Entering the year 2024, there has not been a single dividend distributed yet for retirement financial products on the Chinese market this year, which sharply contrasts with the situation of many retirement financial products paying dividends last year.
Last year, the dividend amounts per share of retirement financial products from financial companies ranged from 0.0025 yuan to 0.005 yuan. Among them, three products under the Yingyi Wealth Management had dividend amounts of 0.005 yuan per share. The cash dividend amount of the Orange 2027 series of the Yingyi Wealth Management’s retirement financial product “Sunshine Retirement Financial Product – Phase 1” reached an average of 0.0025 yuan per share. Meanwhile, Zhaoyin Wealth Management distributed income for their “Zhaoyin Wealth Management Zhaorui Yiruiyuan Stable Five-Year Closed-End Fixed-Income Retirement Financial Product,” with a cash distribution amount of 0.0075 yuan per financial plan.
However, this year, none of the 51 products that had distributed dividends last year have done so this year.
Regarding the absence of dividends for retirement financial products this year, industry insiders interviewed by “First Finance” speculated on several reasons: firstly, the returns did not meet expectations; secondly, market and interest rate fluctuations have put pressure on returns; thirdly, the long lock-up period of products restricted liquidity; fourthly, fierce market competition and homogenization of products have encouraged financial companies to prioritize long-term stability.
Another wealth management professional from a commercial bank stated that whether retirement financial products pay dividends and the frequency of dividends usually depend on whether the actual investment performance of the product meets or exceeds the established performance targets. When setting dividend policies, financial institutions often consider their product’s performance and profitability.
Since the beginning of this year, the performance of retirement financial products has been unsatisfactory. According to Wind data as of September 20, the average annualized return of the 51 retirement financial products over the past year was 2.31%, with a near 1% maximum drawdown during the same period. Overall, the returns of all products did not meet the lower limit of performance benchmarks, and the overall performance fell short of expectations.
The aforementioned wealth management professional from a commercial bank stated: “Due to poor performance, financial companies are more inclined to retain income to cope with market fluctuations rather than distribute dividends.” Moreover, in the current environment of declining interest rates and market volatility, the difficulty of achieving the targets for retirement financial products has significantly increased, making them ineligible for dividends.
Reportedly, the performance benchmarks showcased by retirement financial products are noticeably higher than the actual return performance and underlying asset returns. For instance, the performance benchmark of Industrial and Commercial Bank of China’s wealth management products is 5% to 7%, Guoda Wealth Management’s benchmark is 5.8%, and Jianxin Wealth Management and Zhaoyin Wealth Management’s products have benchmarks of 5.8% to 8%. According to Pu Yi Standard data, the average annualized return of the 51 retirement financial products since inception is approximately 2.37%, with a recent one-month annualized return of -2.32%, well below the performance benchmarks.
A wealth management professional from a state-owned bank remarked that in the current environment of declining interest rates and stock market fluctuations, achieving the high yield targets set for retirement financial products has become increasingly challenging, with a long way to go towards high returns.