(Yicai) April 3 -- Some fixed-income products offered by Chinese wealth managers are struggling to sell because their yields are too low and their lockup periods are too rigid for today’s investors.

So far this year, more than 42 fixed-income products have been pulled by their issuers, including Ping An Wealth Management and Huaxia Wealth Management, because they failed to reach their minimum fundraising targets, according to incomplete statistics from Wind Information. Only three failed to launch a year ago, about seven in 2024, and about nine in 2023.

The minimum fundraising target for fixed-income wealth management products is typically set at about CNY5 million (USD726,710). There were about 44,845 active wealth management products in the Chinese market as of March 29, down from around 44,580 a month earlier, according to data from PY Standard. Over 93 percent were fixed-income products.

With interest rates in China at record lows, the average annualized yield on closed-end fixed-income wealth management products in the market was 3 percent in February, down from 3.3 percent in January, PY Standard’s figures also show. In the three months ended Feb. 28, it was 2.7 percent, down from 2.8 percent in the previous three months.

The performance benchmark for fixed-income wealth management products in the market hovers around 2 percent, markedly at variance with general buyer expectations, investors noted.

The average performance benchmark for closed-end fixed-income products issued in February dropped to about 2.35 percent, while that for open-end products fell to around 1.73 percent, according to PY Standard.

“With a return of around 2 percent, a lock-up period of one or two years, and limited liquidity, it's better to invest in a money market fund or simply keep cash in a current account," one investor commented online.

Indeed, the first thing clients ask now is whether they can get their money out whenever they want, a wealth manager at a joint-stock bank told Yicai. “As soon as products with a lock-up period of more than a year are mentioned, many customers immediately lose interest,” he said.

To deal with the fundraising challenges, several wealth management companies are changing course. The industry increasingly believes that competition will shift away from pure scale expansion and toward investment research strength and the ability to serve customer needs.

Returns can be made more stable and flexible through multi-asset allocation and duration management, according to Gao Zhengyang, special researcher at Jiangsu Su Merchants Bank. Products can be tiered, offering different options for clients with different risk appetites and liquidity preferences, he said.

“In an environment where interest rates are declining, relying solely on traditional bond allocations is no longer sufficient to meet the yield target," Gao noted. “Wealth management companies need to enhance their capabilities in broad asset allocation, credit risk assessment, and portfolio management to strengthen product competitiveness.”

Editor: Futura Costaglione