns continuously exceeded those of the other three types of "Fixed Income +" funds. [31] - From 2022 - 2023, the performance of different "Fixed Income +" funds was not ideal, but first - tier bond funds maintained positive returns, while convertible bond funds had negative returns for two consecutive years. [31] - From 2024 - 2025, all types of "Fixed Income +" funds achieved positive returns. In 2024, partial - debt hybrid funds performed best, and convertible bond funds performed worst. In 2025, convertible bond funds performed best, and first - tier bond funds performed poorly. [34] 3.2.4 Asset Structure - The proportion of stocks and bonds held by "Fixed Income +" funds fluctuated, and the stage - division of performance was not obvious in the stock - holding proportion. In 2025, the median proportion of stocks held by first - tier bond funds, second - tier bond funds, and partial - debt hybrid funds increased compared to 2024, while that of convertible bond funds decreased slightly. [36] - In 2025, the median proportion of bonds held by different "Fixed Income +" funds decreased compared to 2024. The proportion of convertible bonds held by different funds also decreased in 2025. [37][40]

Core Insights - The "fixed income +" fund market has reached a scale of 2.99 trillion yuan, positioning itself as a cornerstone in the low-risk wealth management market [1][2][7] - The growth of "fixed income +" products is driven by a low interest rate environment and a significant shift of household assets towards financial assets [2][3] Market Growth - As of the end of 2025, the total scale of 2,292 "fixed income +" funds reached 2.99 trillion yuan, marking a 9% quarter-on-quarter increase and a 56% year-on-year increase [2] - The secondary bond fund category has expanded significantly, with a latest scale of 1.55 trillion yuan, reflecting a 19% quarter-on-quarter growth [2] Investment Demand - The low interest rate environment has led to a decline in deposit attractiveness, prompting a shift of funds towards "fixed income +" products, insurance products, and equity products [2][3] - Investors are increasingly seeking higher yields with controlled risks, making "fixed income +" products a primary choice [3][6] Performance and Management - The average net value growth rate of "fixed income +" funds in 2025 was 5.66%, with around 40 products exceeding a 20% growth rate [4] - The performance is attributed to favorable market conditions and the effective management capabilities of fund managers, including enhanced credit risk control and flexible asset allocation [5] Future Outlook - The upcoming maturity of a large volume of fixed-term deposits is expected to create additional demand for "fixed income +" products, with estimates suggesting over 5 trillion yuan in deposits maturing this year [6] - The transition of household assets from savings to wealth management is anticipated to continue, with "fixed income +" products likely becoming a core allocation direction for these funds [7]

