Low Rates and Equity Rebound Drive Third 'Fixed Income Plus' Expansion as Assets Top RMB 3 Trillion

Against a backdrop of low interest rates and a recovering equity market, public 'fixed income plus' products have entered a new round of asset expansion. Looking back at their development, the first wave of growth from 2020 to 2021 was driven by the net-asset-value transformation of wealth management products and a reduction in structured deposits. From 2022 to 2024, both the stock and bond markets experienced volatility, and assets fell back to RMB 1.74 trillion. Since 2025, assets have climbed back above RMB 3 trillion. Mixed bond second-tier funds, or second-tier bond funds, have been an important vehicle for this round of expansion, with assets rising from RMB 686.2 billion to RMB 2.32 trillion, an increase of about 237%.

From end-2024 to end-June 2026, the number of second-tier bond fund products rose from 554 to 775, while total assets increased from RMB 686.257 billion to RMB 2,315.941 billion, a net increase of RMB 1,629.684 billion, or about 237%. The growth was highly concentrated: the top ten managers by increment accounted for a combined increase of RMB 1,003.075 billion, or 61.55% of the total increase; the top twenty accounted for 81.52%, while more than one hundred other managers together contributed less than 20%.

At the manager level, Invesco Great Wall Fund's second-tier bond fund assets rose from RMB 43.539 billion at end-2024 to RMB 275.732 billion, an increase of RMB 232.193 billion. China Universal Asset Management grew by RMB 125.414 billion, Fullgoal Fund by RMB 123.483 billion, and E Fund by RMB 113.015 billion, with all three exceeding RMB 100 billion in growth. Penghua Fund, Southern Fund, and Huashang Fund each grew by more than RMB 80 billion, while Yongying Fund and Zhongou Fund each grew by more than RMB 58 billion. In addition, Yinhua Fund's second-tier bond fund assets rose from RMB 1.003 billion to RMB 34.652 billion, Wanjia Fund from RMB 1.091 billion to RMB 24.358 billion, and Industrial Bank Fund from RMB 6.409 billion to RMB 43.709 billion.

At the product level, Invesco Great Wall Jingyifengli grew from RMB 203 million at end-2024 to RMB 71.209 billion by the end of the first half of 2026, an increase of RMB 71.006 billion. Penghua Double Bond Jiali and Invesco Great Wall Jingyi Double Interest grew by RMB 55.173 billion and RMB 42.059 billion, respectively. Yongying Steady Enhancement, E Fund Fenghe, Boshi Hengle, Invesco Great Wall Jingsheng Double Interest, and Huashang Credit Enhancement each grew by more than RMB 30 billion. As of end-2024, among the 554 second-tier bond funds in the market, China Merchants Fund had 18, GF Fund and China Universal Asset Management each had 17, Fullgoal Fund had 16, ChinaAMC and Southern Fund each had 15, Harvest Fund and Tianhong Fund each had 14, ICBC Credit Suisse Fund, Invesco Great Wall Fund, and Penghua Fund each had 13, E Fund had 11, and Boshi Fund had 10.

On the equity side, second-tier bond fund holdings show divergent styles. Among the top twenty products by asset increase, equity positions generally ranged from 13.7% to 20.4%, with the top ten holdings concentrated in AI computing power chain technology stocks such as Zhongji Innolight, Eoptolink, and Cambricon, as well as resource leaders such as Zijin Mining. Among 'fixed income plus' products newly established since 2026, the trend toward clearer style definition has strengthened, and product direction can be seen from the style of co-managed equity fund managers.

As of end-June 2026, there were about 264 technology-themed 'fixed income plus' products, with assets of about RMB 1.22 trillion, ranking first, mainly overweight electronics, communications, and computers. Value-themed products had assets of about RMB 279.2 billion, characterized by low price-to-earnings ratios, high return on equity, and large market capitalization, with relatively balanced industry allocation. Balanced-themed products had assets of about RMB 213.7 billion, with highly dispersed industries and flexibility mainly obtained through convertible bonds. Cyclical-themed products had assets of about RMB 158.9 billion, mostly overweight upstream resources such as nonferrous metals, coal, and oil and petrochemicals; dividend-themed products had assets of about RMB 88.8 billion, mostly overweight high-dividend sectors such as banks, oil and petrochemicals, and utilities; and small-cap-themed products had assets of about RMB 1.7 billion, with heavy holdings mostly in small and mid-cap companies in manufacturing segments such as machinery and equipment, basic chemicals, and electronics.

In terms of holder structure, 'fixed income plus' products remain dominated by institutional investors, with institutional investors accounting for more than 60% overall. By type, institutional holdings were about 74% for high-volatility products, about 64% for medium-volatility products, and about 44% for low-volatility products. Regarding risk-return characteristics, low-volatility products typically have equity exposure of 0 to 10% and a maximum drawdown of no more than 2%; medium-volatility products mostly have equity exposure of 10% to 30% with drawdowns of no more than 5%, or equity exposure of 0 to 10% but drawdowns greater than 2%; and high-volatility products have equity exposure of 10% to 30% but drawdowns exceeding 5%, or equity exposure above 30%.