Xinzheng Global Fund Zhu Zhefeng: How to Seek Low-Volatility Excess Returns Within "Inner Square and Outer Circle"?

Text | Yang Nana

Take it slow, be steady, last longer

In early spring, bond market yields have fallen to historic lows, short-term returns on financial products still face certain pressures, and the stock market is searching for a structural direction amid volatility. Under the anxiety of large amounts of capital having “nowhere to place,” fixed income + products, known as the “better solution for wealth management,” have once again become the focus of investor attention.

Managed by Zhu Zhefeng, the fixed income + fund Xingquan Fengde Bond Fund (hereinafter “Xingquan Fengde”) is one of the products that performs relatively well in drawdown control and risk-return cost performance. According to Galaxy Securities statistics, as of the end of January 2026, this product, established in August 2024, has a net value growth rate of 8.93% since its A-shares inception, surpassing the benchmark by 2.66 percentage points; more notably, its maximum drawdown in the past year is only -1.31%, ranking in the top 30% among peers (152/533), with a Calmar ratio of 5.67 times, ranking in the top 12% (63/533).

Performance trend of Xingquan Fengde since inception

Data source: Galaxy Securities. Statistical period: 2024/8/2 - 2026/1/31

How to achieve “low volatility” and “high cost performance” simultaneously?

With this question in mind, in early March, we spoke with Zhu Zhefeng, a fund manager with 8 years of investment research experience, who is a “post-90s” investor. Starting from convertible bond research, to an “internal strength and external flexibility” investment framework, and to his understanding of the current value of “fixed income +” products in asset allocation, we tried to find answers in Zhu Zhefeng’s thinking.

Fund manager Zhu Zhefeng of Xingquan Fengde Bond Fund

“Inner strength” adheres, “external flexibility” adapts

Zhu Zhefeng’s career began with one of the most complex investment instruments in the market—convertible bonds. “When I entered the industry, it was right at the start of the expansion of the domestic convertible bond market. Although convertible bonds are a segmented asset, they combine debt and equity characteristics, offering coupon protection like bonds, upward potential like stocks, and implicit option value.”

This multidimensional research experience allowed him to establish a “balanced” multi-asset perspective from the beginning. “Studying convertibles forced me to understand company fundamentals, market sentiment, contractual negotiations, and bond pricing simultaneously, laying a solid foundation for managing fixed income + products later.”

Since 2022, Zhu Zhefeng has managed funds independently, from the primary bond fund Xingquan Hengxin, to the hybrid Xingquan Huirong, and then to the secondary bond fund Xingquan Fengde. By the end of 2025, the total assets under his management of three public funds exceeded 8.5 billion yuan. As of the end of Q4 2025, Xingquan Fengde’s equity position was 12.39%, maintaining its product positioning while moderately capturing opportunities in diversified assets.

Zhu Zhefeng summarizes his increasingly mature investment framework as “inner strength and external flexibility.”

“Inner strength” refers to deep understanding. For companies he truly “understands” and considers valuable, Zhu Zhefeng chooses to concentrate investments and hold long-term. “Excess returns come from insights beyond the market. When high-quality assets are mispriced by short-term noise, you need the courage to oppose the market—that’s the ‘inner strength’ of sticking to your principles.”

“External flexibility” is about respecting the market and adapting flexibly. On the premise of ensuring a stable core position, he uses part of his holdings to participate in logical, upward trending market hotspots, such as upstream component companies in AI, to balance the portfolio’s aggressiveness.

This strategy allows the portfolio to defend during adverse periods and be flexible during favorable times, always maintaining a balanced tolerance for errors. Its underlying logic is Zhu Zhefeng’s unique understanding of the Tao Te Ching: “Learning increases day by day; the Way diminishes day by day.”

“Learning increases day by day means accumulating knowledge of different industries and targets; diminishing day by day means maintaining clarity and restraint, returning to simple investment common sense—such as ‘walking with reliable people,’ ‘avoiding zero-sum games,’ ‘trusting the value of time,’ etc.”

Where does the excess return from low volatility come from?

How is this philosophy implemented? Especially for Xingquan Fengde, a secondary bond fund with a maximum equity position of 20%, how does it achieve “stability and progress” amid market volatility?

First, in drawdown control, Zhu Zhefeng’s fundamental principle is “the quality of underlying assets.” “Whether it’s pure bonds, convertibles, or stocks, we avoid companies with poor quality. If the assets we buy are problematic, no matter how we time the market, the risk of permanent capital loss remains.”

At the end of 2022, amid extremely pessimistic market sentiment, Zhu Zhefeng adopted a contrarian approach, increasing holdings of reasonably valued, elastic convertibles. Wind data shows that in 2023, Xingquan Hengxin A achieved nearly 8% return, ranking in the top 3% of the market (13/582).

As market sentiment improved, he reduced the position back to a neutral level. “Excessive position shifts and aggressive trading are inherently risky; I prefer the product to operate within a reasonable risk-return framework.”

