Report Industry Investment Rating No relevant content provided. Core Views - The adjustment of public bond fund redemption fees may lead to a redemption scale of RMB 30 - 100 billion for credit bonds and secondary perpetual bonds, with credit bonds accounting for RMB 20 - 70 billion and secondary perpetual bonds for RMB 10 - 30 billion. The expected redemption ratio of short - term pure bond funds is about 25% - 35%, that of medium - and long - term pure bond funds is about 5%, and that of passive index bond funds is about 1%. The combined redemption ratio of the three types of bond funds is about 3% - 10% [3]. - There is a positive correlation between the redemption scale of short - term and medium - and long - term pure bond funds and the upward range of credit bond and secondary perpetual bond yields and the widening range of credit spreads. The yields of credit bonds and secondary perpetual bonds are more sensitive to the impact of fund liquidity when the redemption scale is small, and the marginal driving effect on yield increases weakens when the redemption scale expands [3]. - Considering the current low - interest rate volatile environment in the bond market, the upward range of short - end credit bond and secondary perpetual bond yields is expected to be about 15 - 25BP, and the spread widening range is about 5 - 15BP; the upward range of medium - and long - end credit bond and secondary perpetual bond yields is about 25 - 35BP, and the spread widening range is about 15 - 25BP. The current adjustment range of yields and spreads has not fully reflected the potential redemption pressure, and the risk of selling has not been fully exposed. The impact of the redemption pressure on yields and spreads is expected to be a phased increase within a controllable range [4]. Summary by Directory 1. Estimated Redemption Scale of Credit Bonds and Secondary Perpetual Bonds Held by Pure Bond Funds - The inclusion of bond - type funds in the scope of redemption fee regulations and the increase in overall redemption fee levels will weaken the short - term trading and liquidity management functions of bond funds. Short - term pure bond funds may face greater redemption pressure, while medium - and long - term pure bond funds and passive index bond funds may also be affected to some extent. Bond ETFs, inter - bank certificate of deposit index funds, and bank short - term wealth management products may undertake part of the funds withdrawn from pure bond funds [15]. - As of the end of June 2025, short - term pure bond funds held about RMB 1.28 trillion in bonds, with credit bonds accounting for 63.03% and financial bonds accounting for 19.12%; medium - and long - term pure bond funds held about RMB 7.76 trillion in bonds, with credit bonds accounting for about 23.27% and financial bonds accounting for about 22.33%; passive index bond funds held about RMB 1.67 trillion in bonds, with credit bonds accounting for 15.80% and financial bonds accounting for about 3.75%. The adjustment of public bond fund fees is expected to have a greater negative impact on the credit bond and financial bond sectors [18]. - According to different scenarios (optimistic, neutral, and pessimistic), the estimated redemption scale of credit bonds is about RMB 231 - 576.6 billion, and that of secondary perpetual bonds is about RMB 101 - 220.5 billion [3][20][21][22][23]. 2. How to Transmit from Redemption Scale to Valuation Yield and Credit Spread - By analyzing the historical data of pure bond fund redemptions in the past three years, there is a significant positive correlation between the redemption scale of short - term and medium - and long - term pure bond funds and the upward range of credit bond and secondary perpetual bond yields and the widening range of credit spreads. The yields of credit bonds and secondary perpetual bonds are more sensitive to the impact of fund liquidity when the redemption scale is small, and the marginal driving effect on yield increases weakens when the redemption scale expands [3][41]. - Applying the logarithmic regression model to the estimated redemption scale of credit bonds and secondary perpetual bonds, in the optimistic scenario, the 1Y/AAA - grade credit bond valuation yield is expected to rise by 29 - 31BP, the credit spread to widen by 14 - 16BP, the 3Y/AAA - grade secondary perpetual bond valuation yield to rise by 24 - 26BP, and the credit spread to widen by 14 - 16BP; in the neutral scenario, the 1Y/AAA - grade and 5Y/AAA - grade credit bond valuation yields are expected to rise by 29 - 31BP and 33 - 35BP respectively, the credit spreads to widen by 14 - 16BP and 22 - 24BP respectively, the 3Y/AAA - grade and 7Y/AAA - grade secondary perpetual bond valuation yields to rise by 24 - 26BP and 29 - 31BP respectively, and the credit spreads to widen by 14 - 16BP and 15 - 17BP respectively; in the pessimistic scenario, the 1Y/AAA - grade and 5Y/AAA - grade credit bond valuation yields are expected to rise by 31 - 33BP and 35 - 37BP respectively, the credit spreads to widen by 15 - 17BP and 24 - 26BP respectively, the 3Y/AAA - grade and 7Y/AAA - grade secondary perpetual bond valuation yields to rise by 26 - 28BP and 31 - 33BP respectively, and the credit spreads to widen by 15 - 17BP and 18 - 20BP respectively [53]. - Since the release of the draft for comments, institutional investors have started to redeem pure bond funds. However, affected by factors such as the stock market trend, central bank policies, and market liquidity, the current adjustment range of credit bond and secondary perpetual bond yields and spreads has not fully reflected the potential redemption pressure. The risk of selling has not been fully exposed, and the market may still be in the early stage of redemption or in a wait - and - see state. In the current environment, the impact of redemption pressure on yields and spreads is expected to be a phased increase within a controllable range [4][55][56].

