Risk aversion led to the suspension of individual investors purchase of bonds

category:Finance
 Risk aversion led to the suspension of individual investors purchase of bonds


Different from the previous suspension due to over enthusiastic subscription, many bond funds have to close down due to the withdrawal of institutional investors.

In addition to yingdaan Huichun bonds, since November, Taikang Yangtze River Economic Zone bonds, China Securities construction investment Shanxi state enterprise bonds and other funds have also announced the suspension of individual investors purchase.

According to chioce data of Dongcai, since October, there have been as many as 13 pure bond funds that have announced similar suspension of individual investors purchase.

A person from a fund company said that the recent suspension of individual investors purchase of the companys bond funds was due to the redemption of some institutional investors, resulting in the holding of more than 50% by other single institutional investors. According to the relevant provisions of fund liquidity risk management, except for special circumstances, it is not allowed to accept an investors subscription application, resulting in its share exceeding 50% of the total fund share.

The open-end funds established after the issuance of the new liquidity regulations for public funds have also agreed on the suspension of investors subscription in the prospectus. In the case of 50% of the funds fund management, or when the investors application for fund management is more than 50% of the funds management, or if the investors application for fund management is more than 50%, it may be considered that the investors application for fund management may be suspended.

Risk aversion

A number of industry insiders said that the recent strong risk aversion sentiment in the bond market, the withdrawal of institutional investors is the reason for the relatively high concentration of some holders, and the emergence of more than 50% single holder in bond funds.

A bond fund manager in Shanghai revealed that the recent default in the credit bond market has led to a rise in risk aversion, with some institutions redeeming bond funds and leaving the market to wait and see. At this time, if the holders of bond funds are not dispersed enough, it is likely that some investors will withdraw, resulting in a single institution holding more than 50%.

According to wind data, among the bond funds that have been suspended from individual investors since October, 9 bond funds have disclosed their holder structure in the funds semi annual report, and 8 bond funds with institutional investors accounting for more than 99% at the end of the second quarter.

In addition, in the view of the above Shanghai bond fund managers, the recent lack of liquidity in the bond market may lead to partial distortion of valuation, which is another factor for institutional investors to redeem. In other words, the net value of bonds is not calculated according to the market value. The current bond market lacks liquidity. Not only are default bonds being sold off, but also some bonds with weaker qualifications may have to be sold at a price lower than the valuation. Out of this concern, coupled with the bear market in the bond market, some institutions are considering redemption of bond funds at their current net worth.

There are also fund managers who interpret the consideration of fund companies suspending the sale to individual investors from the perspective of product positioning. When the withdrawal of other institutional investors leads to the passive exceeding of the standard of a single institutional holder, whether or not to look for other institutions to apply for purchase, so as to reduce the investment proportion of a single institution, meet the requirements of laws and regulations, and open it to individual investors to buy, depends on the positioning of the fund company for this bond fund. If the product positioning is mainly for institutional customers, fund companies are not necessarily eager to find other institutions to purchase. After all, institutional investors have their own requirements on the historical performance and investment direction of the products, and will not apply for the fund hastily. A bond fund manager in Shenzhen said. Another fund manager in Shanghai believes that the impact will not be too great if the fund company with strong institutional sales capacity. Once the proportion of single institution is too concentrated in the funds of these fund companies, they can find new funds in a short time, thus reducing the proportion of single holder. Source: Ren Hui, editor in charge of Securities Times_ NBJ9607

There are also fund managers who interpret the consideration of fund companies suspending the sale to individual investors from the perspective of product positioning. When the withdrawal of other institutional investors leads to the passive exceeding of the standard of a single institutional holder, whether or not to look for other institutions to apply for purchase, so as to reduce the investment proportion of a single institution, meet the requirements of laws and regulations, and open it to individual investors to buy, depends on the positioning of the fund company for this bond fund. If the product positioning is mainly for institutional customers, fund companies are not necessarily eager to find other institutions to purchase. After all, institutional investors have their own requirements on the historical performance and investment direction of the products, and will not apply for the fund hastily. A bond fund manager in Shenzhen said.

Another fund manager in Shanghai believes that the impact will not be too great if the fund company with strong institutional sales capacity. Once the proportion of single institution is too concentrated in the funds of these fund companies, they can find new funds in a short time, thus reducing the proportion of single holder.