This year, macro policy changes and market environment have intensified the turbulence in the capital market. Not long ago, the A-share market once again launched the "3000-point defense war", and the performance of the fund market was not satisfactory. The scale of equity funds has also shrunk to varying degrees, but compared with that, fixed income funds are more favored by the market.

Data shows that by the end of the third quarter of 2023, the scale of active equity funds has shrunk by more than 500 billion yuan, a decrease of nearly 15% compared to the end of 2022, and the fund shares have decreased by 72.1 billion shares, a decrease of 2.47%. In contrast, fixed income products have continuously attracted fans with a "stable" word - a total increase of 771.7 billion yuan in the first three quarters of this year, an increase of 12%; among them, bond funds with a "low wave" are more "popular".

Take the recently popular short-term debt funds as an example. At the end of 2022, the scale of short-term debt funds was 601 billion yuan, and by the end of the third quarter, it had reached 883 billion yuan, an increase of 47%; in the first half of 2023 alone, the scale of short-term debt funds increased by 289.859 billion yuan.

Why are short-term debt funds popular?

Many investors have also realized in the past two years that in the face of a continued downturn in the stock market, asset allocation needs some relatively stable style and moderate income investment varieties as a "safe haven". From historical data, the annualized volatility of the short-term pure debt fund index (code 885062) is only 0.71% over the past 13 years, and it has achieved positive returns every year, with an annual increase of 0.65% to 6.17%.

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On the other hand, "short" is also the soul of short-term debt funds. Because the investment period of the assets is relatively short, short-term debt funds can strive to obtain relatively stable returns while maintaining good liquidity, stay away from the fluctuations of the equity market, and have better defensiveness.

How to choose short-term debt funds?

By the end of the third quarter of 2023, there are a total of 337 short-term debt funds in the market. What dimensions should we start from to find the "most suitable" short-term debt? In fact, it mainly depends on two points: return indicators and drawdown indicators.

As the first fund company in China to break through a scale of one trillion yuan, Tianhong Fund has accumulated rich management experience in the field of short-term debt funds and has created a large number of high-quality managed short-term debt funds. These funds have outstanding performance in drawdown and repair.

Taking Tianhong Anyi Short-term Debt Fund as an example, the fund has achieved positive returns for 28 consecutive months, and currently, only 2 short-term debt funds with a 30-day holding period can achieve this in the entire market; since its establishment on May 11, 2021, Tianhong Anyi's net value has increased by 7.33%, and the increase has exceeded the performance comparison benchmark by 33%, far exceeding the short-term debt fund index. The product performance and performance comparison benchmark performance for 2022 are 2.36% (2.17%), and the performance source is the regular report. From the perspective of the maximum drawdown repair speed, Tianhong Anyi Short-term Debt also has excellent performance: the maximum drawdown in the past year is -0.12%, far lower than the average maximum drawdown of -1.23% for short-term debt funds in the entire market; the maximum drawdown repair days are only 18 days, and the average maximum drawdown repair days for short-term debt funds in the entire market during the same period are 47 days.Particularly, in the fourth quarter of 2022, when the bond market experienced unusual fluctuations, Tianhong Fund anticipated the market three months in advance, swiftly shifting from the pursuit of short-term performance and scale in the first three quarters to a cautious and conservative investment strategy. Under this response, Tianhong Anyi Short-term Bond Fund withstood the impact of the market downturn, quickly recovering the decline in just three weeks, and its net value also rose to a historical high against the market trend.

In addition to this, Tianhong Anheng 60-Day Short-term Bond and Tianhong Anyue 90-Day Short-term Bond also performed quite impressively in terms of performance and drawdown.

Tianhong Anheng 60-Day Short-term Bond has seen a rise of 3.85% in the past year, which is 60% higher than the short-term bond fund index, ranking in the top 1% of its peers (ranking from Haitong), making it a "top student" among short-term bond funds. Since the fund's establishment date (20220802) up to 20230930, the product and comparative benchmark performance is 4.05% (2.48%), sourced from regular reports. In terms of drawdown, the maximum drawdown of Tianhong Anheng 60-Day Short-term Bond in the past year is 0.06%, with a drawdown recovery in one week; in contrast, the maximum drawdown of the short-term bond fund index is 0.55%, requiring three months for recovery. It can be said that Tianhong Anheng 60-Day Short-term Bond is a good choice for investors seeking a strategy of less decline and more increase, pursuing stability and progress.

Furthermore, Tianhong Anyue 90-Day is also a short-term bond fund with a high cost-performance ratio. The rise in the past year is 3.55%, which is 1.5 times that of the short-term bond fund index, outperforming the benchmark by 1.35% in one year. The product performance and comparative benchmark performance for 2022 are 2.5% (2.26%), with performance data sourced from regular reports; the drawdown recovery speed is fast—Tianhong Anyue 90-Day's maximum drawdown recovery days in the past year is 5 days, significantly outperforming the market average.

The reason why Tianhong Short-term Bond Fund products have outstanding performance in historical performance and drawdown control is mainly because it has created the industry's unique Tianhong Five-Cycle Model, analyzing from five dimensions: macroeconomic cycle, monetary policy cycle, institutional behavior cycle, position cycle, and sentiment cycle, regularly providing internal judgments on long, medium, and short-term markets, achieving a scientific grasp of the fixed-income market.

However, it should be noted that although short-term bond funds have been favored by more and more investors, short-term bonds are not equivalent to short-term investments, and holding for too short a period is not a good investment strategy. Based on historical data calculations over the past 10 years (Note 1), the longer the holding period for the short-term bond fund index, the higher the potential returns, especially for those held for 9 months or more, with a positive return probability exceeding 95%, and the average annualized return reaching 3.6%. Therefore, for investors who do not pursue high returns, are unwilling to bear large fluctuations, and want to pursue slightly higher returns than deposits and money market funds, holding short-term bond funds for a longer period is actually a relatively good choice.

Note 1: Under specific conditions that do not consider costs, etc., buying the short-term bond fund index (code XX) at any time point and holding it for 1 year results in a positive return probability exceeding 95%.

Data is for reference only and does not represent the performance of the index or specific products in the future. The mentioned one-year period is from 20220930 to 20230930, and performance data are sourced from fund regular reports; the market has risks, and investment should be cautious. Before purchasing funds, please read the product legal documents carefully and choose a product that suits you.