Since the beginning of 2026, the FOF market has gained significant momentum, with total assets under management surpassing 300 billion yuan, nearly doubling compared to the same period last year. CM BANK's TREE Long-Term Growth Plan has been a major driver of this growth. Other banks, including China Construction Bank and Bank of China, have also launched similar services, signaling a surge in customized FOF offerings led by major banks in collaboration with fund companies.

What is the nature of asset allocation services like CM BANK's TREE Long-Term Growth Plan? Can the advertised target returns of over 3.5%, 4.5%, or even exceeding 8% be achieved? Which institution offers superior asset allocation services?

Services such as CM BANK's TREE are not single standout products but systematic asset allocation frameworks. The key difference from traditional FOFs lies in shifting from a model where bank financial advisors promote individual products to one that offers curated packages through screening and categorization.

From "Selecting Funds" to "Choosing Packages"

For example, TREE simplifies asset allocation into four distinct packages with clear risk-return profiles, allowing investors to select based on their risk tolerance and return expectations.

FOF funds included in the TREE Long-Term Growth Plan are categorized into four tiers based on equity exposure limits, each with specific performance and maximum drawdown targets. For instance, the "Stable Return" tier has an equity exposure ≤15%, targeting an annualized return ≥3.5% and a maximum drawdown ≤2%. The "Balanced Growth" tier allows equity exposure ≤25%, targeting ≥4.5% annualized returns with a maximum drawdown ≤3.5%. As equity limits increase, target returns rise, and drawdown limits are relaxed.

This approach means CM BANK reverse-customizes four packages for fund companies based on client needs. Selected FOF funds must operate according to the corresponding risk-return objectives.

This "reverse customization" logic fundamentally distinguishes these offerings from traditional FOFs.

Traditional FOFs are typically launched by fund companies with strategies centered on basic stock-bond allocations. Bank-customized FOFs emphasize multi-asset allocation, incorporating domestic and international stocks, bonds, gold, REITs, QDIIs, and other diverse assets to achieve genuine risk diversification through low-correlation portfolios.

Additionally, banks, as influential partners, can monitor fund companies to ensure adherence to set risk-return targets.

Comparing Bank Packages

CM BANK introduced the TREE Long-Term Growth Plan in 2024, gaining recent attention due to frequently launching popular funds. This year, peers like China Construction Bank and Bank of China have rolled out similar services.

A comparison shows that CM BANK's TREE Long-Term Growth Plan, China Construction Bank's Longying FOF, and Bank of China's Zhongyin Huitou all offer four asset allocation packages tailored to different risk preferences. Both CM BANK and China Construction Bank specify target returns and maximum drawdowns for each package, which include recommended FOF funds for investor selection.

However, as products are still being listed, China Construction Bank's Longying FOF has not yet disclosed target returns and drawdowns for its ETF-FOF and Global Investment-FOF packages.

Bank of China's Zhongyin Huitou is still under development. It recommends different funds in its "Preferred FOF" section based on investors' risk tolerance. The bank's customer service notes that "Preferred FOF" is an upgrade from the previous "Smart Portfolio" module, using automated systems to select FOF products based on market analysis and investor preferences.

Performance of the Packages

How have the funds within these packages performed?

Comparing CM BANK's "Stable Return" and China Construction Bank's "Low Volatility-Multi-Asset FOF," which have similar risk-return profiles, representative funds under "Stable Return" generally met their annualized return and maximum drawdown targets over the past year. For instance, "Huaan Yingrui Stable Preferred 6-Month Holding Mixed (FOF)" achieved a slightly higher return of 5.49% as of March 16, with a correspondingly larger drawdown of 1.26%.

Performance of selected FOF funds under CM BANK's "Stable Return" tier.

As China Construction Bank launched Longying FOF this year, only historical data for some representative funds is available. As of March 16, "China Juhan Preferred Three-Month Holding Mixed" had a one-year return of 2.83%, slightly below its 3% target. Whether it will meet targets remains to be seen.

Performance of selected funds under China Construction Bank's "Low Volatility-Multi-Asset FOF."

Looking at CM BANK's "Balanced Growth" and China Construction Bank's "Medium-Low Volatility-Multi-Asset FOF," which target similar returns, "E Fund Ruyi Ancheng Six-Month Holding Mixed (FOF)" under "Balanced Growth" achieved a one-year return of 6.82% with a maximum drawdown of 1.52%, meeting the tier's requirements.

Performance of selected FOF funds under CM BANK's "Balanced Growth" tier.

Due to the recent launch of China Construction Bank's "Medium-Low Volatility-Multi-Asset FOF," performance is assessed based on historical data, including pre-inclusion records. "Yinhua Huafeng Three-Month Holding Mixed (FOF) A" and "China Jujia Preferred Three-Month Holding Mixed (FOF) A" generally met the tier's requirements. "Jianxin Fuzee Antai Mixed (FOF) A" had a one-year maximum drawdown of 5.54%, exceeding the 3% target, but also delivered a higher return of 7.19%. Future drawdown control requires monitoring.

Selected FOF funds under China Construction Bank's "Medium-Low Volatility-Multi-Asset FOF."

Not all funds recommended by CM BANK's TREE plan met targets. For example, "Fullgoal Yinghe Preferred Three-Month Holding Mixed (FOF) A" under the "Enhanced Return" tier underperformed its benchmark, with a one-year return of 6.44% as of March 17, below the benchmark's 8.06%.

Regarding potential adjustments to package funds, CM BANK's customer service indicated possible changes based on market conditions. China Construction Bank stated that its system automatically screens and updates funds periodically.

Investment Considerations: A Sober Perspective

Amid the enthusiasm, several points warrant attention:

First, target returns set by bank asset allocation packages are not guaranteed, and principal is not protected. Strong performances in stocks and gold over the past year aided some FOFs in meeting targets. However, significant market volatility could lead to lower returns and higher risks than expected.

Second, liquidity needs planning. Most pool funds are FOFs with minimum holding periods, such as three or six months, requiring investors to hold until the period ends before redemption. CM BANK also suggests holding periods: six months for "Stable Return," over one year for "Balanced Growth" and "Enhanced Return," and long-term holding for "High Growth."

Third, while bank asset allocation services are free, FOF funds involve "double fees." Investors pay management and custody fees for the FOF itself, plus indirect fees from the underlying funds within the FOF's portfolio.

Fourth, bank recommendations are for reference only. Investors should conduct their own due diligence to select the best options based on individual needs.