When bank wealth management products are no longer "guaranteed to make a profit," how should investors respond?

Ask AI · How do fundraising failure phenomena reflect changes in supply and demand in the wealth management market?

In recent times, some developments in the bank wealth management market have drawn widespread attention. On the one hand, certain bank wealth management subsidiaries have adjusted the performance benchmarks of some of their wealth management products, causing expected returns to generally move downward; on the other hand, some wealth management products have seen longer fundraising periods or fundraising failures, causing investors to waver in their confidence in bank wealth management products. In such circumstances, how should investors respond?

Lowered Return Expectations

A reporter from Dazhong Securities News found that since the beginning of this year, multiple bank wealth management subsidiaries—including Ping An Wealth Management, Shanghai Upper Bank Wealth Management, Huaxia Wealth Management, China Post Wealth Management, and China Merchants Bank Wealth Management—have successively adjusted the performance benchmarks of some of their wealth management products. Some directly lowered the interval range of performance benchmark returns, while others changed the previously traditional interval-type benchmarks to a model linked to market interest rates and indices.

In an announcement dated March 27, Ping An Wealth Management stated that, affected by multiple factors including the macroeconomic environment, adjustments to monetary policy, and market supply-and-demand relationships, under the current market environment the yields of fixed-income assets such as deposits and bonds overall show a downward trend, and equity-type assets experience larger fluctuations, resulting in a significant change in the asset return “center” compared with the earlier period. To better adapt to changes in the market environment and ensure that product performance matches actual market conditions, the performance benchmark for the next investment cycle of “Ping An Wealth Management—Outstanding Growth One-Year Fixed Open RMB Wealth Management Product No. 3” has been lowered to an annualized 1.50%–4.50% (previous cycle: annualized 2.00%–5.00%).

China Post Wealth Management also said in its March 24 announcement that “due to the product having been established for a longer period of time, and with the current market environment having changed significantly compared with the time when the product was issued, the expected asset yield has fallen by quite a lot.” Based on the current changes in market conditions, effective from March 27, 2026, the performance benchmark for “Post Bank Wealth—Hongjin Shortest Holding 180 Days No. 7 (Anying Fund) RMB Wealth Management Product” has been adjusted from 3.2%–4.0% (annualized) to 1.15%–2.70% (annualized).

Recently, China Merchants Bank Wealth Management also adjusted the performance benchmarks of multiple wealth management products under its portfolio. Taking as an example the China Merchants Bank Wealth Management Zhaorui Xinding (Yuexiang) 30-Day Holding No. 1 fixed-income wealth management plan: the performance benchmark before the adjustment was 1.50%–3.00% (annualized), and after the adjustment it becomes “30% × the interest rate on demand deposits announced by the People’s Bank of China + 70% × the yield of the ChinaBond 0–3 Months Treasury Bond Wealth (Total Value) Index.”

Liu Sijia, a researcher at Puyi Standards, pointed out that for this kind of composite performance benchmark linked to market interest rates and indices, investors can use a component decomposition method to evaluate returns when estimating them. First, decompose the weights to clarify the share of returns attributable to the linked interest rates and the index; second, look up the historical yield performance of the corresponding deposit rates and indices (with the historical yield performance of the index assessed via annualized yields over 1–3 years); and finally, estimate the product’s potential return range through weighted aggregation of returns. She also said that investors do not need to fully understand the performance benchmark formula, but they must understand its core composition and risk implications—for example, deposit investments have extremely low risk, bond investments face interest-rate risk, and equity investments face typical price volatility—and they should focus on the core-weight index underlying to judge whether the assets toward which the product’s performance benchmark is directed are more geared toward stability or toward an aggressive approach, and then make a purchase decision in combination with their risk tolerance.

Increased Fundraising Difficulty

The reporter also noted that since the beginning of this year, some bank wealth management subsidiaries have published on their official websites announcements such as “notices on extending the fundraising period” for their wealth management products, or “announcements that the product will not be established” for certain wealth management products.