Group 1: Policy Changes and Market Concerns - The Ministry of Finance has reinstated value-added tax on interest income from government bonds, local bonds, and financial bonds since August 8, 2025, with a tax rate of 3%[11] - The China Securities Regulatory Commission has revised public fund sales fee management regulations, imposing punitive redemption fees of at least 1.5%, 1.0%, and 0.5% for different redemption periods[1] Group 2: Impact on Bond Market - As of June 2025, the total scale of bond funds is approximately CNY 11.15 trillion, with individual and institutional investors holding 17% and 81% respectively, translating to CNY 1.88 trillion and CNY 8.99 trillion[2] - If the new redemption fee regulations are implemented, there is a potential for significant capital outflow from public bond funds, which could amplify overall market volatility[1] Group 3: Institutional Responses - Bank wealth management products held CNY 1.38 trillion in public bond funds, accounting for 4.2% of their total holdings as of June 2025[3] - Insurance companies are estimated to hold around CNY 900 billion in public bond funds, maintaining a stable allocation of approximately 2.4%[4] Group 4: Historical Context and Future Projections - Historical cases show that bond fund outflows can be substantial; for instance, from September 2022 to January 2023, bond fund sizes dropped from CNY 5.19 trillion to CNY 4.01 trillion, a decrease of CNY 1.18 trillion[9] - Current market conditions suggest that if bond funds experience significant redemptions, the yield on 10-year government bonds could peak between 1.90% and 1.95%[10]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Since Q3 this year, the bond market has adjusted significantly, but the decline in the duration of public - offering bond funds is not obvious. It is expected that public - offering bond funds will maintain a moderately high duration level, with the 10 - year Treasury yield oscillating in the range of 1.7% - 1.8%. As the correlation between stocks and bonds weakens and fundamental pressure rises, the bond market environment in the fourth quarter is expected to be better than that in the third quarter [2][8] 3. Summary According to the Directory 3.1 Third - quarter Bond Market Adjustment with No Obvious Decline in Bond Fund Duration - In the third - quarter bond market adjustment, the decline in the duration of bond funds was not obvious. For example, in Q1, the 10 - year Treasury yield rose from about 1.6% in early February to nearly 1.9% in mid - March, and the median duration of the whole - market bond funds dropped from a high of 3 years to about 2.1 years. However, as of September 17, the median duration of public - offering bond funds remained at about 2.5 years, and the median duration of medium - and long - term interest - rate bond funds remained at about 3.1 years [5][14] 3.2 Four Reasons Why Bond Fund Duration is Difficult to Decrease - **Mild Adjustment and Multiple Repairs**: Compared with the Q1 adjustment, the Q3 bond market adjustment was relatively mild, with multiple repairs during the period and did not reach the short - term stop - loss lines of some funds. The adjustment range of the 10 - year Treasury active bond yield since Q3 was less than 20bps, and the adjustment lasted nearly a quarter. In contrast, in Q1, the 10 - year Treasury yield rose about 30bps in more than a month [8][17] - **Performance Assessment and Market Expectations**: The bond market has been volatile this year, especially the performance of bond funds focusing on the duration strategy was significantly weaker than last year. As the fourth quarter is a traditional window for bond market pre -emption and repair, from the perspective of achieving the annual performance assessment, bond funds may not significantly reduce their duration. As of September 14, the median yield of the whole - market bond funds this year was 1.21%, significantly lower than last year's 3.78% [8][26] - **Limited Strategy Options in a Low - interest - rate Environment**: The current bond market is in a low - interest - rate environment, with limited market strategy capacity and options. Public - offering funds have to extend the duration to obtain coupons. Institutions such as wealth management and bank self - operation also have a demand for long - duration bond allocations. As of August this year, the net financing proportion of long - term credit bonds rose to about 33%, a record high [8][33] - **Lack of Massive Redemption Pressure**: Institutions usually conduct continuous and large - scale redemptions of long - term bonds only when the bond market shows obvious "negative feedback" characteristics. A normal market adjustment of general amplitude may not trigger large - scale redemptions and re - allocation of redeemed assets. The current bond market is slowly oscillating and correcting, without triggering widespread market panic [8][34]

