The scale of sci-tech bonds has exceeded 2.2 trillion, with banks, securities firms, insurance funds, and private equity vying to "enter the game."

"In 2025, the scale of China's sci-tech bond market has surpassed 2.2 trillion, and the proportion of high-quality sci-tech enterprises will continue to increase."

"This year, the market is more focused on obtaining returns through trading and volatility. ETFs or index-based investments inherently have trading advantages and can better meet the trading needs of bond investors."

"The core allocation logic of insurance funds revolves around Strategic Asset Allocation (SAA) and Tactical Asset Allocation (TAA). Using ETFs as a low-cost tool to track benchmark indices makes it easier to achieve basic returns."

These views were expressed at a recent investment seminar on sci-tech bond ETFs hosted by Penghua Fund, where representatives from insurance funds, brokerage fixed income, and proprietary teams discussed sci-tech bond ETFs. The seminar featured representatives from the Shanghai Stock Exchange, China Securities Index Company, brokerage research institutes, market makers, bank wealth management, insurance asset management, private equity institutions, and other fields.

The ETF Market Welcomes Important Development Opportunities

A relevant person from the Shanghai Stock Exchange stated that ETFs have become an important tool for investors' asset allocation, the construction of a multi-level capital market system, and supporting high-quality economic development. With the steady advancement of various measures for the new round of capital market deepening reforms, the ETF market is welcoming an important development opportunity period, with huge growth potential in the future. The Shanghai Stock Exchange will continue to promote the ETF market to a new level by expanding products, optimizing mechanisms, and creating ecosystems, all centered around the main line of improving the coordination of capital market functions for investment and financing.

Zhang Hao, a member of the Party Committee and Executive Committee of CITIC Securities, anticipates that as the scale of China's sci-tech bond market surpasses 2.2 trillion in 2025 and the proportion of high-quality sci-tech enterprises continues to rise, the demand for market allocation will significantly increase. The launch of sci-tech bond ETFs is an important measure for product innovation in the capital market and serves as an important investment vehicle for the sci-tech bond market, having far-reaching significance in promoting technological innovation and optimizing market structure.

This Year, the Market Focuses on Obtaining Trading Returns

Ye Lijian, a member of the Party Committee of Pudong Development Bank Wealth Management, stated that in recent years, the bond market has remained hot, with various strategies emerging. However, this year, the market is more focused on obtaining returns through trading and volatility. In this context, ETFs or index-based investments inherently have trading advantages, especially high liquidity products that can better meet the trading needs of bond investors. From the perspective of wealth management funds, allocation remains the primary task, but when allocation returns are poor, it is necessary to enhance returns through trading—this requires multi-segment, relatively high-frequency operations.

Mei Jiacheng, the trading director of the fixed income department at CITIC Securities, believes that bond ETFs, as an innovative variety, integrate the advantages of different asset classes and are reshaping the ecology of the bond market. Compared to traditional over-the-counter bond funds, bond ETFs not only provide investors with a more efficient tool for expressing views but also become a core force in primary market bidding through index-based allocation, achieving a separation of asset allocation and cash bond trading. With the expansion of the issuance scale of sci-tech bonds and the highlighting of the advantages of bond ETFs, this field is expected to develop into an important sector, with its scale potential likely to far exceed that of existing over-the-counter bond funds

Insurance, Securities, and Private Equity All Paying Attention

According to Xing Qiuyu, General Manager of the Asset Management Fund Department at Century Insurance, insurance capital is still in the early stages of investing in bond ETFs, especially credit bond ETFs. In the future, as the variety of products increases and liquidity improves, the allocation ratio of bond ETFs will significantly grow. The core allocation logic of insurance funds revolves around Strategic Asset Allocation (SAA) and Tactical Asset Allocation (TAA), using ETFs as a low-cost tool to track benchmark indices for basic returns.

“For example, the Sci-Tech Innovation Bond ETF, with its coupon advantages, index-based diversification of credit risk characteristics, and good liquidity, can replace 3-4 year government bonds or be used for cash management, while also becoming an important tool for financial support to sci-tech enterprises. As product innovation deepens, insurance institutions are expected to continue increasing their ETF allocations to achieve the dual goals of risk-return optimization and support for the real economy,” said Xing Qiuyu.

Du Chenxiang, Director of Fixed Income Business Headquarters at Dongfang Securities, believes that in the bond ETF field, with the establishment of the exchange bond market-making system, the role of brokers as market makers can now provide one-stop market-making services covering interbank bonds, exchange bonds, and bond ETFs. Taking the Sci-Tech Innovation Bonds as an example, the Sci-Tech Innovation Bond ETF forms a virtuous interaction with the underlying bonds through primary market subscriptions and redemptions and secondary market trading: the liquidity improvement of the ETF transmits to the Sci-Tech Innovation Bond market, while the liquidity improvement of the Sci-Tech Innovation Bonds feeds back into the ETF, creating a positive cycle that injects continuous momentum into market liquidity.

Yang Kun, Senior Vice President of Ming Shi Fund, stated that for private equity institutions, due to difficulties in participating in the interbank bond market, the choices for bond investments are relatively limited. Private equity often focuses on products such as government bond ETFs and policy financial bond ETFs to compensate for this shortcoming.

Zhang Yangcheng, Fund Manager of the Cash Investment Department at Penghua Fund, mentioned that the Penghua Sci-Tech Innovation Bond ETF adopts a dual fund manager model. This dual fund manager model will work collaboratively from two dimensions: asset allocation of the ETF and on-market operational management, providing higher quality services. Additionally, in terms of large-scale management, Penghua has chosen the Shanghai Stock Exchange AAA Sci-Tech Innovation Bond Index. This index currently has a capacity of 900 billion and significant room for expansion, with future liquidity expected to further improve, fully supporting product scale growth.

Risk Warning and Disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk