With risk-free rates continuing to slide, returns on wealth management products and bank deposits have been steadily declining. Meanwhile, volatility in the equity market has intensified, with the sharp sell-off in the technology sector in July leaving many investors rattled. Neither stocks nor bonds alone have proven sufficient to weather such market turbulence.

Against a backdrop of both asset scarcity and heightened volatility, fixed income plus products, particularly bond funds with equity kickers, are emerging as a popular alternative for household wealth management thanks to their ability to offer both defense and offense. Among these, secondary bond funds, which keep equity exposure within a 0-20% range, have seen significant growth in recent years. According to Wind data, as of the end of the second quarter, the total assets under management for such funds across the market reached 2.28 trillion yuan, with the number of unitholders hitting a new record high.

In the first half of 2026, the scale of secondary bond funds grew by over 720 billion yuan compared to the end of 2025, with the half-year increase already approaching the full-year growth seen in 2025. For fund managers, fixed income plus is not just a key strategic battleground; the scope and depth of asset allocation are constantly expanding. The evolution is moving from simple equity and bond combinations to multi-asset, multi-strategy allocations, with public fund managers accelerating the development of product matrices that span different risk-return profiles to better align with investor preferences and allocation needs.

At the same time, focusing on the equity enhancement component, leading fund houses are actively building their own "transparent fixed income plus" product lines, delving into which specific assets to add and which strategies to employ. Zhong Ou Fund, a prominent public fund manager in China, has spent years cultivating its expertise in steady investing, gradually building a multi-strategy, full-spectrum product line for this purpose.

The "White Box" Trend Takes Hold in Fixed Income Plus

Currently, "white box" fixed income plus is becoming a new trend. Since the start of 2026, several public fund managers have brought equity fund managers into the management of secondary bond funds, either through new appointments or by launching new products. The term "white box," borrowed from cybernetics and originally used in information dissemination, signifies in investing that the investment logic, decision-making basis, and risk sources are clearly displayed and explained. Investors can understand where their money is going and why the allocation is structured as it is, fostering deeper trust in the product.

In contrast, a "black box" or non-transparent approach means investors only see the net value fluctuations as an outcome, without a clear understanding of the underlying strategy, as the decision-making logic remains hidden. Traditionally, fixed income plus products were managed with the manager making multi-asset and multi-strategy allocations internally, dynamically adjusting the portfolio based on predefined risk targets. For investors, these products were often presented with risk labels like "low volatility," "medium volatility," or "high volatility," but the specifics of the equity investments and how the enhancement was achieved were often unclear.

"White box fixed income plus" goes a step further, with the core goal of enhancing the transparency of the equity enhancement strategy. This allows investors not only to know how much risk the product carries but also to understand where the equity returns primarily come from and how they are generated. There are currently two main approaches: "sector white box," which anchors the equity enhancement to clear directions like technology, cyclical, or dividend stocks, allowing investors to understand the style or industry exposure before buying. The second is "method white box," which does not presuppose a single sector but instead clearly explains the method and investment discipline for the equity enhancement, such as using a quantitative stock-picking strategy, so investors know the logic and rules used to build and adjust the portfolio. Neither is inherently superior; the key difference lies in who holds the choice. White box options hand the choice of "what to add" to the client, akin to ordering a la carte at a restaurant, while non-transparent versions place the allocation responsibility with the manager, similar to ordering a set meal. For investors, the crucial factor is matching the product's risk-return profile with their own risk tolerance.

Making the "Plus" Clearer: Zhong Ou Fund Expands Its Fixed Income Plus Range

As a major player in active equity management, Zhong Ou Fund also has a strong presence in the fixed income plus space. This year, the firm has brought some of its most distinctive and successful active equity fund managers into its fixed income plus products. Through a co-management model with both fixed income and equity fund managers, the company aims to combine its robust equity capabilities with a solid fixed income foundation, offering investors a wider array of choices.

