The debt market has been experiencing a noticeable surge since the beginning of the year, and recent trends indicate an even more substantial upward trajectoryThe net asset values (NAVs) of bond funds have risen sharply, reflecting a healthy appetite among investors for fixed-income securities.

Statistics reveal that as of December 13, over 3,400 bond funds have achieved record-high NAVs, representing more than 80% of the total bond funds availableNotably, more than a thousand of these funds have generated returns exceeding 5% year-to-date, attracting significant investor interest.

From a macroeconomic perspective, the yield of 10-year government bonds has seen a considerable decline since DecemberOn December 2, the yield fell below the crucial “2%” mark for the first time, leading to a series of new record lowsThis trend has continuously fed into investor confidence as the pure bond fund index recorded an impressive seven-week streak of gains, with a notable one-week increase of 0.29% recently, marking the largest weekly gain observed in recent times.

In the past week, most bond funds reported positive performance

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A clear “see-saw” effect has emerged between the stock and bond markets lately; while equity markets faced some challenges, the bond market strengthenedRecent data indicates that nearly 3,700 bond funds experienced an increase in their NAVs within just one week, representing a stunning 99% of the sampled funds.

Examples of standout performers include over 300 bond funds that achieved a weekly NAV increase of over 1%. The DeBond Ruiyu Rate Bond A climbed by an impressive 3.3%, leading the pack, while other notable funds such as the Pengyang Zhongbond-30 Year Treasury ETF and Bosera's 30-Year Treasury ETF also enjoyed increases of more than 2.5%.

The Pengyang Zhongbond-30 Year Treasury ETF's third-quarter report noted a shift in monetary, fiscal, and real estate policies from conservative to more proactive stancesAlthough it acknowledged that these policy shifts take time to materialize, it remains optimistic about future investment opportunities

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During an economic recovery period, 30-year treasury bonds may face competition from equity assets, but their fundamental investment value remains intact.

Factors contributing to this outlook include the prevailing monetary policy aimed at sustaining low-interest rates amid a backdrop of liquidity expansionThe likelihood remains high for further interest rate reductions, enhancing the attractiveness of long-term treasury bondsAdditionally, following significant corrections in late September, the continuous rise observed in 30-year treasury bonds has alleviated market “fear of heights,” thereby encouraging a fresh wave of capital inflow.

Reflecting on the recent past, there has been a robust recovery of bond funds following a major market correction at the end of SeptemberThe pure bond fund index has notably risen over a series of seven consecutive weeks, cumulatively gaining 1.24% since October

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The recent weekly gains of 0.2%, 0.27%, and 0.29% highlight an accelerating upward trend.

When assessed from a long-term perspective, bond funds appear to be on a steady upward trajectory despite minor fluctuations along the wayCurrently, the pure bond fund index has reached an all-time high since its inceptionThe overarching increase has enabled large segments of bond funds to continually surpass previous NAV records, contributing to a bustling investment environment.

Year-to-date returns from select bond funds showcase impressive yields, with numerous funds generating returns above 5%. Top performers such as the Guangda Medium and High-Grade A Fund, ICBC Ruiying, and the Pengyang Zhongbond-30 Year Treasury ETF reported yields exceeding 20%.

Some bond funds have included convertible bonds within their portfoliosThe Guangda Medium and High-Grade A Fund indicated in its third-quarter report that it opts for high-value convertible bonds to leverage potential rebounds in the equities market

• Funds and Foreign Investors Target High-Growth Stocks
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The selection process for these bonds considers various factors such as bond-to-stock premium rates and pricing to ensure an optimal balance between risk and reward.

Similarly, ICBC Ruiying has diversified its asset allocation between stocks and convertible bondsA highlight among their stock investments includes Dongfang Fortune, which has seen a surge exceeding 30% since OctoberOn the bond side, both the Zhongyin Convertible and Shanju Convertible bonds have registered increases of over 7%, while the Shangyin Convertible and Xinyang Convertible bonds gained more than 3%.

The bullish sentiment within the debt market appears to be set to continueAccording to research from Cinda Securities, the shift in potential monetary policy strategies suggests that the current 1.8% yield on 10-year government bonds may not signify the peak of this bullish trend, with further room for downward adjustments in rates expected