1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - The report focuses on Li Yulu, a fund manager at Manulife Fund, who adheres to the principle of absolute return and aims to navigate complex bull - bear markets smoothly. Li Yulu has formed a comprehensive investment framework and achieved good results in the management of representative products such as Manulife Jili and Manulife Juli [3]. 3. Summary According to the Table of Contents 3.1 Macro - view of Manulife Fund Manager Li Yulu - **Personal Background**: Li Yulu holds a master's degree in International Banking and Monetary Studies from the University of Birmingham, UK. She has worked in credit rating, insurance, and pension companies before joining Manulife Fund in April 2021. Currently, she manages mainly fixed - income plus and pure - bond funds, with representative products including Manulife Jili and Manulife Juli [3][9]. - **Investment Framework** - **Systematic Asset Allocation**: The company's fixed - income investment committee sets the annual strategic position, and adjusts the quarterly and monthly tactical positions dynamically. The fund manager and researchers determine specific allocations and select individual stocks and bonds. A multi - department team manages investment concentration, risk, and monitors product net value daily [12]. - **Pure - bond Investment**: Adopt a "core + satellite" strategy. The core position focuses on high - coupon, low - credit - risk financial - like bonds, and the satellite position targets trading opportunities in local government bonds. Avoid credit downgrades and continuously track bond credit changes [13]. - **Stock Investment**: Based on the absolute return target, use dividend - paying stocks as the base position, moderately allocate AI and new - tech stocks, and reserve some positions for excess returns through sector rotation. Adjust stock positions dynamically according to market trends, economic data, and policies [13]. - **Convertible Bond Investment**: In first - tier bond funds, convertible bonds are used to enhance pure - bond returns; in second - tier bond funds, they provide certain returns. The convertible bond portfolio has a "stable base + enhanced flexibility" structure, with a focus on in - depth research and bottom - up stock selection [13][14]. 3.2 Second - tier Bond Fund Representative: Manulife Jili - **Risk - return Characteristics** - **Annual Positive Returns**: Since Li Yulu took office, Manulife Jili has achieved positive returns in every full year, outperforming second - tier bond funds in various risk - return indicators [15]. - **Outperformance Against Peers**: Compared with other medium - position second - tier bond funds, it leads in cumulative returns, maximum drawdown control, Sharpe ratio, and Calmar ratio [18]. - **Asset Allocation Strategy** - **Dynamic Position Adjustment**: The "plus" assets are mainly stocks, with a relatively small convertible bond investment ratio. The fund manager adjusts positions based on the accumulation of safety margins and significantly reduces positions during extreme market conditions [20]. - **Stock Position Timing**: The fund manager is a moderate timer, making large - scale position adjustments only in extreme market conditions and small - scale adjustments in normal times [22]. - **Pure - bond Investment Style** - **High - grade Credit Bonds**: The bond investment uses a coupon - based strategy with some interest - rate bond trading. It prefers high - grade medium - term notes, corporate bonds, and policy - bank bonds [27]. - **Diversified Portfolio**: The bond portfolio is relatively diversified, with the top five heavy - position bonds accounting for no more than 20% of bond assets. The duration center is 3 - 4 years, showing significant duration timing characteristics [30][34]. - **Convertible Bond Investment Style**: The convertible bond portfolio is concise, with a small number of bonds (no more than 20 during the reporting periods). It mainly consists of large - cap bank convertible bonds, with a low equity - like position, focusing on stable returns [36]. - **Stock Investment Style** - **Sector Rotation**: The fund manager mainly allocates to dividend and technology sectors, adjusting the allocation ratio according to market conditions. Since 2024, the weight of the technology sector has increased [44]. - **Style and Concentration**: The fund manager follows market trends in terms of market - value and fundamental styles. The stock portfolio was relatively diversified before 2024 and has become more concentrated since then. The turnover rate is 2 - 3 times, and some technology stocks are held for the long term [48][50]. 