Zhong Ou Yuan Li Bond Fund (中欧元利债券) was established on May 22, 2026, and is co-managed by Ren Fei and Li Zenan. Ren Fei is a seasoned investor specializing in cyclical styles within the equity team and currently serves as the head of the equity research department at Zhong Ou Fund. With 11 years of experience in the securities industry and nearly 3 years in fund management, his longest-managed fund, Zhong Ou Zhou Qi You Xuan (中欧周期优选), exhibits a distinct cyclical style. Consequently, the equity portion of Zhong Ou Yuan Li is primarily positioned for cyclical enhancement. According to the latest interim report, the fund's equity component focuses on cyclical manufacturing with a value-style preference, concentrating on upstream materials, energy, and export-oriented stocks in high-end manufacturing.

In the most recent interim report, Ren Fei outlined his future allocation strategy. He highlights upstream materials directly linked to manufacturing, such as non-ferrous metals and chemicals, while appropriately positioning in new materials where supply-demand gaps exist for AI upstream sectors. Oil, gas, coal, and nuclear power remain long-term focus areas. Additionally, following the Iran conflict, China's export advantage in general capital goods has expanded further, with high-end manufacturing sectors like automobiles, ships, power equipment, and new energy growing faster. This also benefits the transportation sector, with a particular preference for shipping and shipbuilding.

Zhong Ou Shuang Li Bond Fund (中欧双利债券), on the other hand, is focused on adding a "plus" through technology. In July, the fund appointed Du Houliang, a technology-focused fund manager, to its management team. Du Houliang is a veteran tech investor within Zhong Ou Fund's technology team, with 13 years of industry experience and 4 years in fund management. His longest-managed fund, Zhong Ou Xin Xi Ke Ji (中欧信息科技), actively capitalizes on AI investment opportunities. As of the latest interim report, Zhong Ou Shuang Li holds significant positions in chips, electronics, new energy, and chemicals, supplementing its tech-growth focus with value-style stocks. Since its inception in 2016, the fund's A-share class has delivered a net value growth of 49.87%, compared to a benchmark return of 14.60%, generating an excess return of 35.27% and demonstrating strong long-term performance.

The "plus" for Zhong Ou Yi Li Bond Fund (中欧颐利债券) is reflected in a dividend enhancement strategy. Currently co-managed by Liu Yong and Hu Tianyang, with Liu Yong specializing in value and dividend investing, the fund has 10 years of industry experience and 3 years in fund management. Zhong Ou Yi Li is positioned as a low-volatility secondary bond fund. Its allocation strategy uses dividend assets as a core holding while also keeping an eye on key sectors like cyclical stocks, tech manufacturing, and consumer healthcare. In the latest interim report, Liu Yong stated that looking ahead to the second half of the year, the momentum for style rebalancing in the stock market is strong, and dividend sectors have the potential for price recovery. He believes the dividend sector currently exhibits obvious oversold characteristics. In terms of operations, the portfolio maintains a relatively high weighting in bank stocks, favoring quality city commercial banks and joint-stock banks with growth potential, while focusing on stocks likely to increase their dividend payout ratios.

Moving Toward Transparency with an Institutionalized Investment System

There is no inherently superior investment strategy. The value of "white box fixed income plus" lies in breaking down the previously vague "plus" component, making the direction of equity enhancement, investment methods, and risk exposure clearer. This enables investors to understand what risks they are taking before purchasing and to better comprehend the sources of net value fluctuations during the holding period. In the era of net value-based wealth management, investors selecting stable products are shifting their focus from simply observing a historical net value curve to also considering whether the source of returns is clear, the investment logic is understandable, and the product style is consistent.