He shared an enlightening story: “In 2003, Zhang Yongping shared in an interview that if you’re driving at 200 km/h on the highway and suddenly encounter a wall, what do you do? The answer is to accept fate. The only thing you can do is not to drive so fast in the first place.” He applies this crisis management thinking to portfolio management. In his view, “post-event risk control is often too late; true risk management lies in pre-emptive and ongoing management, in the daily construction of the portfolio.”

“During 2025’s trade war, recent sudden Iran developments… When emergencies happen, the only thing we can do is keep the portfolio balanced most of the time, leaving enough room for error. That way, when opportunities arise, we have the capacity to add to those high-quality assets that were mispriced.”

Second, bottom-up selection of individual bonds is the main source of excess returns for Zhu Zhefeng’s managed products.

Excess returns mainly come from discovering investment opportunities that the market does not fully recognize. During his research analyst days, he identified a convertible bond that the market largely ignored due to industry quality and past losses. But after in-depth analysis, he found the company had large orders and was undertaking massive construction projects. “In heavy-asset industries, once depreciation is behind, profit elasticity is huge, and reported profits tend to lag.”

For Xingquan Fengde, Zhu Zhefeng explains that the stock component is mainly composed of high-quality leading companies selected from the bottom up, which have high visibility and can generate stable basic income. “When prices fall, I have confidence.” Additionally, he also allocates a small portion to potential mid- and small-cap stocks.

Regarding recently popular convertible bonds with high valuations, he considers them “desserts,” used as a supplement to portfolio gains. “I focus on two types of opportunities: one, those with better value compared to stocks, which can buffer declines; two, AAA-rated convertibles with short maturities and no credit risk, which also present some opportunities.”

Focusing on stable investment from a higher perspective

In the convertible bond field, China Securities Global Fund is recognized as a “pioneer.” This “soul tool” was embedded into the team’s DNA as early as 2004, just six months after the company’s founding, when it launched China’s first domestic convertible bond fund, Xingquan Convertible Bond.

Zhu Zhefeng’s investment research career also began at China Securities Global Fund as a convertible bond researcher. At that time, convertible bond researchers and industry analysts were in the same department, so most of his work involved bottom-up company research. To this day, Xingquan’s convertible bond analysts maintain this tradition: “We collaborate on industry research, and for every new bond on the market, we complete a pricing report before it is issued.”

More importantly, the company’s “full industry + multi-asset” coverage research system is fully open to the fixed income team. “We can participate in all stock meetings and internal deep-dive reports. This barrier-free, in-depth interaction allows me to make fixed income + decisions from the broadest equity research perspective.” Zhu Zhefeng cites examples such as the TMT group’s judgment on the tech wave or the cyclical group’s tracking of the non-ferrous metals sector, which can quickly empower his portfolio construction.

Additionally, the company regards “risk control” as the cornerstone of investment management, with a risk management system integrated throughout the investment process. “The company has risk warning mechanisms for multi-asset funds, including pre-risk budgets and compliance reviews, ongoing risk analysis and tracking, and post-investment attribution summaries. When net value drawdowns reach warning levels, discussions are triggered to reassess whether the holdings’ logic has been compromised.” This mechanism reminds fund managers to strictly adhere to safety margins and has profoundly influenced his concept of controlling drawdowns.

Seeking certainty through balanced diversification

Looking at the current market, Zhu Zhefeng also shares his thoughts.

“After the previous rally, the market has entered a consolidation phase, but there are still many structural opportunities in A/H shares.” He observes that several main themes are unfolding simultaneously: “AI-driven industries continue to develop; the high prosperity of the non-ferrous sector is supported by supply constraints and steady demand; dividend-related assets are increasingly scarce in a low-interest-rate environment; and valuation recovery in consumer and non-bank sectors is gathering strength.” He emphasizes that the supply side of non-ferrous metals is constrained, and demand remains good, making these assets valuable for medium- to long-term allocation, not just cyclical trading.

Regarding the bond market, he is more cautious. “In the context of broad-based interest rate declines, the coupon protection of pure bonds is weakening, and we may enter a period of low yields and increased volatility. Therefore, pure bonds will focus on stability, with credit risk control as a priority, managing duration and leverage, and avoiding credit downgrades.”

For equities and convertibles, he maintains a neutral to slightly positive stance. “Internally, the economy is in a moderate recovery; externally, liquidity conditions are improving. The market’s explosive growth potential is limited, but structural opportunities are abundant.”

Xingquan Fengde aims to seize multi-asset opportunities

Source: Fund periodic reports

Based on this outlook, his portfolio will continue to maintain a balanced allocation. While the dividend sector provides stability as the core holding, he also focuses on technology growth stocks represented by AI, cyclical sectors benefiting from economic recovery, and attractively valued consumer and pharmaceutical stocks. He also keeps an eye on Hong Kong stocks, seeking high-quality internet and innovative drug targets that are scarce in A-shares.

