In 2026, global commodities have shown volatile trends, while U.S. and A-shares also experienced fluctuations. Amid complex market conditions, convertible bond funds have become a popular investment choice due to their ability to provide downside protection during equity market declines while capturing upside opportunities during rebounds. Liu Yingxing, fund manager of Southern Xiyuan Convertible Bond (Class A: 005461, Class D: 024077), believes that with medium-term positive expectations for equity markets and supply-demand imbalances in convertible bonds, valuation levels are expected to remain at medium-to-high ranges. However, following significant gains in 2025, convertible bond valuations have entered a new normal of elevated levels. For 2026, return expectations will shift from "high elasticity" to "steady enhancement," with the market transitioning to an intensive research phase focusing on deep tracking of individual bonds and differentiated analysis, emphasizing win rates while pursuing better risk-reward ratios. As a representative of the new generation in the industry, Liu co-manages Southern Xiyuan Convertible Bond with veteran bond fund manager Liu Wenliang. Liu Yingxing specializes in managing low-to-medium volatility fixed-income plus products, demonstrating expertise in联动 strategies across equities, bonds, and convertible assets. She excels at balancing return enhancement with drawdown control through cross-asset hedging, balanced sector allocation, and diversified risk exposure to achieve superior risk-adjusted returns. The fund's investment strategy emphasizes flexible allocation across "stable core holdings," "balanced convexity assets," and "high-growth equity-sensitive instruments," while utilizing equity position timing and structured布局 to enhance absolute returns. In 2025, while bond markets faced overall pressure, convertible bonds outperformed with the CSI Convertible Bond Index rising 18.66% according to Wind data. Southern Xiyuan Convertible Bond delivered notable performance, with its Class A share achieving a 79.27% cumulative return since inception as of December 31, 2025, outperforming its benchmark by 34.61 percentage points. The fund's 2025 return reached 28.07%, exceeding its benchmark by 15.81 percentage points. Credit rating agency Golden Credit noted that 2026 should see continued monetary easing, influx of long-term capital, and growing household demand for financial asset allocation, supporting gradual equity market appreciation that will bolster convertible bonds. Consensus positive equity expectations will further attract bond market funds to allocate to convertible assets, providing additional liquidity support. Liu anticipates that elevated convertible bond valuations in 2026 will demand more refined portfolio management, requiring pricing analysis from both liability-side perspectives (like funding attributes) and detailed asset-side research. Southern Xiyuan will employ dual drivers of active enhancement and quantitative strategies to pursue consistent excess returns.