Core Viewpoint - The report from CICC focuses on the impact of the third phase of the public fund industry fee reform, particularly regarding the potential elimination of the 7-day redemption exemption and its implications for public bond fund investments [1][3]. Group 1: Fee Reform Background - The fee reform plan, released in July 2023, outlines a three-phase approach involving management fees, transaction fees, and sales fees [3]. - The third phase, initiated with the release of the draft regulations on September 5, 2025, aims to enhance the sales fee structure, with particular attention to redemption fee adjustments [3]. Group 2: Market Impact Analysis - The new regulations are expected to lead to a clearer distinction between long-term holding of off-exchange products and short-term trading of on-exchange ETFs [4]. - Increased trading costs for bond funds will limit their ability to engage in short-term trading, while bond ETFs may see growth as they cater to short-term trading needs [4]. - The investment positioning of short bond funds will shift, with money market funds and wealth management products potentially taking over liquidity management roles [4]. Group 3: Recommendations for Bond Fund Investors - CICC suggests that bond fund investors should focus on long-term holding strategies, utilizing active pure bond funds as a core holding and bond ETFs for market timing [5]. - The report advocates for a dual-layer investment strategy in "fixed income +" funds, combining absolute return products for foundational returns with high-volatility products for tactical market positioning [5]. - There is an anticipated opportunity for bond ETFs to develop in response to policy changes, with a focus on innovative thematic products and the expansion of multi-asset and fixed income ETFs [5].

Core Viewpoint - The third phase of the public fund industry fee reform has officially started, focusing on the adjustment of sales fees to encourage long-term holding and reduce irrational short-term trading behaviors [2][9][11]. Group 1: Fee Reform Overview - In July 2023, the China Securities Regulatory Commission (CSRC) released the "Public Fund Industry Fee Reform Work Plan," marking the beginning of the third phase of fee reform [2][9]. - The reform aims to lower the comprehensive fee levels of public funds through a gradual approach, focusing on management fees, transaction fees, and sales fees [9][11]. - The proposed adjustments to redemption fees include a tiered structure for different holding periods, with a minimum of 1.5% for holdings under 7 days and 0.5% for holdings between 30 days to 6 months [12][11]. Group 2: Impact on Fund Market - The new redemption fee structure is expected to clarify the positioning of public products, distinguishing between long-term holding for off-market funds and active trading for ETFs [15][14]. - Frequent trading costs for bond funds are likely to increase, making it difficult for them to serve as tools for short-term trading, thus creating opportunities for bond ETFs [16][14]. - The cost of short-term adjustments for public funds of funds (FOFs) is expected to rise, leading to a trend towards ETF-based investment strategies [21][20]. Group 3: Recommendations for Investors - Investors are advised to optimize their pure bond fund management by using actively managed funds as a base, complemented by bond ETFs for market timing and liquidity management tools [29][31]. - A comprehensive evaluation system for bond ETFs is recommended, focusing on liquidity, tracking ability, and strategy uniqueness [31][32]. - The investment strategy for "fixed income plus" funds may polarize into long-term stable products and high-volatility aggressive products, maintaining a balance between risk and return [33][24]. Group 4: Future Product Development Directions - There is a significant opportunity for the development of bond ETFs, particularly in niche themes and strategies, as the market for these products is expanding rapidly [36][41]. - The diversification of institutional investors in bond ETFs is increasing, with a notable shift in the types of institutions holding these products [37][41]. - Future product innovations may include multi-asset ETFs and fixed-income ETFs, addressing the evolving needs of institutional investors [42][41].

