Image source: Visual China
It is the end of the year again, and personal pension contributions in 2023 have also come to an end.
In November last year, the personal pension system was launched, and four types of products including pension funds, bank wealth management, savings deposits, and commercial insurance were put on the shelves. One year has passed, and the fund's return rate is at the bottom among the four categories of products. Wind data shows that there are 179 personal pension funds in the market, and more than 90% of them have suffered losses since their establishment, with the average return rate being -4.47%.
The other three types of products all recorded positive returns: there were 19 financial products, with an average return of 2.32%; there were 99 insurance products, and the annualized settlement interest rate last year was generally above 4%; and there were a maximum of 465 savings products, The annual interest rate is mostly in the range of 2%-3.5%.
So, how is the performance of personal pension funds that seem to be "poor students"? Compared with the other three types of "no loss" products, are funds still worth buying?
90% lost money, with the highest drop reaching -17.83%
On November 18, 2022, 129 pension FOFs were shortlisted in the personal pension investment catalog. Since then, personal pension funds have continued to expand, and have increased to 179 as of press time. However, in terms of income, the equity market fluctuated and declined during the year, and personal pension funds also generally recorded negative income. As of press time, only 12 had positive income, accounting for less than 10%, and the rest were in the red.
Specifically, on the profit side, Ping An Steady Pension One Year Y has the highest income, recording 3.51%, followed by China Conservative Pension Y and China Europe Foresight Pension 2025 One Year Y, which have recorded 1.49% and 1.08% respectively. It is worth noting that among the 12 products with positive returns, 5 products were established in the fourth quarter of this year. When the market continued to bottom out, they were affected by the equity market for a short period of time.
On the losing side, 165 products have negative returns, accounting for 92%. Among them, there are 17 personal pension funds with a decline of more than 10%. The top three decliners are China Europe Foresight Pension Holding Y for five years in 2050, Guotai Junan Shanwu Pension holding Y for five years in 2024, and Minsheng Canada Bank Kangtai Holding Y for five years in 2040. , the declines were -17.83%, -14.36%, and -13.70% respectively. Overall, the average return of personal pension funds across the market since their establishment has been -4.47%.
organizes both ends of the income and it can be found that the level of income is closely related to the product type. Among the profitable products (except for 5 newly issued products), except for the two target date FOFs of China Europe Foresight Pension Holding Y for One Year in 2025 and Fuguo Xinhui Holding Y for One Year 2025, the rest are all stable target risk FOFs. . Among the products with a loss of more than 10%, except for Dongfang Hongyi and Active Pension, which have held Y for five years, the rest are target date FOF, and most of them are target years that are far away from the present, such as 2040, 2045, and 2050. In addition, the return performance of products with a one-year holding period is better than that of three-year and five-year holding periods.
Overall, in terms of product types, stable performance is better than positive performance. The closer the target date is, the better the performance is. The shorter the holding period, the better the performance. Market opinion believes that this is related to the equity position of the product. The equity position of products with low risk levels, short holding periods, and closer target dates is relatively low. In the past year, the equity market has experienced ups and downs, and products with low equity positions have naturally been less affected.
In terms of holding period, products with returns below -10% are held for three years and five years, while products with positive returns exceed 80% for one year. This is related to the equity position of the product. The "Guidelines for Pension Target Securities Investment Funds (Trial)" stipulates that if the holding period is more than 5 years, the equity asset investment ratio shall not exceed 80%; if the holding period is more than 3 years, the equity asset investment ratio The proportion shall not exceed 60%; if the holding period is more than one year, the equity asset investment proportion shall not exceed 30%.
The advantages of the fund are clear: transparent supervision and strong investment research capabilities.
Personal pension funds suffer 90% losses, which has attracted many investors to complain. In most people’s existing concepts, pension funds should be stable, but why do personal pension funds generally suffer losses?
Wang Rui, director of Morningstar (China) Fund Research Center, told Blue Whale Finance that the bottom layer of pension funds is equity assets. In the short term, it will be affected by market preferences, investor sentiment, industry and style cycles, and is prone to large fluctuations. .
At the same time, a public fundraiser in Shanghai believes that personal pension funds have actually become “defensive” in nature."Currently, personal pension funds operate in the form of FOF, which can diversify risks twice, have controlled fluctuations, and are relatively stable among equity assets. From a data perspective, the returns are indeed better than those of partial stock hybrid funds and hybrid funds. FOF fund." the above person added.
At the data level, the partial stock hybrid fund index fell by -14.80% during the year, the FOF index fell by -5.13%, and the average decline of personal pension funds was -4.48%. This shows that personal pension funds are indeed more "resistant" among equity assets.
The public equity industry generally believes that pensions are a long-term sum of money, and time will smooth out short-term net worth fluctuations. China Asset Management pointed out that due to the impact of capital market fluctuations, personal pension funds have suffered relatively large overall losses, but over time, long-term returns are still considerable. "With reference to the goal of doubling GDP per capita in 2035, an average annual real growth rate of 4.7% and a nominal growth rate of about 7%-8% are required. Correspondingly, in the next 10 years, the long-term investment goal of pension funds should be set at 7%-8% %."
Although personal pension funds generally suffer losses in the short term, Wang Rui believes that among the four types of products: financial management, savings, insurance, and funds, funds have very obvious advantages: transparent supervision and strong investment research capabilities.
Compared with bank financial management, the regulation of public funds has always been the most stringent in the market. Therefore, the investment operation of public funds is more standardized and transparent than that of bank financial management. It not only helps investors track and select products, but also strengthens supervision. It is also a great benefit to protect the interests of investors. Banks cannot guarantee principal and profits. “The new asset management regulations and new financial management regulations introduced in 2018 have largely eliminated regulatory arbitrage opportunities for bank financial management. Under the requirements of new regulations such as the elimination of rigid redemptions, the elimination of nesting, the elimination of leverage, and the elimination of non-standard bonds, financial management The operation of products has fully shifted to "public offering" and can no longer provide the characteristics of guaranteed capital and income. Bank financial management and public offering products will mainly compete on investment management capabilities." Wang Rui further pointed out that public offering in terms of investment research capabilities, especially equity In terms of asset investment research, it has stronger advantages than bank financial management.
Compared with cash savings, in the context of declining bank deposit interest rates, although cash deposits are highly secure, it is difficult to offset the impact of deposit depreciation caused by inflation. Compared with financial management, deposits and funds, insurance itself plays a greater role in providing protection for families and individuals, while weakening its investment function. It is essentially a type of product that is distinguished from the other three types of products.
Wang Rui added that investors should still conduct long-term financial management based on their own risk preferences and risk tolerance. To resist inflation risks while increasing returns, pension funds are a good choice. "From a long-term investment perspective, if you allocate low-risk assets just to avoid risks, it will be difficult to achieve the goal of a prosperous retirement. In the long run, equity assets will show a steady upward trend with the growth of economic fundamentals."