1. Report Industry Investment Rating There is no information provided in the report regarding the industry investment rating. 2. Core Viewpoint of the Report The report analyzes the asset allocation changes of public - offering bond funds in Q4 2025. In Q4, medium - and long - term pure bond funds continued to shrink, while second - tier bond funds maintained growth. All types of bond funds increased their bond positions, with second - tier bond funds reducing their stock positions. Short - term bond funds increased leverage, medium - and long - term bond funds decreased leverage, and most bond funds reduced duration. All bond funds significantly increased their allocation to credit bonds and reduced their allocation to interest - rate bonds. There were signs of marginal credit downgrading in the top - holding bonds, and there were regional differences in the allocation of top - holding urban investment bonds. [1][2][3] 3. Summary by Directory 3.1 Medium - and Long - term Pure Bond Funds Shrink, Second - tier Bond Funds Grow In Q4 2025, the scale of medium - and long - term pure bond funds continued to shrink, while the scale of second - tier bond funds maintained growth. The total net asset value of the four types of bond funds was 9.2 trillion yuan, an increase of 151.2 billion yuan from the previous quarter. Medium - and long - term pure bond funds decreased by 154.9 billion yuan to 5.76 trillion yuan, short - term pure bond funds increased by 69.9 billion yuan to 1.02 trillion yuan. The first - tier bond funds decreased by 14 billion yuan to 833.1 billion yuan, and second - tier bond funds increased by 250.3 billion yuan to 1.6 trillion yuan. [1][10] 3.2 Asset Structure: Bond Positions Increase In terms of asset allocation structure, the scale contraction led medium - and long - term bond funds to reduce their bond holdings, while second - tier bond funds increased their bond allocation due to share expansion. The four types of funds collectively increased their bond holdings by 168.1 billion yuan. By the end of 2025, medium - and long - term pure bond funds, short - term pure bond funds, first - tier bond funds, and second - tier bond funds held bond market values of 6.69 trillion yuan, 1.1 trillion yuan, 941 billion yuan, and 1.42 trillion yuan respectively. Medium - and long - term pure bond funds reduced their holdings by 186.3 billion yuan, while short - term pure bond funds, first - tier bond funds, and second - tier bond funds increased their holdings by 84.2 billion yuan, 17.5 billion yuan, and 252.6 billion yuan respectively. The bond positions of all types of bond funds increased, and the stock position of second - tier bond funds decreased slightly. [18][19] 3.3 Medium - and Long - term Bond Funds Reduce Leverage and Control Duration Short - term bond funds increased leverage, while medium - and long - term bond funds decreased leverage. In Q4, short - term pure bond funds adopted a defensive coupon strategy of "increasing leverage + reducing duration", with the leverage ratio increasing by 0.26 pct to 111.66%. Medium - and long - term pure bond funds actively reduced leverage due to net redemption pressure and unstable long - term interest rates, with the leverage ratio decreasing by 0.92 pct to 115.83%. The leverage ratios of first - tier and second - tier bond funds increased by 1.58 pct and 0.82 pct to 113.53% and 111.59% respectively. Most bond funds reduced their duration exposure. The arithmetic average durations of medium - and long - term interest - rate bond funds, medium - and long - term credit bond funds, short - term interest - rate bond funds, and short - term credit bond funds in Q4 were 3.35 years, 2.38 years, 0.99 years, and 0.88 years respectively, decreasing by 0.23 years, 0.15 years, 0.19 years compared to Q3, and the short - term credit bond fund increased by 0.02 years. [28] 3.4 Bond Type Portfolio: Increase Allocation to Credit Bonds, Reduce Allocation to Interest - rate Bonds In Q4, the four types of bond funds collectively increased their credit bond holdings by 306.1 billion yuan and reduced their interest - rate bond holdings by 117.4 billion yuan. Among pure bond funds, medium - and long - term bond funds reduced interest - rate bonds and increased credit bonds, and short - term bond funds increased their credit bond allocation more than interest - rate bonds. Among bond funds with equity components, first - tier bond funds mainly increased their credit bond holdings, and second - tier bond funds increased their credit bond allocation more than interest - rate bonds. In terms of specific bond types, medium - and long - term pure bond funds mainly reduced their holdings of treasury bonds, policy - financial bonds, and financial bonds and increased their holdings of medium - term notes; short - term pure bond funds mainly increased their holdings of financial bonds, policy - financial bonds, and commercial paper; first - tier bond funds mainly increased their holdings of financial bonds; second - tier bond funds mainly increased their holdings of financial bonds and policy - financial bonds. The proportion of policy - financial bonds in the interest - rate bond portfolio of most bond funds increased. [35][43][52] 3.5 Top - holding Bond Analysis: Rating Central Tendency Migrates Downward In Q4 2025, bond funds significantly reduced their holdings of interest - rate bonds, slightly reduced their holdings of urban investment bonds, increased their holdings of convertible bonds, industrial bonds, and certificates of deposit, and slightly increased their holdings of financial bonds. There were signs of marginal credit downgrading in the top - holding bonds. Most bond funds reduced the proportion of AAA - rated bonds and increased the proportion of AA - and below - rated bonds. In terms of regional allocation of top - holding urban investment bonds, bond funds significantly reduced their holdings of urban investment bonds in Zhejiang and Anhui and increased their holdings in Sichuan and Chongqing. [55][58][65]

Performance Overview - In Q4 2025, convertible bond funds achieved a median return of 1.09%, outperforming first-level bond funds (0.6%), second-level bond funds (0.44%), and mixed bond funds (0.31%) [1] - For the entire year of 2025, the median return for convertible bond funds was 22.43%, significantly higher than first-level bond funds (2.06%), second-level bond funds (4.66%), and mixed bond funds (5.49%) [1] Fund Scale and Demand - In Q4 2025, the scale of second-level bond funds increased by 2506 billion CNY to reach 15535 billion CNY, while first-level bond funds and mixed bond funds saw decreases of 142.5 billion CNY and 7 billion CNY, respectively [1] - The net subscription for second-level bond funds in Q4 2025 was 2344 billion units, while first-level bond funds faced a net redemption of 186 billion units [19] Convertible Bond Holdings - In Q4 2025, the convertible bond holdings of first-level bond funds increased by 0.32 percentage points to 7.97%, while second-level bond funds and mixed bond funds saw declines of 1.07 and 0.88 percentage points, respectively [33] - Public funds focused on increasing holdings in bank bonds, as well as in sectors like new energy, cyclical stocks, and military-related bonds [40] Investment Strategy Insights - The demand for fixed-income plus funds is robust, with second-level bond funds becoming the primary vehicle for this demand, while first-level bond and convertible bond fund scales have marginally declined [3] - Institutions with equity allocation permissions are shifting their demand from first-level bond funds to second-level bond and mixed bond products due to the high valuation of convertible bonds [3]