Conclusion: Good investments are visible over time

In the introduction of Xingzheng Global Fund’s fixed income + products, there is a slogan: “Good investments, visible over time.” Zhu Zhefeng has previously explained his understanding of this phrase: “Some things are effective in the long run, but not necessarily in the short term. Our company has recognized this, so we focus more on long-term value rather than short-term aggressive gains.”

He elaborates on two meanings of this phrase: First, compound interest requires time to accumulate; short-term surges and drops are unlikely to generate real wealth. Second, many aspects related to company quality, manager integrity, and investment logic may be obscured by noise in the short term, but over longer periods, the truth will emerge.

“The greatest significance of fixed income + products is to provide investors with a controlled volatility alternative that can outperform pure bonds in a low-interest-rate environment, building a ‘fortress’ to withstand storms.” Zhu Zhefeng states that Xingquan Fengde’s product positioning is a “low-volatility multi-asset allocation plan.” He hopes investors can understand and accept this risk-return profile rather than expecting high yields.

The essence of investing is often not about “winning,” but about “not losing.” Through the adherence to “inner strength” and the flexibility of “external adaptation,” under the grand narrative of AI reshaping the world, Zhu Zhefeng and Xingquan Fengde are trying to become a kind of investment that time will ultimately reward—simple, solid, and enduring.

“Crossing cycles in uncertainty: Xingzheng Global Fund Fixed Income Enhancement Team’s ‘Slow Variable’ Philosophy”

Risk reminder: Non-periodic performance has been reviewed by the custodian bank. Xingquan Fengde Bond Fund is a bond fund, with expected returns and risks higher than money market funds but lower than hybrid or equity funds. Fund manager Zhu Zhefeng’s research experience: Master of Science. Previously served as researcher at Changsheng Fund, researcher at China Securities Global Fund, and assistant fund manager. Currently fund manager at China Securities Global Fund. Performance during management: Xingquan Fengde Bond Fund A since inception through 2026/2/27: (9.18%/6.26%); annual performance since inception: 2024/8/2-2024/12/31 (1.58%/3.69%), 2025 (5.76%/1.63%). Xingquan Fengde Bond Fund C since inception through 2026/2/27: (8.51%/6.26%); annual since inception: 2024/8/2-2024/12/31 (1.42%/3.69%), 2025 (5.34%/1.63%). Benchmark: ChinaBond Composite All-Price (Total Value) Index yield ×85% + CSI 300 Index yield ×5% + Hang Seng Index yield (converted at valuation exchange rate) ×5% + ChinaBond Convertible Bond Index yield ×5%. Past fund manager changes: Zhu Zhefeng (since 2024/8/2). Xingquan Hengxin Bond established 2020/01/20, A shares since then up to 2025/12/31: performance 38.13%, benchmark 1.53%; over 5 years: 2021 (11.90%/1.42%), 2022 (-4.44%/-1.05%), 2023 (7.94%/2.35%), 2024 (4.10%/2.27%), 2025 (2.75%/-2.06%). Xingquan Hengxin C since 2020/01/20 to 2025/12/31: performance 34.89%, benchmark 1.53%; over 5 years: 2021 (11.46%/1.42%), 2022 (-4.81%/-1.05%), 2023 (7.51%/2.35%), 2024 (3.68%/2.27%), 2025 (2.33%/-2.06%). Benchmark: ChinaBond Corporate Bond Total Index yield ×80% + ChinaBond Government Bond Total Index yield ×20%. Past fund manager changes: Gao Qunshan (2020/01/20–2022/03/13), Zhu Zhefeng (2022/03/01–present), Bu Xuehuan (2025/12/23–present). During management: as of 2025/12/31, Xingquan Hengxin Bond performance and benchmark: 11.68%/1.01%; Xingquan Huirong One-Year Holding Hybrid Fund performance and benchmark: 16.17%/8.45%. Performance during management has been reviewed by the custodian bank. The fund’s Class A shares charge a subscription fee: (M is subscription amount): M<5 million, 0.40%; M≥5 million, 1,000 yuan per transaction. Class C shares do not charge a subscription fee. Redemption fee rates (N is holding period): N<7 days, 1.50%; 7≤N<30 days, 0.75%; N≥30 days, 0. Management fee: 0.50% annual rate based on previous day’s net asset value. Custodian fee: 0.13% annual rate based on previous day’s net asset value. Class A shares do not charge sales service fees; Class C shares’ sales service fee is 0.40% annually. This material was prepared on March 4, 2026. The above fee rates may change; please refer to the fund legal documents and latest announcements. China Securities Global Fund commits to managing and operating the fund’s assets with honesty, diligence, and responsibility, but does not guarantee profits or minimum returns. Investors should carefully read the fund contract, prospectus, and other legal documents to understand the fund’s risk-return features, and assess whether the fund matches their investment objectives, time horizon, experience, and asset status. They should make independent judgments about the investment value and risks. Due to the relatively short operation history of Chinese funds, it cannot reflect all stages of stock market development. Past performance of other funds managed by the fund manager or other portfolios previously managed does not guarantee future performance. Past performance is not indicative of future results; fund returns are volatile. Investment in funds should be cautious; please choose carefully.