The Shanghai Composite Index once again fell below the 3,900-point mark, with trading sentiment before the holiday being relatively weak, and short-duration bond ETFs gaining increased attention.

Why did short-duration bond ETFs become favored by funds before the holiday?

On the last trading day before the Qingming Festival, the three major indices collectively declined, with the Shanghai Composite Index falling below 3,900 points. After-hours data from the previous trading day showed that the margin financing balance across the two markets decreased by 10.99B yuan, down to 2.572055 trillion yuan, indicating that leveraged funds are accelerating their exit, reflecting that risk appetite within the market remains low. Meanwhile, with the upcoming Qingming holiday, the demand for holding cash during the festival increases, and attention to bond assets has also risen.

According to statistics, in the past five trading days, net inflows into bond ETFs exceeded 14.5 billion yuan, ranking first among various ETF categories.

Source: Wind, as of April 2, 2026

The bond market has been relatively stable. The yield on the 2-year government bond is at 1.27%, only slightly higher than the level at the end of February, with the yield curve showing overall gentle and low volatility. Media reports indicate that amid global bond market turbulence, the value of Chinese government bonds as a “stabilizer” is becoming more prominent, and institutional investors’ focus on Chinese bonds is increasing.

From a liquidity perspective, the People’s Bank of China conducted a 1 billion yuan 7-day reverse repurchase operation on April 3, maintaining the rate at 1.40%. On that day, 146.2 billion yuan of reverse repos matured, resulting in a net withdrawal of 145.2 billion yuan. Analysts note that April, traditionally a large tax revenue month, also sees fiscal expenditures providing some support to liquidity, and short-term interest rates are expected to remain stable.

In this environment, short-duration bond products, which are less sensitive to interest rate fluctuations, are favored by funds seeking to improve liquidity management efficiency. For example, the short-duration Government Bond and Policy Financial Bond ETF 招商（511580） serves as a basket of government bonds and policy financial bonds, with underlying assets typically having durations between 1 and 2 years, making the overall price volatility of the portfolio relatively controllable.

Regarding product design, Government Bond and Policy Financial Bond ETF 招商（511580） is listed on the Shanghai Stock Exchange, supports T+0 rollover trading, and has been included in the pledge repo pool (with a conversion rate of about 103%).

In terms of yield, bond ETFs mainly generate income from coupon payments and price difference gains. Short-duration portfolios, due to the shorter maturity of held bonds, have relatively stable coupon accumulation and higher flexibility in turnover. Therefore, they can be used for idle fund management, liquidity reserves, or in combination with equity positions.

As for fee rates, Government Bond and Policy Financial Bond ETF 招商（511580） charges an annual management fee of 0.15%, a custody fee of 0.05%, totaling 0.20% per year, which is relatively low among similar bond ETFs.

According to the latest institutional research reports, mainstream views believe that the current bond market still has support. Domestic monetary policy remains supportive, with the central bank repeatedly stating it will maintain reasonably ample liquidity; meanwhile, the interest rate environment domestically and abroad provides some medium-term support for RMB-denominated bonds. However, some institutions also warn to watch for potential disturbances such as the pace of government bond issuance in April and economic data exceeding expectations.

Shenwan Hongyuan’s fixed income team pointed out that short-duration products, due to their low sensitivity to interest rate changes, have a clear advantage in liquidity management efficiency in the current market environment.

CICC’s fixed income research believes that, under the global low-volatility environment and the advancement of RMB internationalization, the medium-term demand from overseas institutions for RMB bonds remains supported.

Overall, in the context of uncertain market directions and holiday effects, the design of short-duration bond ETFs as on-market cash management tools is worth关注.

Risk reminder: Funds are subject to risks; investments should be cautious.