Core Viewpoint - The "fixed income +" fund sector experienced significant growth in 2025, with a year-on-year increase of over 50%, primarily driven by the expansion of secondary bond funds, which are favored by institutional investors [2][9]. Fund Performance - In 2025, the Shanghai and Shenzhen 300 Index rose by 17.66%, and the convertible bond index increased by 18.66%, leading to strong performance in "fixed income +" funds, particularly those with higher equity allocations [4][16]. - The median return for convertible bond funds in 2025 was 22.4%, while secondary bond funds achieved a median return of 4.6% [4][16]. Fund Size Changes - By the end of 2025, the total size of "fixed income +" funds reached 3.0 trillion yuan, marking a 56% increase compared to the previous year, with secondary bond funds being the main contributors to this growth [5][22]. - The number of "fixed income +" funds reached 2,292, with secondary bond funds expanding to 1.55 trillion yuan, reflecting a 19% quarter-on-quarter growth [5][22]. New Product Issuance - In Q4 2025, the issuance of "fixed income +" products saw a significant rebound, with 119 new products launched, raising a total of 957 billion yuan, a 223% increase from the previous quarter [6][33]. - Secondary bond funds accounted for nearly 50% of the new issuance, indicating strong market demand [6][33]. Subscription and Redemption Trends - The overall net subscription for "fixed income +" products in Q4 2025 was 990 billion units, with secondary bond funds contributing 1,028 billion units to this total [36][38]. - Leading fund companies in net subscriptions included Invesco Great Wall and Jianxin Fund, both exceeding 100 billion units in net subscriptions [36][38]. Asset Allocation Trends - In Q4 2025, most "fixed income +" fund categories reduced their equity allocations, with secondary bond funds decreasing by 1.3 percentage points [7][45]. - The communication sector saw increased investments across various fund categories, while the healthcare sector experienced a reduction in allocations [7][45].

Core Viewpoint - The bond market at the beginning of 2026 is experiencing a "funding frenzy" due to the implementation of tax exemptions for foreign institutional bonds, the valuation advantages of Chinese bonds, and stable yields, leading to increased foreign investment and significant inflows from bank wealth management and individual investors into bond funds [1][6]. Summary by Sections Current Market Environment - The bond market in 2026 is characterized by "liquidity easing + interest rate fluctuations + credit bond yields dominating," with foreign capital and inflows reinforcing the importance of "certain returns" [6]. Types of Bond Funds - **Pure Bond Funds**: Focus on government bonds, financial bonds, and credit bonds without equity participation, characterized by low risk [4][5]. - **Level One Bond Funds**: Primarily bond-focused but can participate in new stock subscriptions, with moderate risk [4][5]. - **Level Two Bond Funds**: Have a bond base (≥80%) and can directly invest in stocks (up to 20%), presenting medium risk [4][5]. Fund Suitability Analysis - **Pure Bond Funds**: Considered the safest option, suitable for most investors due to their low volatility and stable returns, aligning with the current market's focus on yield [7]. - **Level One Bond Funds**: Face pressure on new stock subscription returns, making them less attractive compared to pure bond funds and level two bond funds in the current market [8]. - **Level Two Bond Funds**: Offer unique advantages in a volatile market, combining bond stability with potential stock gains, suitable for investors with moderate risk tolerance [9]. Selection Strategy for Bond Funds - The selection process for bond funds should match individual risk tolerance and market conditions, following a four-step approach: defining risk preference, examining product details, selecting fund managers, and configuring asset allocation [10]. - Recommended allocation strategy includes 60%-70% in core holdings (short-duration pure bond funds) and 30%-40% in enhancement strategies (level two bond funds) [10]. - Emphasis on selecting funds with high credit ratings (AA+ and above) and low fees (management + custody fees below 0.6%) to optimize returns [10].

Investment Highlights - The equity market has shown a recovery since December 2025, with major indices recording monthly gains. The cyclical and growth sectors performed well, while the value sector lagged behind. Notably, the defense, non-ferrous metals, and communication sectors saw significant increases of 21.24%, 13.03%, and 12.82% respectively, while real estate, food and beverage, and pharmaceuticals experienced declines of -4.47%, -4.34%, and -4.09% respectively [6][11][12] - The bond market faced overall weakness in December, with long-term and ultra-long-term bonds performing poorly. The yield curve steepened, and the overall performance of the bond market was subdued due to various factors, including supply pressures and profit-taking by institutions at year-end [7][20] Active Equity Fund Selection Strategy - Since December 2025, there has been a shift from defensive to offensive market strategies, with a recovery in risk appetite. The central economic work conference emphasized "seeking progress while maintaining stability" and focused on structural adjustments and technological innovation, particularly in the "AI +" sector [2][12][13] - The current environment supports asset revaluation, with a focus on sectors driven by both "story and performance," such as the AI industry chain and commercial aerospace. Additionally, traditional industries like chemicals and engineering machinery are highlighted for their reasonable valuations and potential for improved return on equity (ROE) [2][15] Fixed Income Fund Selection Strategy - The outlook for January suggests a potential short-term rebound in the bond market, but a cautious approach is advised due to ongoing supply pressures and limited room for interest rate cuts. The strategy continues to favor flexible bond products while maintaining duration neutrality [3][20] - The pure bond fund index has shown stability, with slight increases in various bond fund indices, indicating a mixed performance landscape in the bond market [7][22] Historical Performance Review - Since the construction of the active equity selection index on May 11, 2023, it has achieved a cumulative net value of 1.4934, outperforming the benchmark by 20.21%. The index recorded a return of 6.61% since the December 2025 monthly configuration report [17][22] - The short-term bond fund selection index has also shown positive performance, with a cumulative net value of 1.4637, exceeding its benchmark by 0.5434% since its inception [22][30]