3.3 First - tier Bond Fund Representative: Manulife Juli - **Risk - return Characteristics** - **Stable Positive Returns**: Since the strategy reform in 2023/11/20, Manulife Juli has maintained a relatively low position and continuously provided stable positive returns for investors [60]. - **High Quarterly Win - rate**: Since 2024, it has achieved positive returns in 7 consecutive quarters, with a quarterly win - rate of 100% and 85.71% of quarters achieving excess returns over the first - tier bond fund index [60]. - **Time - enhanced Earnings Effect**: The holding - period returns show a "time - enhanced" characteristic, with the average return, median return, and probability of positive returns increasing with the holding time [63]. - **Higher Sharpe Ratio**: Compared with first - tier bond funds with the same position, it has a better Sharpe ratio, indicating a higher risk - return ratio [67]. - **Asset Allocation Strategy** - **Low - risk Convertible Bond Allocation**: The average convertible bond allocation ratio in the recent four periods is about 14.63%, with a low risk exposure, which is in line with the goal of low - volatility and absolute return [68]. - **Contrarian Position Adjustment**: The convertible bond position changes significantly, following a "buy - low, sell - high" strategy and implementing a temporary empty - position strategy in extreme market conditions [68]. - **Pure - bond Investment Strategy** - **Financial Bonds and Local Government Bonds**: Since the end of 2023, the fund has focused on financial bonds as the core position and local government bonds for trading. The position management of local government bonds is flexible, based on the spread between local government bonds and treasury bonds [73]. - **Flexible Duration Strategy**: The duration strategy is flexible, increasing duration when interest rates are expected to fall and reducing it when necessary. The bond portfolio is becoming more diversified, with the top five heavy - position bonds accounting for no more than 30% of bond assets [76]. - **Convertible Bond Investment Strategy** - **Concise Portfolio**: Similar to Manulife Jili, the convertible bond portfolio is concise, with the number of bonds usually between 10 - 40. - **Stronger Return - enhancement**: Compared with Manulife Jili, it has a lower proportion of bank convertible bonds, a higher equity - like position, a lower bond - like position, and more small - and medium - cap convertible bonds, showing a stronger return - enhancement property [82][85].

Core Insights - The report emphasizes the complexity of investing in local government bonds, highlighting the need to understand pricing logic, regional differences, and market dynamics [6] - The entry of more trading institutions, such as wealth management subsidiaries and public funds, has significantly improved the liquidity of local government bonds, especially in the second half of last year [6] - The report expresses a cautious outlook for pure bond investments in the fourth quarter, citing potential market adjustments and increased volatility risks due to liquidity pressures from wealth management products [7] Summary by Sections Fund Manager Profile - Li Yulu, the fund manager of Manulife Fund, has a decade of experience in fixed income and holds a master's degree in international banking and monetary economics from the University of Birmingham [6] - Li has previously worked in various roles related to credit analysis and investment management before joining Manulife in 2021 [6] Investment Strategy - The report discusses the current allocation strategy, focusing on convertible bonds primarily in the banking and aquaculture sectors, with a positive outlook on their performance due to low PB valuations [7] - It also mentions a portion of the portfolio allocated to environmental and state-owned enterprise reform themes, driven by strong government intentions to reduce debt [7] Market Performance - The report indicates a favorable view on the overall performance of fixed income products, particularly convertible bonds, which align with current market trends [8] - It notes that the median returns of primary and secondary bond funds are similar this year, but primary bond funds have experienced less drawdown, making them more attractive to certain investors [8] Sector Focus - The report highlights significant changes in the holdings of actively managed equity funds, with a decrease in large-cap stocks and an increase in positions in industry leaders within the AI hardware and communication sectors [11][12] - It points out that the non-bank financial sector has seen substantial increases in holdings, reflecting a recovery in valuations and performance expectations [13] Investment Recommendations - The report suggests focusing on four main investment themes: communication and hardware sectors benefiting from AI expansion, non-bank financials, new consumption trends in Hong Kong, and defense and military sectors [14]

