As the bond market reaches its current juncture, many investors share a common sentiment: there is ample capital, but quality assets are increasingly difficult to source. Credit spreads on tenors within three years have been compressed to razor-thin levels, with five-year high-grade credit bonds yielding around 1.7%-1.8%, and even ten-year premium instruments hovering near 2.1%. With coupon income narrowing and the tail-end of the debt-resolution cycle bringing regulatory list adjustments and rating reviews, a single misstep could trigger significant valuation fluctuations. In this low-interest-rate landscape, bond investing has shifted from a passive "set-and-forget" approach to a discipline demanding meticulous execution.

Against this backdrop, the two-year performance of CITIC Prudential Wenda (Class A: 006177, Class C: 006178, Class E: 019881) merits closer examination. The fund, currently rated five stars, has been managed by Gu Feichen since November 2023. Over the past three years, the fund has delivered a net asset value growth of 14.89%, translating to an annualized return of 4.74%, ranking 6th among 778 comparable funds. It has also earned dual five-star ratings from Morningstar for both the three-year and five-year periods. (Data as of 2026.8.20, performance audited by the custodian bank. Annualized return is calculated as [(1 + total return)^(1/holding years) - 1] × 100%. This figure reflects historical performance over the period and does not predict future results, nor does it serve as a guarantee of fund performance. The annualized return does not imply that investors can achieve this level of return at any given point. The benchmark for the same period: 12.96%, with a benchmark annualized return of 4.21%. Ranking source: Morningstar, as of 2026.8.20; rating data as of 2026.6.30, published 2026.8.21. Fund type: China open-end fund - pure bond.)

While rankings tell part of the story, the more compelling question is how this fund has generated such robust returns while maintaining disciplined drawdown control. The Q2 report reveals a portfolio predominantly composed of mid-to-high-grade credit instruments and Tier 2/Perpetual (Er Yong) bank bonds. Gu Feichen articulates the strategy succinctly: "Wenda does not rely on coupon harvesting alone; we seek returns through tactical bond trading and duration management." (Note: The holdings disclosed in periodic reports represent point-in-time data and do not reflect current or future positions. The fund's allocation ratios and targets are subject to adjustment based on market conditions within the contractual framework; refer to the fund's legal documents for specifics.)

A closer look at the Q2 report reveals how the three asset classes are allocated. Financial bonds constitute 70.25% of the fund's net asset value, of which policy bank bonds account for 10.40%. Medium-term notes represent 28.16%, corporate bonds 20.71%, and government bonds 4.09%. The combined total exceeds 100%, indicating the use of leverage. Turning to the top five holdings, the fund holds four commercial bank bonds—China Minsheng Bank Tier 2 capital bonds, China Merchants Bank perpetual bonds, Industrial Bank Tier 2 capital bonds, and Bank of Beijing perpetual bonds—alongside one policy bank bond. Together, these five positions account for 14.33% of net asset value, with the largest single holding at less than 3.7%, reflecting a well-diversified portfolio.

This structural allocation signals several strategic choices. Bank Er Yong bonds serve as the core anchor. The four bank capital instruments span both Tier 2 and perpetual varieties, offering strong liquidity and pledgeability—assets that can generate static income while remaining readily convertible for tactical trades during market corrections. Policy bank bonds act as a complement, providing low credit risk and high liquidity, though with relatively modest yields; they primarily fulfill a liquidity management role rather than serving as primary return drivers. The portfolio's risk posture leans conservative: all top five holdings are systemically important banks and policy bank bonds, with no exposure to lower-quality issuers. This reflects a credit allocation philosophy that prioritizes safety and liquidity before pursuing incremental yield.

Interest rate bond trading emerges as the primary engine for enhancing returns. With a background as a trader, Gu Feichen possesses a keen sensitivity to capital flows and institutional behavior, which underpins his disciplined approach to tactical operations—strict stop-losses and flexible profit-taking. In essence, the portfolio's construction logic is clear: bank Er Yong bonds and mid-to-high-grade credit instruments form the foundation, contributing coupon income and moderate duration gains, while the interest rate bond allocation supports tactical trading, aiming to augment returns through well-timed positioning.

Maintaining Dry Powder

Gu Feichen consistently emphasizes a core principle: keeping ammunition in reserve. Rather than stretching duration to its limits or chasing rallies indiscriminately, he retains positions to add during corrections. The rationale is twofold. First, the risk-reward of chasing current levels is unattractive. Credit spreads are already at historical lows, leaving limited room for further compression. Buying into strength captures only the final leg of gains while exposing the portfolio to full-scale corrections. Gu Feichen's approach is pragmatic—avoid envy during rallies, preserve cash, and deploy it when supply shocks or sentiment swings create entry points. Second, the tools at his disposal enable rapid position building. Bank Er Yong bonds trade actively daily, and government bonds offer deep liquidity, allowing quick deployment when adjustments occur, ensuring he never watches opportunities pass idly by.