A report titled "Insights from 1,000 Chinese Families on Steady Investing," jointly released by Zhong Ou Fund and China International Capital Corporation, shows that 53% of surveyed families consider the transparency and comprehensibility of a product's strategy as the most important factor when choosing stable products. Recent industry discussions on "white box fixed income plus" have increasingly centered on being "identifiable, understandable, and attributable." For fund managers, this approach also raises the bar for management capabilities. Only by establishing a mature, platform-based investment research system, with clear strategy boundaries, a stable talent pipeline, and robust risk management mechanisms, can the complex asset allocation process be translated into an easily understandable product expression for investors.

Zhong Ou Fund's exploration of white box fixed income plus is built upon its long-established investment research framework. Leveraging its industrialized investment system, the firm integrates its equity and fixed income capabilities through specialized division of labor and efficient collaboration. This shifts the driver of investment performance from individual capability to a systematic, intelligent production model, providing solid support for the "long-term stability" of its fixed income plus products. According to data from Guotai Haitong Securities, as of June 30, 2026, Zhong Ou Fund ranked 2nd among 12 large equity-focused fund companies in terms of absolute returns over the past 10 years, and 1st among 14 mid-sized fixed income-focused companies over the past 3 years, with a 3rd place ranking over the past 7 years.

From an industry development perspective, the white box trend represents a further step in the asset management industry's evolution from "displaying results" to "process transparency." By offering clear product definitions and stable investment frameworks, managers can make return sources more explainable and risk boundaries more identifiable. Investors, in turn, can move beyond simply looking at past performance and make more rational asset allocation decisions based on their own needs. In the future, as investor demand for transparent investing and long-term engagement continues to grow, managers who can rely on mature investment research systems to translate complex investments into clear strategy expressions will be better positioned to meet investors' long-term stable allocation needs.

Ranking source: Guotai Haitong Securities, "Fund Company Equity and Fixed Income Asset Performance Ranking," as of June 30, 2026. The classification of large, medium, and small companies is based on the average scale of active equity (or active fixed income) management over the past year according to Guotai Haitong Securities' scale ranking. Companies are sorted from largest to smallest, with those whose cumulative average active equity (or active fixed income) scale accounts for 50% of the market total (with the smallest value exceeding 50% used as the dividing line) classified as large, those between 50%-70% (with the smallest value exceeding 70% used as the dividing line) as medium, and the rest as small.

Risk warning: Funds involve risks, and investment should be made with caution. Fund managers are committed to managing fund assets with honesty, diligence, and responsibility, but do not guarantee profitability or minimum returns. Past performance is not indicative of future results. The performance of other funds managed by the fund manager does not constitute a guarantee of this fund's performance. Before making any investment decisions, please carefully read the fund contract, fund prospectus, and fund product summary, as well as other legal documents and risk disclosure statements, fully understand the fund's risk-return characteristics and product features, carefully consider the various risk factors, and assess your own risk tolerance based on your investment objectives, timeframe, experience, and financial situation. Make rational and cautious investment decisions after understanding the product and the suitability opinion. Zhong Ou Yuan Li Bond, Zhong Ou Shuang Li Bond, and Zhong Ou Yi Li Bond are bond funds; their expected returns and risk levels are higher than money market funds but lower than hybrid and equity funds. Zhong Ou Yuan Li Bond, Zhong Ou Yi Li Bond, and Zhong Ou Zhou Qi You Xuan may invest in stocks listed on the Stock Connect. In addition to the general investment risks similar to domestic securities investment funds, these funds also face specific risks associated with the Stock Connect mechanism, including differences in investment environment, underlying assets, market systems, and trading rules. Zhong Ou Zhou Qi You Xuan is a hybrid fund; its expected returns and risk levels are higher than bond funds and money market funds but lower than equity funds.

