Wealth Management Sub-Portfolio Slicing: The Migration, Compromise, and Breakthrough of Massive Funds

As the tone of macro liquidity easing continues, the consecutive decline in deposit rates is profoundly reshaping the asset-liability structure of domestic residents. Over the past few years, the belief in principal and interest guarantees—often called “rigid repayment”—has gradually faded with macroeconomic cycles. When large-denomination certificates of deposit even fail to keep pace with some inflation indicators, massive amounts of capital are forced to seek new habitats.

This wealth migration, dubbed “deposit relocation,” constitutes the most significant source of incremental growth in the current large asset management industry.

Bank wealth management subsidiaries, as the core of wealth management evolved from commercial banks, naturally become the primary recipients of this flood of funds.

A closer look at the latest industry data reveals that the market evolution is more intense than imagined. Using five institutions as samples, a clear progression trend is emerging—

As of February 26, Ping An Bank Wealth Management, Suzhou Bank Wealth Management, Hangzhou Bank Wealth Management, Qingdao Bank Wealth Management, and joint-venture-backed Banque Populaire and Agricultural Bank of China Wealth Management subsidiaries have announced their 2025 product scales;

The total scale of these companies’ wealth management products has reached 3.19 trillion yuan, a 24.21% year-over-year increase, with some institutions approaching a 40% growth rate.

Behind this rapid growth, industry structure is undergoing deep restructuring.

From re-evaluating the nature of funds, improving asset-side efficiency, to channel sinking and breakthrough strategies, a logical closed loop centered on “source, destination, and channels” of funds is shaping the current landscape of wealth management subsidiaries.

The “core” of fixed income

Although the A-share market experienced a moderate “slow bull” in 2025, and the bond market showed cyclical fluctuations, the product structure of the sample institutions still shows an overwhelming dominance of fixed income products.

As noted by Xin Feng, among these wealth management subsidiaries, Banque Populaire and ABC Wealth Management have 100% of their products in fixed income, Qingdao Bank Wealth Management 99.98%, Ping An Bank Wealth Management 99.91%, and Hangzhou Bank Wealth Management remains high at 99.22%. On the asset side, the proportion of equity assets in Ping An, Suzhou, and Qingdao Bank Wealth Management has slightly declined.

Data from Zhongtai Securities also confirms this trend.

The report states that, due to the decline in bond asset proportions, by the end of 2025, bonds, interbank certificates of deposit, and non-standardized debt assets decreased by 3.71 percentage points to 57.03% of the investment asset structure;

Meanwhile, the proportion of equity assets only decreased by 0.68 percentage points from the beginning of the year to 1.90%.

In an environment where the stock market has profit-making effects, why hasn’t capital flowed into equity investments?

A financial consulting firm official told Xin Feng that this is because the customer base of bank wealth management has inherently very low risk appetite—“clients can’t tolerate high volatility and large drawdowns. Even in a bull market, they find it hard to bear the risks of increasing equity exposure.”

This approach is not uncommon in prudent financial management.

“It’s similar to how brokerages use OCI (Other Comprehensive Income) items,” the official explained. “Brokerages that are good at self-management won’t heavily use OCI during a slow bull market like in the past two years, but will actively seize opportunities; whereas some average-performing brokerages will increase OCI allocations even in a bull market, purely for steady operation.”

Beyond proactive defense, there are also other strategies hidden behind the data surface.

An interviewed public fund professional said that wealth management subsidiaries may also increase equity positions by allocating to public funds, though this isn’t directly reflected in their balance sheets.

“Bank wealth management is generally shrinking direct stock investments,” he pointed out. “Under current standards, only direct stock investments and pure equity funds count as increased equity assets. Secondary bond funds and primary bonds are still essentially fixed income assets. They are indirectly boosting equity exposure through public fund investments.”

Regardless of the approach, maintaining stability remains the main theme for bank wealth management subsidiaries.

A uniform “99% pure fixed income” lineup may also aim to precisely absorb the massive incremental funds.

Huatai Securities Research Institute estimates that by January 2026, the scale of term deposits over one year maturing will be about 50 trillion yuan, a 10 trillion yuan increase from 2025, with the largest rollover rate decline in 2- and 3-year fixed deposits, indicating the strongest “relocation” effect.

Tianfeng Securities data shows that among the 180 trillion yuan in nationwide fixed deposits, approximately 107 to 114 trillion yuan will mature in 2026.

Most of the incremental funds flowing into wealth management subsidiaries currently come from surplus on-balance-sheet savings. The core demand of this customer segment is not capital gains but seeking a safe “savings alternative.”

After experiencing bond market volatility and the wave of net value devaluation, investors are more sensitive than ever to net value drawdowns, forcing wealth management subsidiaries to reassess liability constraints.

In the context of an overall “asset shortage,” high-yield quality assets are becoming increasingly scarce. Since capital demands certainty, wealth management subsidiaries must tilt resources toward low-volatility assets, even at the expense of some yield flexibility, to smooth net values with thick coupons as a safety cushion.

Securing absolute returns remains the most crucial survival principle at this stage.

Leveraging public funds

In terms of specific asset choices, a clear trend is that wealth management subsidiaries are significantly increasing allocations to public funds.

