The net value-based wealth management has entered deep waters, and the "steady happiness" has quietly faded away

This article is reprinted from China Securities Journal

Wealth Management Net Asset Value Enters Deep Water

“Steady happiness” quietly exits the stage

“Recently, there have been quite a few green days.” Xiao Wei, an investor in wealth management products, said. Before the Spring Festival, multiple markets, including gold and equities, experienced fluctuations, causing the net value of wealth management products to fluctuate accordingly. Additionally, this year, the transformation of wealth management into net asset value has been continuously deepened, and product net values fluctuating with the market has become the norm, which has made some investors who expected steady profits feel somewhat uncomfortable.

China Securities Journal’s investigation found that, against the backdrop of low interest rates in the bond market, wealth management products are increasing yields through “multi-asset, multi-strategy” approaches. However, the transition to net asset value and increased asset price volatility are causing investors to go through a necessary market fluctuation learning period. Industry insiders say that many short-term adjustments in the market are often part of a long-term upward trend. Investors are advised to be more patient with the fluctuations in the net value of wealth management products and to make investment decisions from a long-term perspective.

● Reported by Li Yunqi

Wealth Management Product Net Value Experiences a “Roller Coaster”

Recently, the fluctuation of net asset values of wealth management products has attracted investor attention. Xiao Wei purchased several products from a large state-owned bank’s wealth management company at the end of January. Several days of net value declines caused his account to show unrealized losses.

Taking one of Xiao Wei’s holdings, a fixed income-enhanced product, as an example, the product risk level is R2 (medium-low risk), and the investment type is “Fixed Income +.” From January 15 to January 29, the net value rose from 1.1124 to 1.1223, with a steep growth curve; but on January 30 and February 2, the net value retraced from 1.1223 to 1.1138, surprising many investors. Xiao Wei bought this product at the end of January, just experiencing its net value decline.

Reviewing the latest periodic report disclosed for this product, it mainly invests in fixed income assets, with a moderate allocation to equity assets. Gold ETFs are among the top ten assets in the investment portfolio, accounting for 1.48% of total assets. Since the beginning of this year, gold prices have fluctuated significantly, which may be a key reason for the net value fluctuations.

Another R2 risk-level product issued by a different large state-owned bank also showed similar trends. In January, its net value performed well and hit a new high of 1.1209 on January 28. However, from January 29 to February 2, the net value retraced, erasing the gains made since January 6.

Because many investors hold R2 risk-level products, they were unprepared for the net value fluctuations from late January to early February. There is a gap between investors’ general expectation of “steady growth and low drawdowns” for R2 products and the actual net value trend. Topics such as “buy R2 products and experience R3 volatility,” “two days of net value fluctuations wiping out a month’s gains,” and “slow rise, quick fall” have become hot topics among investors.

Underlying Asset Price Fluctuations Meet Full Net Asset Value Transition

Reviewing the historical volatility of wealth management indices, this data somewhat confirms the recent increase in net value fluctuations experienced by investors. Historical volatility measures the degree of asset price changes over time by calculating the standard deviation of past price changes, reflecting how much asset prices deviate from the mean. Wind data shows that the historical volatility of various wealth management indices varies with risk level and investment type. Generally, the higher the risk level, the higher the proportion of high-volatility assets, and the greater the historical volatility of the corresponding wealth management index.

Additionally, the historical volatility of multiple wealth management indices has increased at the beginning of this year. Moreover, the higher the product risk level, the more obvious the recent rise in the index’s historical volatility. For example, over the past 20 days, from the end of last year to February 6, the Wind R3 wealth management index’s volatility increased from 1.81% to 2.26%, while the Wind R2 index rose from 0.38% to 0.4%, and the Wind R1 index decreased from 0.29% to 0.26%.

Industry insiders explain that the recent net value fluctuations of wealth management products mainly stem from underlying asset price volatility and the full implementation of net asset value.

On one hand, since 2025, bond yields have remained low, prompting wealth management products to seek returns through “multi-asset, multi-strategy” approaches, increasing underlying asset price volatility. According to data from the China Banking Wealth Management Market Annual Report (2025), by the end of 2025, asset allocation in wealth management products was primarily in fixed income assets, with bond holdings totaling 18.52 trillion yuan, accounting for 51.93% of total investments. A fixed income analyst from a securities firm told reporters that last year, with thin coupon income and limited band opportunities, investors found it difficult to achieve substantial returns in the bond market of 2025.

To boost yields, many wealth management products increased their allocation to high-volatility assets. By the end of 2025, the proportion of public fund holdings in wealth management products was 5.1%, up 2.2 percentage points from the end of 2024. According to estimates by the Open Source Securities Banking Research Team, by the end of 2025, the scale of hybrid funds and equity funds held by wealth management products was 44.9 billion yuan and 39.9 billion yuan, respectively, significantly higher than the 25.6 billion yuan and 20 billion yuan held at the end of 2024. Before the Spring Festival, equity market volatility transmitted through public funds to wealth management products, contributing to net value fluctuations.

On the other hand, comprehensive valuation reforms have prompted restructuring of wealth management products. Tan Yiming, Chief Fixed Income Analyst at Tianfeng Securities, said that previously, wealth management products used methods like “fund pools” and “amortized cost” to artificially conceal the true risks and valuation fluctuations of underlying assets. After regulatory reforms, wealth management products are required to face market fluctuations directly, returning yields to their true levels.

Tan Yiming also stated that the core requirement of the full transition to net asset value is that product valuations accurately reflect the price fluctuations of underlying assets. To maintain net value stability, wealth management products need to increase allocation to low-volatility assets, which will inevitably lead to lower yields and create a gap with investors’ expected returns. The industry’s goal of “full net asset value, stable high returns, and regulatory compliance” may be difficult to achieve simultaneously.

New Strategies in a Low-Interest-Rate Era

In a low-interest-rate environment, the yield space for pure fixed income products continues to shrink, and wealth management firms will strengthen their layout of “Fixed Income +” products. Tan Yiming believes that after the full transition to net asset value, wealth management firms operating “Fixed Income +” products need to manage investor expectations well to prevent irrational redemptions. Currently, their ability to directly invest in “Fixed Income +” is relatively limited, so further cooperation with public funds can be pursued to expand yield through multi-asset allocation strategies, seeking a balance between volatility and returns. To control equity and bond positions, increasing holdings in secondary bond funds and index-based equity funds may be a suitable choice for boosting yields.

For wealth management investors, balancing between returns and volatility may be a key theme this year. “After the gradual withdrawal of the net value smoothing mechanism, investors should pay more attention to the proportion of underlying assets and investment strategies rather than just risk levels,” said a wealth management industry insider.

Qingyin Wealth Management noted that when “Fixed Income +” products experience net value fluctuations, many investors inevitably feel concerned. The key is how to respond rationally and allocate assets scientifically. During market cyclical adjustments, net value fluctuations are normal, and short-term unrealized losses do not necessarily mean final losses. Investors should avoid panic redemptions due to short-term net value declines, which could turn unrealized losses into actual losses. Moreover, since “Fixed Income +” products are based on bonds with a small proportion of equities, their volatility is relatively controllable. The returns of “Fixed Income +” products depend on time accumulation, and short-term fluctuations can be smoothed out over the long term.

Qingyin Wealth Management also suggests that if investors are particularly sensitive to volatility, they should consider low-volatility “Fixed Income +” products with an equity proportion below 5%. Additionally, long-term regular investment can effectively smooth the yield curve; automatic purchases at market lows can reduce average costs.