Group 1: US Economic Overview - The US economy continues to expand, with the Atlanta Fed's GDPNOW model predicting a Q3 growth rate of 3.1%, driven by stable consumer momentum and strong investment in technology [2] - Jobless claims have increased, with initial claims rising by 27,000 to 263,000, the highest in four years, indicating a cooling labor market [2] - Inflation remains manageable, with August PPI unexpectedly dropping to 2.6%, significantly below the expected 3.3%, while CPI slightly increased to 2.9% [2] Group 2: Monetary Policy and Market Reactions - The US is expected to restart monetary easing, with market participants fully pricing in three rate cuts this year, leading to a decline in private sector financing costs [3] - The 30-year mortgage rate fell by 15 basis points to 6.25%, and the 10-year AAA corporate bond yield decreased by 8 basis points to 4.26% [3] - US stock markets rose, influenced by the Fed's dovish outlook, although valuations are considered high, with future gains expected to come from corporate earnings growth rather than valuation expansion [3] Group 3: Bond Market Dynamics - Short-term interest rates are expected to decline as the easing cycle begins, but the long-term rates may remain volatile due to economic resilience and inflationary pressures [4] - The 10-year US Treasury yield is projected to average 4.3% this year and 4.2% next year, with a fluctuation range of 3.5% to 5% [4] Group 4: Currency and Commodity Outlook - The US dollar is anticipated to remain in a range-bound trading pattern, with a fluctuation range of 95 to 103, due to the dual support of easing monetary policy and fiscal expansion [5] - The Chinese yuan is expected to maintain a strong stance in the short term, although potential fluctuations may arise from changes in the A-share market and US rate cut expectations [5] - Gold is viewed positively, benefiting from the Fed's easing cycle and ongoing global central bank purchases [5] Group 5: China Economic Insights - China's economy is showing signs of slowdown, with external demand weakening and internal demand potentially continuing to decline [7] - August macro data indicates a drop in export and import growth rates, with exports to the US declining by 33.1% [7] - The government is implementing policies to stabilize growth in key industries, including the automotive sector, with a target of approximately 3% growth in overall vehicle sales by 2025 [9] Group 6: Market Strategy and Recommendations - The current market sentiment favors equities over bonds, with a recommendation to hold short to medium-duration bonds while being cautious with long-duration investments [12] - The A-share market has shown resilience, with the Shanghai Composite Index rising 1.52%, supported by liquidity and favorable policies [13] - Investment strategies suggest maintaining dividend stocks as a stable base, while allocating to growth sectors like technology and healthcare for potential gains [14]

Core Viewpoint - The recent draft regulation by the China Securities Regulatory Commission aims to stabilize the redemption pressure on public bond funds, allowing them to focus on investment research and management rather than being forced sellers in the market [1][3][5] Summary by Sections Regulation Changes - The draft regulation simplifies the redemption fee structure from four tiers to three, increasing fees for short-term redemptions to discourage frequent trading [2][5] - The new fee structure includes a minimum redemption fee of 1.5% for holdings less than seven days, 1% for seven to thirty days, and 0.5% for thirty days to six months [2] Market Dynamics - Public bond funds have been in a weak position within the market ecosystem, often forced to sell at a loss during redemption waves, particularly in volatile market conditions [3][4] - The draft regulation is expected to reduce the forced selling pressure on bond funds, allowing them to stabilize their positions and avoid being labeled as "market tools" [3][5] Investment Strategy Implications - With the potential for more stable funding, bond fund managers will need to demonstrate stronger research and trading capabilities, shifting the focus towards active management [5][6] - The concentration of institutional investors, which accounted for 82.8% of bond fund assets by June 2025, highlights the importance of stable liabilities and effective investment strategies [5] Future Outlook - If the draft regulation is implemented successfully, it may lead to a new phase for public bond funds, emphasizing active management and the ability to generate excess returns [5][6] - The market may see a shift towards bond ETFs as a preferred tool for liquidity management among institutions, while actively managed bond funds that can navigate market cycles will gain more attention [5][6]

Group 1 - The core viewpoint of the articles indicates that the new public fund fee regulations have led to a generally bearish sentiment towards bond funds, resulting in increased redemption pressure [1][3] - Data shows that in the first two days of the week, various bond products sold nearly 100 billion yuan worth of bonds, with significant sales of long-term government bonds and policy bank bonds [1][2] - Analysts suggest that the recent large-scale redemptions are not solely due to the new regulations but are also influenced by a combination of negative market events and sentiments [3] Group 2 - The bond market experienced a notable sell-off, with fund companies selling 682 billion yuan in bonds on September 9, making them the largest sellers in the market that day [2] - The new public fund fee regulations are expected to increase redemption fees for short-term holders, potentially reducing institutional investment in bond funds [2] - Market sentiment remains fragile, with even unverified negative news causing significant reactions from investors, leading to a cautious outlook on long-term bonds [3]