Report Industry Investment Rating - The report does not explicitly mention the industry investment rating [1][2][3] Core View of the Report - The report is optimistic about the performance of fixed - income + products throughout the year, especially considering that convertible bonds fit the current market style. The median returns of first - tier and second - tier bond funds are similar this year, but first - tier bond funds have smaller drawdowns, making them more attractive to some "smart money" [8][37] Summary by Relevant Catalogs 1. Pure Bond as the Foundation: How to Achieve Refined Management? - **Trading Logic of Pure Bond Part**: The core position of Juli's pure bond part focuses on quasi - financial bonds, and the flexible position pays attention to local bond trading strategies. Hengli focuses more on local bond allocation. Local bond investment is complex, and its trading opportunities may come from curve convex points and primary market subscription spreads. The allocation of local bonds is adjusted based on the spread between local bonds and national bonds. When the spread is below the historical median (e.g., below 30%), the position is reduced, and when the spread widens, it is re - increased [13][14] - **View on New Credit Bond Products and Strategies**: Super - long - term credit bonds are more suitable for institutional investors with stable liability ends such as special accounts or insurance, rather than public funds. The current market allocation of super - long - term credit bonds is crowded, and the interest rate trend is in a sideways shock. The proportion of super - long - term credit bonds in the portfolio is generally controlled at about 5%, and high - turnover and liquid varieties are selected [20] - **Obtaining Excess Returns through Variety Rotation Strategy**: The dumbbell strategy is adopted, with long - term positions mainly in local bonds and short - term positions moderately increasing assets priced by NCDs according to market opportunities. The proportion of Tier 2 capital bonds is also controlled at a low level. In the second quarter, short - end assets were adjusted structurally to obtain excess returns [20] - **Key Factors for Interest Rate Breakthrough or Reversal**: The report is optimistic about the third - quarter (Q3) market, believing it is a typical pattern of strong stocks and bonds. There are no obvious negative factors in Q3, and the stock market's strong rebound benefits from loose liquidity, so the positions of convertible bonds in the portfolio are not significantly reduced [20] 2. Enhancement as the Blade: How to Achieve Stable Profit Accumulation in the "+" Part? - **Configuration Ideas and Framework of Juli Product**: Juli aims for absolute returns, with a target of maintaining the median drawdown level in the long term and a relatively high performance ranking. The pure bond duration of the product is controlled at about 3 - 4 years, with insurance perpetual bonds as the bottom - position variety and about 30% of commercial bank financial bonds for liquidity management. The convertible bond part is mainly configured with bank and breeding sector targets, and the remaining positions are allocated to environmental protection, state - owned enterprise reform themes, and the pan - technology field [24] - **Convertible Bond Individual Bond Strategy**: The report prefers a "steady and long - term" strategy, holding relatively concentrated convertible bond targets. This is because of limited human and research resources, and over - dispersion makes it difficult to conduct in - depth research and respond quickly to credit risk events [24] - **Stop - Loss and Take - Profit Strategies and Positions of Convertible Bonds**: Clear stop - loss and take - profit lines are set, with a 10% stop - loss amplitude generally being a reasonable choice. The take - profit is adjusted flexibly according to specific convertible bond targets. Positions are adjusted dynamically based on the market environment [29] - **Configuration Strategy in the Case of Limited Target Pools**: The most stable strategy is the double - low enhancement strategy. The industry rotation strategy in the convertible bond market has limited effects. The product adheres to the goal of absolute returns, controls drawdowns, and relies on research capabilities and target selection [36] - **Stock Market Allocation Opportunities**: This year, there have been theme - driven market trends in the equity market, such as AI, innovative drugs, and new consumption. The overall market allocation strategy may still be a dumbbell - shaped strategy. In the second half of the year, the equity market may be further promoted by industrial trends, with strong - performing themes such as AI, solid - state batteries, and semiconductors being key allocation directions, and the dividend sector being a preferred defensive allocation [37]