The stock market in China, often referred to in the context of the A-share market, has gained a reputation akin to that of a charming yet unreliable partner. The highs and lows that have characterized its performance can elicit both hope and despair from investors. For instance, the significant surge witnessed in September of the previous year was soon followed by a period of narrow fluctuations, amounting to months of volatility that perplexed many. The turbulence has only intensified in the new year, leaving investors dazed and confused after a series of setbacks.

Analyzing the long-term trends provides further insight into this rollercoaster experience. Since 2005, the CSI 300 index has traversed through five distinct bull and bear cycles. While the periods of bull markets have been marked by steep gains, the bear markets have brought about substantial losses, often lasting for extended durations. A deep dive into the statistics reveals that over the past decade, the annualized volatility of the CSI 300 has exceeded 22%. Furthermore, the maximum drawdown has surpassed 46%, and the time to recover from such losses has exceeded 1,200 days. This indicates that for those who invested at market peaks, recouping their losses could take nearly four years.

Investing in such a volatile environment presents a unique set of challenges. Not only does one have to navigate the inherent ups and downs influenced by human psychology, but the risks involved are quite substantial. Therefore, for those seeking a more stable investment strategy, relying solely on the A-share market proves to be impractical. A diversified portfolio across various asset classes becomes essential, with particular attention being paid to low-volatility assets such as bonds.

The rationale for including bonds in an investment mix is multifaceted. Firstly, bonds and stocks typically exhibit a low correlation with each other. In most scenarios, stock and bond prices do not rise and fall in unison. They often display a negative correlation; as stocks surge, bonds may dip, akin to a seesaw effect. For example, during periods of economic expansion, corporate earnings improve, driving stock prices upward, while bond prices may decline in response to rising interest rates. Conversely, in times of economic downturn, corporate profits diminish leading to declining stock prices, while bonds may gain strength due to decreases in interest rates.

Statistical data from the past decade illustrates this point vividly. The performance of the CSI 300 index and the China Bond Composite Index exhibits an inverse relationship, with a correlation of merely -0.20, highlighting this negative correlation starkly. Secondarily, the volatility of bonds is significantly lower compared to stocks. As a more stable asset class, bonds are characterized by muted fluctuations, contrasting sharply with the dramatic swings often seen in stock prices.

For instance, in the past ten years, the annualized volatility of the China Bond Composite Index was only 1.05%, with maximum drawdowns limited to -3.05%. Furthermore, the recovery period for such drawdowns was relatively brief, typically around 200 days, enabling the index to rebound to previous highs effectively.

Additionally, bonds have historically maintained a long-term upward trend. The income derived from bonds consists primarily of coupon payments and capital gains, with interest rates trending lower over time. This trajectory has earned the Chinese bond market a nickname akin to "China's NASDAQ". Despite intermittent fluctuations, the China Bond Composite Index has retained its long-term upward trajectory, boasting an annualized return of 4.81% over the last decade, far outpacing the results of the CSI 300 index.

In summary, bonds represent a crucial asset class that should not be disregarded. For those averse to high volatility and seeking steadier investment options, incorporating a reasonable allocation of bonds into their portfolio can effectively mitigate stock market fluctuations, thereby reducing overall portfolio volatility.

Among various strategies for mixing stocks and bonds, the classic “eighty-twenty” model prevails, wherein 80% of the portfolio is allocated to equities and 20% to bonds. This allocation not only significantly diminishes portfolio volatility but also enhances long-term returns, providing investors with a commendable experience.

When implementing this investment approach, individual needs should guide asset allocation; however, it may require substantial effort for periodic management. Alternatively, investors could consider mutual funds, such as the E Fund's "Sui Feng Tian Li A" (161115), known for its low volatility and solid performance.

Recently, alongside the Panshi Outlook investment app, a new real trading account has been initiated with a small amount of capital. The investment strategy mirrors the Harry Brown All Weather portfolio, diversifying globally across major asset classes, with the bond segment supported by the E Fund's "Sui Feng Tian Li A" while also allocating resources to gold and the CSI 500 index, with plans to invest in US stocks in the future.

Historical performance of E Fund’s "Sui Feng Tian Li A" showcases minimal volatility and consistently stable growth, making it a reliable foundation for an investment portfolio.

This reliability can be attributed to three main reasons. Firstly, the investment strategy is clearly defined. Investors familiar with E Fund’s offerings would recognize its strong market presence, impressive popularity, and positive reputation among investors. Managed by the renowned fixed income expert Hu Jian, the fund's scale has exceeded 11.4 billion.

From a classification standpoint, E Fund’s "Sui Feng Tian Li A" is categorized as a mixed bond fund, adhering to the traditional “eighty-twenty” allocation strategy primarily focused on bonds, with an insistence that at least 80% of assets are invested in various bond types while equity exposure remains capped at 20%, ensuring a transparent investment strategy.

Moreover, the long-term performance has been impressively robust. Since its inception, E Fund’s "Sui Feng Tian Li A" has shown a positive trajectory, with cumulative returns exceeding 215% and an annualized return of 8.44%. This performance not only outshines the China Bond Composite Index but also significantly surpasses the CSI 300 metrics.

Even more notably, E Fund’s "Sui Feng Tian Li A" maintains low volatility. While the CSI 300 has exhibited dramatic fluctuations, navigating clear cycles of buoyancy and contraction, E Fund’s returns have remained steady, characterized by gradual increases with only mild fluctuations.

Finally, the diversification within the bond allocation further enhances resilience against interest rate changes. Recent years have seen a bull market in bonds, with exceptionally low interest rates expected to bring continued stability. For cautious investors, it becomes vital to ensure that bond investments are well-diversified, accounting for convertible bonds and financial bonds that are less sensitive to interest rate shifts.

E Fund’s "Sui Feng Tian Li A" holds a diversified portfolio that includes various bond types like government bonds, financial bonds, mid-term notes, corporate bonds, and convertible bonds, minimizing sensitivity to interest rate fluctuations. Notably, the fund also allocates around 9% to convertible bonds, which thrive during economic recoveries and buoyant stock markets, potentially enhancing overall portfolio returns.

Given this landscape, it's essential to note that E Fund’s "Sui Feng Tian Li A" has recently been featured in "Dajia Ying," a brand promoted by Li Cai Tong focusing on low-volatility fixed income products. Investors interested in E Fund's offering can explore it through this dedicated fund section.

As the Chinese New Year approaches—an event that is eagerly awaited—it’s crucial to consider that returns from the bond segment will reflect at the close of trading on the first working day post-holiday. For those not prepared to endure the swings typically associated with the stock market and seeking stability in investment, E Fund’s "Sui Feng Tian Li A" stands out as a worthy option, delivering lower volatility alongside decent returns.