Data source: Fund periodic reports, as of June 30, 2026. Zhong Ou Yuan Li Bond A has been established for less than six months, so its performance is not disclosed as per regulatory requirements. Since inception, Zhong Ou Shuang Li Bond A has gained 49.87%, while its benchmark has returned 14.60%. From 2021-2025, the fund's returns and benchmark performance were 3.56%/1.5%, -4.38%/-1.78%, 1.42%/0.71%, 7.28%/6.13%, and 6.37%/0.3%, respectively. Successive fund managers include Du Houliang (from July 17, 2026), Xu Wenxing (from May 19, 2026), Jiang Wenwen (Jan 30, 2018 – July 2, 2021), Huang Hua (from April 5, 2017), and Zhang Yuepeng (Nov 23, 2016 – June 1, 2018). The product's investment scope was modified in October 2020 to include depositary receipts. Please refer to legal documents for details. Since inception, Zhong Ou Yi Li Bond A has gained 11.03%, against a benchmark return of 18.22%. From 2023-2025, the fund's returns and benchmark performance were 0.11%/2.59%, 6.5%/8.9%, and 4.34%/3.12%, respectively. Successive fund managers include Hu Tianyang (from Dec 24, 2024), Liu Yong (from Aug 14, 2023), and Hu Qiongyu (Nov 25, 2022 – Jan 19, 2024). Since inception, Zhong Ou Zhou Qi You Xuan A has gained 82.54%, against a benchmark return of 69.50%. From 2024-2025, the fund's returns and benchmark performance were 2.75%/11.14% and 98.41%/45.72%, respectively. Fund manager: Ren Fei (from Nov 14, 2023).

Sales fee details for Zhong Ou Yuan Li Bond: A-class subscription fee is 0.30% for amounts under 5 million yuan, and 1,000 yuan per transaction for amounts of 5 million yuan or more. C-class has no subscription fee. A-class redemption fee (individual investors) is 1.50% for holding periods under 7 days and 0% for 7 days or more. A-class redemption fee (non-individual investors) is 1.50% for under 7 days, 1.00% for 7 to 30 days, and 0% for 30 days or more. C-class redemption fee (individual investors) is 1.50% for under 7 days and 0% for 7 days or more. C-class redemption fee (non-individual investors) is 1.50% for under 7 days, 1.00% for 7 to 30 days, and 0% for 30 days or more. C-class sales service fee is 0.20% per year.

Sales fee details for Zhong Ou Shuang Li Bond: A-class subscription fee is 0.80% for amounts under 1 million yuan, 0.50% for 1 million to 5 million yuan, and 1,000 yuan per transaction for 5 million yuan or more. C-class has no subscription fee. A-class redemption fee is 1.50% for under 7 days, 0.10% for 7 to 30 days, and 0% for 30 days or more. C-class redemption fee is 1.50% for under 7 days, 0.10% for 7 to 30 days, and 0% for 30 days or more. C-class sales service fee is 0.40% per year.

Sales fee details for Zhong Ou Yi Li Bond: A-class subscription fee is 0.80% for amounts under 1 million yuan, 0.50% for 1 million to 5 million yuan, and 1,000 yuan per transaction for 5 million yuan or more. C-class has no subscription fee. A-class redemption fee is 1.50% for under 7 days, 0.10% for 7 to 30 days, and 0% for 30 days or more. C-class redemption fee is 1.50% for under 7 days, 0.10% for 7 to 30 days, and 0% for 30 days or more. C-class sales service fee is 0.40% per year.

Sales fee details for Zhong Ou Zhou Qi You Xuan: A-class subscription fee is 1.50% for amounts under 1 million yuan, 1.00% for 1 million to 5 million yuan, and 1,000 yuan per transaction for 5 million yuan or more. C-class has no subscription fee. A-class redemption fee is 1.50% for under 7 days, 0.75% for 7 to 30 days, 0.50% for 30 to 180 days, and 0% for 180 days or more. C-class redemption fee is 1.50% for under 7 days, 0.50% for 7 to 30 days, and 0% for 30 days or more. C-class sales service fee is 0.60% per year. The specific sales fees applicable to the products mentioned in this material are subject to the fund's legal documents and sales institution business rules in effect at the time, as available on the fund manager's official website (www.zofund.com).

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