A few days ago, it was mentioned that Huachen Future Stable Bond Fund likely suffered losses due to exposure to WX bonds, and investors were advised to pay attention to the scale of bond funds.

Subsequently, the market risks from WX bond defaults began to spread— A multi-billion private equity bond product recently dropped over 4%, prompting an apology from its founder: "We always treat our investors with the utmost goodwill, even if short-term results appear brutal..." Of course, the sharp decline in the product's net value and the apology were likely also tied to WX bonds.

The apology was sincere, but here’s the perspective: Strictly speaking, the WX bond default isn’t the fund’s fault. However, investors who bought into affected funds should reflect on their own investment criteria.

This logic may seem odd, but let’s break it down: When rumors about WX bonds first surfaced, major shareholder Shenzhen Metro publicly stated support for the company. Before the actual default, most believed WX bonds would still be honored. Market prices also showed WX bonds trading slightly below par before the extension, suggesting perceived low risk.

The crash came suddenly. Realistically, any fund manager holding these bonds before the crisis would have faced the same outcome—no perfect model exists to predict such defaults in advance. Unless a fund strictly avoids corporate bonds altogether, exposure to such risks remains possible.

For now, there’s no confirmation of non-payment—current market prices simply reflect uncertainty, forcing fund valuations to adjust accordingly.

Back to investment fundamentals: Risk cannot be eliminated entirely—only managed or diversified. In the case of WX bonds, a fund manager can’t eliminate risk but can mitigate it through diversification—which largely depends on fund size (unless the manager gambles recklessly, though even then, allocation limits apply).

Post-default, many bond funds were impacted. Yet, some fell less than 1% with recovery potential, while others plunged several points. Shouldn’t investors reconsider their own choices?

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