Group 1: Report Industry Investment Rating - No information provided Group 2: Core Viewpoints of the Report - The bond market may gradually recover in an oscillatory and progressive manner as the correlation between stocks and bonds weakens and commodity pressure eases, but other markets, seasonal factors, and regulatory policies may cause oscillations during the recovery process. It is recommended to adopt a dumbbell - shaped operation, and long - term bond rates may decline more smoothly in the second half of the fourth quarter, with rates expected to hit new lows this year [4][6][18] Group 3: Summary by Relevant Content Bond Market Performance This Week - This week, both long - term and short - term bonds remained oscillating. The active bonds of 10 - year and 30 - year treasury bonds, 250011.IB and 2500002.IB, changed by - 1.25bps and 0.95bps respectively compared with last week, reaching 1.77% and 2.03%. After the month - end, the capital price remained loose, and the 1 - year AAA certificate of deposit stayed at around 1.67%. Credit interest rates declined slightly, with the 3 - year and 5 - year AAA - secondary capital bonds falling by 1.7bps and 1.9bps respectively compared with last week, reaching 1.92% and 2.05% [1][9] Weakening Impact of the Stock and Commodity Markets on the Bond Market - The impact of the stock and commodity markets on the bond market has gradually weakened. The 10 - day moving correlation coefficient between the daily interest rate change of the 30 - year active bond and the increase of the Shanghai Composite Index dropped from around 0.8 in late July to around 0.15 currently. On one hand, it is due to the change in bond institutional positions; on the other hand, the relative cost - effectiveness of bonds compared with stocks has gradually increased. Since the end of July, the commodity price index has continued to decline, and the Nanhua Industrial Product Price Index on September 4th has cumulatively dropped by 6.3% compared with the high on July 25th [2][10] Factors Protecting the Bond Market - The loose capital and banks' under - allocation are the main protections for the bond market. The fundamentals are still under pressure, the demand is not strong, and the financing demand is insufficient, so the loose capital situation remains unchanged. The future asset supply will further decline, and the net financing of government bonds in the next 4 months may significantly decrease compared with the same period last year. For banks, the deposit growth rate is rising while the credit growth rate is slowing down, so banks need to increase bond allocation to make up for the gap, and they may have a high willingness to increase allocation [3][10] Reasons for the Oscillatory and Progressive Recovery of the Bond Market - Other markets still impact the bond market. Although the seesaw effect between stocks and bonds has weakened, non - banks still hold a relatively high position in long - term bonds, and a significant rise in the stock market may lead to institutional selling and short - term bond market fluctuations. Seasonal factors may restrict the downward speed of interest rates. September is often a period of interest rate adjustment, and October is an oscillatory period. The new regulations on public fund redemption fees may reduce institutional willingness to invest in bond funds, and the redemption behavior may bring short - term adjustment pressure to the market [4][14][17]

Group 1 - The bond market has experienced increased volatility since July, but several institutions remain optimistic about its future direction, with Huaxi Securities suggesting that August may see a peak in the bond market due to weak demand, cooling commodity prices, and seasonal pressures [1] - Dongfang Securities maintains that the logic of a bond bull market remains unchanged, although the market is becoming sensitive to negative factors, indicating that the overall environment is still favorable despite potential disturbances [1] - According to CITIC Securities, the public bond fund market is expected to see a dual recovery in stocks and bonds by the second quarter of 2025, with the total bond fund scale projected to exceed 11 trillion yuan for the year [1] Group 2 - In the index bond fund sector, bond ETFs, particularly the benchmark credit bond ETF and the Sci-Tech bond ETF, have shown significant growth this year, with a combined scale reaching 240 billion yuan as of August 11 [2] - The Guangfa credit bond ETF has seen its scale grow over six times since its inception, reaching 13.904 billion yuan, and has experienced continuous net subscriptions for 29 days following its approval as collateral for general pledged repo [2] - Despite the bond market's volatility in July, the overall trend remains bullish, with medium and short-term credit bonds showing potential for yield spread opportunities, and the expectation that ETF discounts will narrow as market sentiment improves [2]