In May, China’s largest money market fund, Tianhong Yu’E Bao, has officially seen its 7-day annualized yield drop below 1%, hitting a new low since its establishment. Tianhong Yu’E Bao is not alone in this trend, as nearly 40% of money market funds have yields below 1%, signaling a phase of “surviving on thin margins.”
According to a report by “Finance” magazine on May 20, 2026, Tianhong Yu’E Bao’s 7-day annualized yield fell below 1%, marking a historic low since its inception in 2013. Wu Kai, an associate professor at the Central University of Finance and Economics, stated in an interview with “Finance” that breaking the 1% mark is a significant milestone in the evolution of trends rather than an isolated incident.
Money market funds, also known as money market mutual funds, typically have low risk as they primarily invest in short-term credit instruments such as government bonds, bank deposits, large certificates of deposit, and central bank notes, with a very low probability of principal loss.
Public data shows that Tianhong Yu’E Bao, launched in 2013 by Ant Group (an affiliate of Alibaba) in collaboration with Tianhong Fund, was initially integrated into Alipay. At its inception, the fund’s 7-day annualized yield reached 6.3%. However, with the continuous decline in market interest rates in recent years, the fund’s returns have been on a steady downward trend.
On May 2, 2026, Tianhong Yu’E Bao, with assets under management exceeding 700 billion yuan and 789 million account holders, saw its 7-day annualized yield drop below 1% to 0.999%. Subsequently, the yield continued to decline, reaching 0.88% on May 14 and 0.865% on May 20, with a daily return of 0.2356 per ten thousand units, indicating minimal earnings of less than 0.25 yuan for depositing ten thousand yuan for one day.
Apart from Tianhong Yu’E Bao, the majority of money market funds are currently experiencing a phase of “surviving on thin margins.” According to data from Wind, as of May 19, only two funds, Golden Eagle Cash Income B and Debond Deluxe Money B, had monthly annualized returns exceeding 1.4%, while the remaining 955 products had returns below 1.4%. Moreover, the percentage of products with annualized returns below 1% has reached 38.56%.
Industry experts widely believe that the current decline in money market fund returns is not a short-term fluctuation but a consequential outcome of loose macro liquidity. Currently, one-year term deposit rates at state-owned banks have fallen below 1%, and AAA-rated one-year interbank certificates of deposit yields have dropped to around 1.45%.
Regarding the future trajectory of money market fund returns, most analysts anticipate that they will continue to stay at low levels. The Securities Times recently reported that Ming Ming, chief economist at CITIC Securities, expects the current moderately loose monetary policy aimed at boosting the economy to persist in the short term, maintaining the low-interest environment. He noted that the situation of low returns for money market funds is likely to persist for a while, as the potential significant rebound in returns will depend on the strength and speed of economic recovery and whether the monetary policy adjusts accordingly.
Wang Yifeng, chief analyst of the financial industry at Everbright Securities, stated recently that the core factor influencing the future changes in money market fund returns is the direction of policy interest rates. If policy rates remain stable, money market fund yields are likely to fluctuate around 1%. However, if the central bank implements interest rate cuts, fund yields may face further downward pressure.