QDII bond funds relax subscription limits, U.S. bond investment logic changes

Under the recent influence of uncertainties such as U.S. inflation expectations and exchange rate fluctuations, since March, some QDII bond funds have gradually begun to relax subscription limits. The subscription limit for the Renminbi share of Haifutong U.S. Dollar Bond (QDII) has been significantly raised from 10,000 yuan to 10 million yuan.

Industry institutions indicate that the current U.S. Treasury market is in a “tug-of-war” period between inflation concerns (oil prices) and recession worries (employment). Investment has shifted from merely “betting on interest rate cuts” to a multidimensional game of “inflation protection, looking at employment, and selecting quality.” As signals of an economic downturn in the U.S. are confirmed, the safe-haven attribute of U.S. Treasuries may overshadow the inflation noise caused by oil prices.

** QDII Bond Funds Relax Subscription Limits **

Recently, some QDII bond funds have consecutively announced the relaxation of investment limits.

On March 16, Haifutong Fund announced that to meet investors’ investment needs, Haifutong U.S. Dollar Bond (QDII) will adjust the amount restricting large subscription transactions. Specifically, the cumulative subscription limit for Renminbi shares of this fund per individual account per day has been raised from no more than 10,000 yuan to no more than 10 million yuan, and the cumulative subscription limit for U.S. Dollar shares of this fund has been raised from no more than 1,400 USD to no more than 1.4 million USD.

At the same time, to better protect the interests of fund share holders and ensure the smooth operation of the fund, Haifutong U.S. Dollar Bond (QDII) has set a total fund size limit of 2.7 billion yuan effective from March 16 (except for cases where the net asset value of the fund exceeds this amount due to fluctuations in the net value of fund shares), adopting a “proportional confirmation” principle for size control.

Coincidentally, since March, Wells Fargo Global Bond (QDII) has also relaxed its subscription conditions. According to the fund’s announcement, starting from March 3, the subscription and regular investment limit for the Renminbi A shares of this fund has been raised from the previous 100 yuan to 5,000 yuan.

The China Securities Journal has learned from the industry that in response to the regulatory authorities’ deployment regarding the “Five Major Articles,” especially inclusive finance, public fund institutions have recently been gradually promoting QDII quotas toward public products, with some new investment quotas for QDII products potentially coming from transfers of separate account products.

** U.S. Treasury Market Enters “Tug-of-War” Period **

Affected by uncertainties such as U.S. inflation expectations and exchange rate fluctuations, since the fourth quarter of 2025, QDII products investing in overseas bonds have generally entered a downward yield oscillation range. According to Wind data, as of March 16, the average yield of 24 QDII bond funds in the entire market has dropped by over 1% this year, with the maximum drop exceeding 2%.

A QDII bond fund manager stated in an interview with the China Securities Journal that this round of adjustment is mainly due to the accelerated appreciation of the Renminbi against the U.S. dollar since the fourth quarter of 2025. With the Federal Reserve’s interest rate cut finally occurring, the yield on 10-year U.S. Treasuries has fluctuated in the range of 3.9%-4.3%. Since March, due to ongoing overseas conflicts, oil prices have surged, and market expectations are further compressing energy supply and exacerbating inflation, pushing the yield on 10-year U.S. Treasuries up from the low of 3.9% this year to around 4.3%.

Moreover, overseas uncertainties and drastic fluctuations in the macro environment are also exacerbating volatility in the overseas bond market. Bank of China Fund stated that although the Federal Reserve had cut interest rates consecutively in 2025, due to the unexpectedly resilient performance of U.S. economic data, the Federal Reserve entered an “observation period” from late 2025 to early 2026 and paused rate cuts in January this year.

While rising oil prices raise inflation concerns, low U.S. employment forms a counterbalance. The aforementioned fund manager believes that the upward risk of U.S. inflation dominates the interest rate market’s reaction to rising oil prices, with a flattening yield curve and rising real interest rates reflecting a significant reduction in bets on Fed interest rate cuts. Especially in the context of increasing growth concerns, the current overall slowdown in U.S. core inflation and the weakening labor market will limit the Fed’s hawkish risks stemming from rising energy prices. Currently, the high historical yields on U.S. Treasuries provide substantial returns from coupon payments, creating a sufficient buffer for price fluctuations.

Currently, the U.S. Treasury market is in a “tug-of-war” between inflation concerns (oil prices) and recession worries (employment). According to Bank of China Fund, the U.S. macro environment of “stagflation” has made the trading logic in the bond market extremely complex, with the market repeatedly shifting between “inflation protection” and “betting on interest rate cuts.” At present, attention can be paid to opportunities for extending durations and locking in mid- to long-term high coupon rates. As signals of an economic downturn in the U.S. are confirmed, the safe-haven attribute of U.S. Treasuries may overshadow the inflation noise caused by oil prices.

** Emphasizing Coupon-Based Strategies **

In this year’s volatile overseas macro environment, U.S. Treasury investments face a complex situation. Bank of China Fund believes that investment in U.S. Treasuries has shifted from merely “betting on interest rate cuts” to a multidimensional game of “inflation protection, looking at employment, and selecting quality.” As a result, portfolio strategies will place greater emphasis on active management and yield curve strategies, focusing on coupons rather than speculating on price differences.

Regarding whether exchange rate risks will continue to erode QDII product yields, Bank of China Fund suggests closely monitoring the impacts of core variables such as the pressure of narrowing China-U.S. interest rate differentials, recurring risk aversion sentiment, and seasonal and trade settlement factors.

Bank of China Fund notes that considering the interest rate cut expectations triggered by the U.S. employment downturn, the “price appreciation dividend” of U.S. Treasuries is likely to enter a main rising wave. Even if there are certain exchange rate erosions, the capital gain potential of U.S. Treasury assets themselves may currently outweigh the risks of exchange rate fluctuations, and the allocation value of QDII bond funds can still be worth attention.