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Hybrid wealth management products, which combine investments in fixed-income and equity assets, are becoming increasingly popular in China due to the ongoing growth of the stock market and the low interest rates on savings accounts.
Many long-term investors are reallocating their funds to equity-oriented or hybrid products once their traditional fixed-term deposits mature, according to representatives from several major commercial banks.
While fixed deposits offer a safe haven for investors with low risk tolerance, their returns have diminished as benchmark interest rates decline. Consequently, some depositors are shifting their funds toward equity-focused and hybrid products, buoyed by the stock market’s rally.
This year, equities have generally performed well, with Hong Kong stocks and gold each soaring over 30 percent. Major indexes in both China and the U.S. have also posted double-digit gains, according to the head of the multi-strategy and equity investment division at a wealth management firm.
These gains have widened the return differential between hybrid products that include equity holdings and those focused solely on bonds.
The Shanghai Composite Index has increased by more than 17 percent this year, while the Shenzhen Component and ChiNext indexes—highlighting technology stocks listed in Shenzhen—has surged approximately 31 percent and 52 percent, respectively.
Within a large bank’s wealth management offerings, products with a higher equity allocation, particularly those investing in tech stocks or Hong Kong shares, have outperformed others, noted a senior manager in the bank’s equity investment division.
Due to the past few years of underperformance in the stock markets, banks’ direct investments in equity-centric products remain near five-year lows. However, there’s considerable potential for growth in hybrid products, an analyst from Zhongtai Securities stated.
The analyst also predicted that the issuance of hybrid products will continue to rise as their popularity increases. It’s expected that, between the second half of this year and the end of next year, over 100 billion yuan (roughly 14 billion USD) could be allocated to equity assets through new wealth management offerings.
Data from the China Banking Wealth Management Registration and Depository Center indicate a sharp rise in newly issued equity investment products this year. Twelve such products were launched in the first three quarters, compared to just two throughout all of 2024. Meanwhile, the total number of hybrid products issued reached 202 during the same period, up from 169 in 2024.
According to Puyi Standard, the total value of hybrid products grew to about 654.8 billion yuan by the end of September, up from 647.1 billion yuan at the end of June.
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