Data provides the most direct evidence.

In 2025, Suzhou Bank Wealth Management increased its allocation to public funds from 0.5% to 6.22%, Hangzhou Bank from 4.28% to 7.21%, Ping An Bank from 0.64% to 3.41%, Banque Populaire and ABC Wealth Management from 0.27% to 3.44%, and Qingdao Bank Wealth Management has maintained a high level at 15.78%.

In the current asset shortage environment, leveraging public funds has become a highly practical form of “rational outsourcing.”

The investment research system of wealth management subsidiaries, rooted in credit culture, excels at credit deepening and macro rate analysis. However, when faced with the need for rapid position building and segmenting into passive index ETFs, internal teams often face capacity limitations and trading efficiency bottlenecks.

A wealth management subsidiary official from a joint-stock bank admitted to Xin Feng that historically, their products mainly invested in bonds, with research capabilities focused on bonds.

“Since last year, as the equity market improved, wealth management subsidiaries also wanted to issue equity-including products, but direct stock investments involve too much net value volatility. Increasing fund allocations allows exposure to equities without the sharp fluctuations of individual stocks, and funds are managed by professionals, which is more convenient,” he explained.

The same public fund professional also highlighted staffing constraints.

He noted that most wealth management subsidiaries are still primarily fixed income-focused, with fund managers typically limited to bonds, bond ETFs, and bond funds. In a bullish equity environment, the only way to keep up with performance is to invest through funds to achieve equity-like positions.

Besides research capacity, liquidity and tax advantages are also core drivers for wealth management subsidiaries to embrace public funds.

Particularly, short-term bond funds and interbank deposit index funds are becoming key tools for managing liquidity positions.

“Public funds enjoy tax benefits, often saving dozens of basis points,” the consultant said. “Direct bond trading may lack counterparties, but open-ended public funds can meet large redemption needs efficiently. When liquidity is needed urgently, selling bonds may be too slow, but redeeming funds to get cash is very quick.”

However, relying solely on public funds is not enough to establish a long-term competitive moat.

In the wave of homogeneous pure fixed income products, it remains essential to develop asymmetric competitive advantages to determine long-term positioning.

The decisive battle in county markets

Beyond asset-side deployment, more intense covert battles occur on the channel front.

Analyzing the data of the five sample institutions reveals significant differences in expansion speed:

Hangzhou Bank Wealth Management leads with a 38.53% increase, surpassing 600 billion yuan in scale; Suzhou Bank Wealth Management grew by 30.48%, reaching about 826 billion yuan; Banque Populaire and ABC Wealth Management achieved a staggering 202.04% growth.

In contrast, Qingdao Bank Wealth Management, also a city commercial bank, only grew from 199.3 billion to 205.6 billion yuan, a mere 3.15% increase, nearly stagnating.

This stark contrast highlights the brutal survival logic.

As large and joint-stock banks intensify their efforts, the penetration rate into high-net-worth clients in first- and second-tier cities has reached a ceiling. In the red ocean of existing clients, customer acquisition costs rise, and product yield competition becomes fierce.

The real incremental space has shifted to the vast county markets.

With active county economies and rising incomes, the demand for wealth management in sinking markets is on the verge of explosive growth. Those who can quickly deploy quality, low-volatility products into these channels will reap the dividends of the era.

For city commercial bank wealth management subsidiaries, their parent bank branches have natural regional limitations. The breakthrough lies in expanding distribution networks. Meanwhile, rural commercial banks and village banks, which lack wealth management licenses, need to introduce external high-quality products to retain their customers’ funds from being siphoned off by larger banks. This mutual push has accelerated channel sinking.

The rapid growth of Hangzhou Bank and Suzhou Bank Wealth Management is a direct result of this strategy:

By December 2025, Hangzhou Bank Wealth Management had expanded its distribution to 223 agencies (69 city commercial banks, 111 rural banks, 22 rural credit cooperatives). By early 2026, the number of partner institutions exceeded 270, extending into counties in Chongqing, Fujian, Sichuan, and other regions.

They adopt a “dual-wheel drive” approach—deepening cooperation with large banks while promoting sinking into city and rural banks, and constructing pyramid-shaped product structures tailored to low-risk preferences in county markets.

Suzhou Bank Wealth Management’s sinking efforts are equally resolute.

In February 2026, they added Jiangsu Jurong Rural Commercial Bank as a sales partner. Previously, their cooperation extended across Jiangsu and into many counties in Zhejiang.

To match the county market’s understanding, Suzhou Bank Wealth Management developed the “Xin+” multi-asset product system, visually demonstrating increased volatility levels, and frequently engaging investors through activities to reach grassroots clients.

Today, the “channel is king” rule has been reaffirmed. A strong distribution network brings low-cost capital and creates a moat against regional economic fluctuations. Conversely, institutions lacking broad channels and sinking capabilities face severe pressure.

The Matthew effect in the wealth management subsidiary market is accelerating. Future competition will not only be about investment ability but also comprehensive battles in channel reach and customer operation.

Looking back at the current wealth management subsidiary market, it is clear that it is a strategic response to capital flows. In this winner-takes-all environment of existing assets, differentiation is just beginning. Those who can perform better in efficiency and capability tests will stand undefeated.