The 1.60% CD Floor and the Rush to Fixed-Income Alternatives

China's big four state-owned banks have recently re-listed their five-year large-denomination certificates of deposit (CDs), with interest rates uniformly set at 1.60% — but online quota is quickly running out. While some offline availability remains, many bank relationship managers are already steering customers toward a more flexible option: R2 risk-rated pure fixed-income wealth management products (WMPs) with 6- to 12-month investment cycles.

New data from 南财理财通, covering 918 public pure fixed-income WMPs issued by wealth management subsidiaries that have been running for at least one year, shows exactly why. Out of 506 products with complete annualized yield disclosure as of July 30, 2026, a full 497 — or more than 98% — posted yields above 1.60%. The difference between the highest and lowest yields exceeded 400 basis points, but the bulk of products delivered a stable performance: 12 products achieved a weighted annualized return of over 3%, while nearly 60% were in the 2%–3% range.

The comparison is stark for savers. A five-year lock-up at 1.60% now faces competition from alternatives that not only offer higher returns but also historically limited drawdowns, as measured by the Calmar ratio — a gauge of how much annualized return a product generates for each 1% of maximum drawdown. For many retail investors, the reopening of CD subscription is a signal to re-assess where their cash can work harder.

Inside the Risk-Return Profile of R2 Pure Fixed-Income WMPs

What Separates the Best Performers

Among the top-tier products, BOC Wealth Management's "Wenfu Youjia 270-Day Holding Period A" stood out with a Calmar ratio of 127.45 and an annualized return of 3.98% while experiencing a maximum drawdown of just 0.03%. That effectively means it delivered bank-deposit-like stability with a near-4% return. The portfolio's Q1 report shows heavy allocation to bank deposits, negotiable certificates of deposit (NCDs), and high-quality credit bonds from banks, local government financing vehicles and central SOEs. The manager's disciplined duration management and credit selection smoothed net asset value (NAV) fluctuations, preserving the capital-like stability.

Advertisement

Minsheng Wealth Management's "富竹纯债 369-Day Holding Period 6 A" returned an impressive 5.17% since inception (with a weighted annualized yield of 3.86%) and a maximum drawdown of only 0.15%, yielding a Calmar ratio above 34. The product invests mostly in mid-to-high-grade credit bonds, maintaining moderate duration and leverage. Its second-quarter report showed that bonds and asset-backed securities made up more than half the portfolio, supplemented by over 40% in public bond and money-market funds, adding further diversification.

Why CD Rates Remain Low and Market Outlook

The 1.60% rate on five-year large CDs reflects the current interest rate environment and banks' reluctance to lock in high long-term funding costs. In contrast, actively managed fixed-income WMPs benefit from professional selection of credit, duration, and leverage, which allows them to capture yields above deposit rates, even within a low-rate cycle. However, they are not guaranteed — they carry R2 risk, the lowest investment risk category, but still subject to credit and market fluctuations.

Looking ahead, Minsheng Wealth Management's team expects the third-quarter bond market to be range-bound, with upward pressure on government bond yields due to heavy issuance. Credit bonds may see continued divergence: high-quality assets remain in demand amid "asset scarcity," but weaker regional city investment bonds could face rating volatility. This suggests that for investors, top-performing WMPs with robust credit selection will likely continue to beat bank CDs, but careful product picking is essential.

How to Evaluate the Shift from CDs to Wealth Management Products

  • Assess your lock-up tolerance: If you can set aside funds for at least 6–12 months, a pure fixed-income WMP may offer a meaningful yield pickup over a 1.60% CD, with historical maximum drawdowns often below 0.4%. Be clear about your liquidity needs before committing.
  • Look beyond headline yield: Compare the weighted annualized return (which blends recent performance) and the Calmar ratio to understand risk-adjusted returns. A product like BOC Wealth Management's with a Calmar ratio above 100 indicates high compensation per unit of drawdown, but verify that the portfolio remains defensive.
  • Check the portfolio's health: Review the latest quarterly report for asset allocation. Products heavily relying on bank deposits and high-grade bonds (as seen in the BOC WM product) tend to show lower volatility; those with higher credit exposure may offer more yield but carry greater tail risk, especially in a worsening credit environment.
  • Factor in the bond market outlook: With expectations of range-bound rates and credit differentiation, products managed by teams cautious on weak credits (such as Minsheng WM's stated approach) may navigate the period better. Avoid products that chase yield through low-quality bonds unless you are comfortable with the hidden credit risk.
  • Monitor online quota availability: If you still prefer the security of a bank deposit, check for offline availabilities, as some branches still have CD quotas while online channels have sold out.