Since this year, the highest yield convertible bond funds Qianhai Kaiyuan convertible bond and GF convertible bond a have achieved a yield of more than 40%, not only ranking high in the bond base, but also not inferior compared with some equity funds.
Public funders said that in the medium and long term, with the continuous expansion of the convertible bond market, the overall investment opportunities of relevant funds are worth looking forward to. However, in the short term, the valuation level of convertible bonds is high and the investment difficulty is increased. It is necessary to select the core target in industries that continue to maintain a high boom, such as power equipment, new energy and high-end manufacturing.
actively distribute convertible bonds through public offering
The convertible bond market is hot recently. This year, the CSI convertible bond index outperformed many stock indexes. As of the closing on December 13, the CSI convertible bond index rose as high as 17.54%. As of the closing on December 13, the two most expensive convertible bonds, Jingrui convertible bond and China Mining convertible bond, had exceeded 500 yuan, reaching 508.90 yuan and 500.00 yuan respectively. Among the 390 convertible bonds that have been listed, there are 45 convertible bonds with more than 200 yuan and only 3 convertible bonds with less than 100 yuan.
Honeycomb Fund pointed out that the convertible bond index rose better this year, mainly because the positive stock index corresponding to convertible bonds outperformed some stock indexes, and the conversion premium rate was at a high level. Haitong Securities Company Limited(600837) also said that thanks to the style of the equity market, convertible bonds went out of the independent market and took advantage of the trend. After the market adjustment from mid September to early October, the index rose again, and the low-priced bonds in the market were gradually “eliminated”. This year is a big year for convertible bonds. The rising valuation and the dominant style of small and medium-sized market capitalization drive the convertible bond index to improve.
The outstanding performance of convertible bonds also stimulated the investment enthusiasm of public funds, Zheshang Securities Co.Ltd(601878) statistics show that as of the end of the third quarter of this year, the market value of convertible bonds of public funds reached a new high, reaching 218.7 billion yuan, an increase of 19.38% month on month compared with the end of the second quarter. Among them, the scale of “fixed income +” fund’s additional allocation of convertible bonds has been close to 150 billion yuan since the first quarter of 2019. By the end of the third quarter of 2021 alone, the month on month growth rate of convertible bond positions has reached 23.3%. The trend of fund’s additional allocation of convertible bonds has been established.
performance varies greatly
The performance of convertible bonds in the past two years has led to a rise in the net value of convertible bond funds. Last year, among the top debt bases in terms of income, convertible bond funds “dominated the list”. The same is true this year. Among the top five bond funds in terms of income this year, there are three convertible bond funds. According to statistics, as of December 10, of the 108 convertible bond funds that can be counted, only 7 have not achieved positive returns this year, and 37 convertible bond funds have a yield of more than 20%.
The yields of Qianhai open source convertible bond and GF convertible bond a have both exceeded 40% this year. However, there is a big difference between the beginning and end of the income of convertible bond funds. Wu Di, manager of GF convertible bond fund, said that the income characteristic advantages of convertible bonds with “bottom down and no top up” were brought into full play in the market fluctuations in the first quarter. The maximum pullback of aggressive convertible bond funds after the Spring Festival was generally about 10%, which was significantly lower than that of partial stock funds. Since the second quarter, the valuation of the premium rate of convertible bonds relative to positive stocks has increased significantly. In addition, since the second quarter, the style of small and medium-sized stocks has significantly outperformed the market, and the subject matter of convertible bonds and positive stocks is relatively small and medium-sized as a whole.
Market participants stressed that the continuous expansion of the convertible bond market since 2017, with enough space to tap the excess returns of individual bonds and industry rotation, is the basis for the expansion of the performance difference of convertible bond products. At the same time, the selection of positive shares is the decisive factor in the income of convertible bonds. In recent two years, the structural market characteristics of stocks are prominent. When the selection is right and can be held, convertible bond products can obtain better income.
the overall opportunity is worth looking forward to
For the next trend of the convertible bond market, Chen Xiao, head of the fixed income Department of Taiping fund, said that the short-term market is in the process of raising the valuation and raising the premium rate, but the overall valuation has reached a relatively high level, which may suppress the cost performance in the short term. With the continuous expansion of the convertible bond market in the medium and long term, the overall opportunity of the convertible bond market is worth looking forward to. Honeycomb Fund believes that the income source of convertible bonds depends on the performance of the stock market in 2022, and it is judged that the market still maintains a structural bull market. At the same time, the “fixed income +” market has expanded significantly in recent years. As the target of advancing, attacking and retreating, convertible bonds are the re allocation varieties of “fixed income +” products, and the conversion premium rate should remain high, “Maintain an optimistic judgment on the convertible bond market next year”.
In terms of specific investment, Yin Peijun, assistant general manager of Huafu fund and director of fixed income department, frankly said: “at present, the valuation level of convertible bonds is high, and the operation is more difficult for fund managers, so we are relatively cautious in operation and adhere to the operation idea of balance and moderation.” He prefers to control the proportion and position of partial equity convertible bonds in the portfolio in a relatively stable range, while varieties with relatively low valuation account for a relatively high proportion in the bottom position allocation.
Wu Di said that we should pay more attention to growth and need the high growth of positive stock performance to digest the overvalued value of stocks and convertible bonds. From the perspective of meso industry boom tracking, power equipment, new energy and high-end manufacturing will continue to maintain a high boom, and the core target will still have relative returns. At the end of the year, pay attention to the valuation repair opportunities of the large financial sector and the consumer sector.
He also pointed out that in order to minimize pullback, we should maintain a certain degree of industry dispersion in the selection of key positions and avoid excessive risk exposure in a single industry. “We should stop earnings next year, and low-cost convertible bond products are expected to significantly outperform the index”.
(China Securities Journal)