The execution of this "keep dry powder" philosophy rests on two pillars: disciplined position sizing—typically avoiding full allocation during rallies—and maintaining readily deployable instruments rather than holding cash with nothing to buy. Wenda's operational track record reflects this logic throughout: no recklessness, no herd-following, sustained flexibility, and a focus on finding opportunities amid corrections. When credit spreads sit at historical lows, this approach proves particularly pragmatic. Ultimately, in a low-yield era, bond investing is less about who takes the biggest risks and more about who observes more keenly, reacts more swiftly, and adheres more rigorously to process. CITIC Prudential Wenda embodies this path—using mid-to-high-grade credit and Er Yong bonds as its shield, and interest rate tactical trading as its spear, avoiding directional bets and extreme duration extension while steadily accumulating excess returns through precise timing and security selection.

CITIC Prudential Wenda, established on 2018/8/31, benchmarks against the CSI Composite Bond Index. Class A historical returns/benchmark for 2021-2025: 4.52%/5.23%, 2.57%/3.32%, 3.98%/4.81%, 7.19%/7.89%, 1.50%/0.70%. Class C: 4.50%/5.23%, 2.56%/3.32%, 3.75%/4.81%, 7.13%/7.89%, 1.49%/0.70%. Class E shares were added on 2023/10/27, with 2024-2025 performance/benchmark: 6.91%/7.89%, 1.29%/0.70%. Current and former fund managers: Wu Yinxi (20180831-20201022), Xing Gonghai (20200820-20240515), Gu Feichen (20231106-present). The fund's risk rating by the manager is R2.

Among Gu Feichen's other comparable funds: CITIC Prudential Zhitai Medium-Short Term Bond, converted from a flexible allocation mixed fund on 2020/2/7, benchmarks against CSI Composite Wealth (1-3 year) Index return × 80% + one-year deposit rate (after tax) × 20%. Class A historical returns/benchmark for 2021-2025: 2.31%/3.51%, 1.84%/2.48%, 2.12%/3.19%, 5.99%/3.65%, 1.40%/1.54%. Class C: 2.21%/3.51%, 1.73%/2.48%, 2.02%/3.19%, 5.86%/3.65%, 1.31%/1.54%. Class E shares added on 2024/5/28, with 2024-2025 performance/benchmark: 2.17%/2.01%, 1.11%/1.54%; Class D added on 2025/6/5, not yet reporting due to short history. Fund managers: Yang Xu (20170606-20180928), Ti Yuntao (20170914-20191230), Miao Xiamei (20180914-20200115), Yang Mubin (20220713-20230831), Xi Xingyi (20190123-present), Gu Feichen (20231019-present). Risk rating: R2.

CITIC Prudential 60-Day Holding Period, established 2024-06-18, benchmarks against CSI Composite Bond (Gross) Index × 80% + one-year deposit rate (after tax) × 20%. 2025 performance/benchmark: Class A: 1.59%/-0.98%, Class C: 1.40%/-0.98%. Fund managers: Xi Xingyi (20240618-present), Gu Feichen (20240807-present). Risk rating: R2.

CITIC Prudential Qianyuan 30-Day Holding, established 2024-12-17, benchmarks against CSI Composite Bond (Gross) Full Price Index × 90% + one-year deposit rate (after tax) × 10%. 2025 performance/benchmark: Class A: 2.21%/-1.28%, Class C: 1.99%/-1.28%. Fund managers: Gu Feichen (20241217-present), Xi Xingyi (20250228-20260408), Yang Mubin (20241217-20251229). Risk rating: R2.

CITIC Prudential Jingfeng, established 2019-01-15, benchmarks against CSI Composite Bond Index. Class A historical returns/benchmark for 2021-2025: 4.19%/5.23%, 1.99%/3.32%, 3.69%/4.81%, 5.23%/7.89%, 1.68%/0.70%. Class C: 4.12%/5.23%, 1.88%/3.32%, 3.61%/4.81%, 5.12%/7.89%, 1.58%/0.70%. Class D added on 2024/06/17, with 2024-2025 performance/benchmark: 3.17%/4.36%, 1.67%/0.70%. Fund managers: Gu Feichen (20251229-present), Liu Hongliang (20240805-20260119), Chen Lan (2024-05-15 to 2025-06-05), Xing Gonghai (2020-10-23 to 2024-05-15), Wu Yinxi (2019-01-15 to 2020-11-13). Risk rating: R2.

Fees are based on the latest prospectus and legal documents; refer to fund manager or distributor announcements for specifics. Fund code, fund name, subscription fee [front-end] %, redemption fee [back-end] %, management fee %, custody fee %, sales service fee %: 019881.OF CITIC Prudential Wenda E: 0% subscription, redemption 1.5% under 7 days, 0.1% 7-30 days, 0% over 30 days; management 0.20%, custody 0.05%, sales service 0.20%. 006178.OF CITIC Prudential Wenda C: 0% subscription, redemption 1.5% under 7 days, 0.1% 7-30 days, 0% over 30 days; management 0.20%, custody 0.05%, sales service 0.01%. 006177.OF CITIC Prudential Wenda A: subscription 0.8% under 500K, 0.5% 500K-2M, 0.3% 2M-5M, 1000 RMB/transaction over 5M; redemption 1.5% under 7 days, 0.1% 7-180 days, 0% over 180 days; management 0.20%, custody 0.05%.

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