Huaxia Wealth Management, in an announcement dated March 25, stated that “Huaxia Wealth Management Yue’an Closed-End Wealth Management Product No. 469 (Product Code: 26121054) is not established because the total amount raised did not reach the minimum issuance size specified in the product prospectus.” On the same day, Xinyin Wealth Management announced that its “Xinyin Wealth Management Anying Xiang Fixed Income Stable Income Closed-End Wealth Management Product No. 332” “did not reach the minimum scale required under this wealth management product prospectus (RMB 5 million). In accordance with the terms of the prospectus, this period’s wealth management product is not established.” Previously, Xinyin Wealth Management also issued an announcement titled “Xinyin Wealth Management Huiying Xiang Fixed Income Increment Three-Month Holding Period 96 No. wealth management product fundraising period extended.”

Zhang Jinghan, a researcher at Puyi Standards, said that the occurrence of this kind of phenomenon is the result of multiple factors working together. First, the yields on the asset side continue to decline, reducing product appeal. In an environment where the overall interest-rate “center” is moving down, the performance benchmarks of newly issued products are generally trending lower, creating a certain gap with investors’ earlier psychological expectations; additionally, some products lack obvious advantages among comparable competing products, which affects fundraising. Second, investors’ preference for liquidity does not match product tenors. Looking at the fundraising-failed products this year, most are medium- to long-term closed-end products or fixed-income products with minimum holding periods. Against the background of increased uncertainty in the equity and bond markets, investors prefer open-ended products with better liquidity over closed-end and holding-period products with longer lockups, leading to insufficient subscription willingness for such products. Third, some wealth management firms choose to proactively reduce costs and improve efficiency—after weighing the subsequent operational and research-and-investment costs of products, they “end fundraising early” for products with smaller fundraising scale to improve the firm’s operational efficiency.

She further pointed out that in the short term, under the backdrop of a downward shift in the asset yield “center” and investors’ risk appetite not yet stabilizing, cases where fundraising falls short of expectations may still occur; but in the medium to long term, as wealth management companies continue to optimize areas such as product design and customer stratified operations, the match between product supply and investor demand will gradually improve. She emphasized that the occurrence of an appropriate number of products with fundraising failures is actually a reflection of the industry becoming mature. It not only reflects that investors are gradually becoming more rational and no longer pay for “principal protection” expectations; on the other hand, it also forces wealth management companies to enhance their product design capabilities and sales adaptation capabilities, thereby promoting a transformation of the industry toward high-quality development.

Actively Adjusted Strategies

Huang Shiyujian, a researcher at Puyi Standards, pointed out that the occurrence of fundraising failures for wealth management products indicates that the market for bank wealth management products is moving toward a “buyer’s market.” She advised investors to proactively adjust their strategies to adapt to the new market environment. First, take a rational view of fundraising failures. This shows that there is “mismatch between supply and demand” between bank wealth management products and investors. “Bank wealth management products that fail to raise funds are mainly fixed-income products and have a certain degree of homogenization; at the same time, in a low interest-rate environment combined with the hot performance of the capital markets at the beginning of the year, the attractiveness of fixed-income wealth management products to investors is further reduced.” Second, investors should proactively adapt to the “buyer’s market” environment and actively adjust their investment strategies by making good use of their choices. On one hand, they can deepen their understanding of wealth management products, stay alert to wealth management products that lack distinct features and are highly homogeneous, and pay attention to the management capabilities of the wealth management companies; on the other hand, they can continuously strengthen financial literacy, avoid over-concentration in a single category of products, and conduct diversified asset allocation based on factors such as their life cycle, asset level, and risk tolerance.

As for the “index-based” transformation that has taken place in the performance benchmarks, Liu Sijia suggested that when selecting wealth management products, investors should focus on the following dimensions: first, the underlying asset allocation. Investors can use the composition of the performance benchmark to understand the product’s asset allocation direction. For example, if the bond index has a high weight, the product’s return performance will be more sensitive to fluctuations in the bond market; if the equity index has a high weight, the product’s return performance will be more sensitive to fluctuations in the stock market. Second, the product’s risk level. Assess whether the product’s risk level matches the underlying asset allocation and the customer’s own risk tolerance. Third, the level of historical performance. By observing whether the product’s historical performance meets or exceeds the estimated level of the performance benchmark return, investors can evaluate the manager’s investment capability.

Reporter Zhao Qiwei