Since the beginning of the year, gold prices have experienced a notable rally, delivering impressive performance, and assets linked to the precious metal have consequently become a major focus for investors. It has been observed that recently, numerous institutions including China Merchants Bank and Shanghai Rural Commercial Bank have successively launched structured deposit products linked to gold. Their relatively short investment tenures and the feature of principal protection with floating returns have made them a "highly sought-after" option in the eyes of many stability-seeking investors. It is understood that the high-tier annualized yield of some gold-linked structured deposit products can exceed 1.7%, making them more competitive than the interest rates on fixed deposit products of the same maturity. However, a review of historical payout records shows that the final returns have mostly fallen into the medium-yield bracket. Interviewed experts point out that while structured deposits meet investors' dual needs for stable allocation and value appreciation opportunities, they still carry characteristics such as return uncertainty, liquidity constraints, and complex terms, necessitating investors to rationally assess their allocation proportion. Mostly Achieving Medium Returns What exactly is a structured deposit? Reportedly, a structured deposit is a type of deposit with floating returns, protected by deposit insurance. The principal is invested in a deposit, and the interest earned is partly used to invest in financial derivatives, such as gold, indices, or stocks, to pursue higher returns. Such products typically display two or three tiers of potential return ranges, with the actual yield being flexible and linked to the price movements of the underlying financial derivative. Taking China Merchants Bank as an example, the bank recently launched structured deposits linked to gold, with investment tenures ranging from 7 days to 181 days, all carrying a risk rating of R1 (low risk). The minimum deposit requirement is mostly around 10,000 yuan, with some products' projected annualized rates at maturity reaching up to 1.78%. "Judging from recent yield outcomes, the final return is highly likely to land in the medium tier," a China Merchants Bank client manager stated. "Gold prices have been rising over the past two years, already breaking through 1,000 yuan per gram. Unless there are significant surges or drops in the linked product's market price, the probability of triggering either the highest or lowest return tier is relatively low." A review of the bank's gold-linked structured deposits reveals that, based on past performance, the majority of historical products had an over 80% probability of ultimately achieving the medium return. For instance, a product issued on January 12th with a term of 24 days had three tiers of maturity annualized rates: low, medium, and high, at 1.00%, 1.45%, and 1.65% respectively. The distribution for the medium return accounted for 84.49%, while the high and low return ranges were distributed at 2.30% and 13.21% respectively. Furthermore, among three structured deposits linked to London gold recently issued by Shanghai Rural Commercial Bank, the historical yields for the 91-day product mostly fell within the middle range of the expected annualized return. Additionally, foreign banks like DBS Bank and HSBC have also launched similar USD-denominated investment products. Principal Protection Still Requires Rational Allocation Why are banks frequently launching gold-linked structured deposits recently? Zeng Fangfang, Head of Public Fund Product Operations at Simuwang.com, pointed out that, from a product structure perspective, structured deposits combine the features of "principal protection + floating returns," aligning with the dual demands of current investors for stable allocation and appreciation opportunities amidst capital market volatility and a declining interest rate environment. "Banks can also leverage this to capture market attention during periods of high gold price volatility, attracting risk-averse capital inflows," Zeng Fangfang analyzed. "This helps enhance retail AUM (Assets Under Management), expand non-interest income, and alleviate pressure from narrowing net interest margins. Furthermore, such products can effectively absorb the demand from stability-seeking clients溢出 following the transition to net-value-based wealth management, while also providing a channel for large amounts of maturing deposit funds, thereby optimizing the bank's balance sheet structure." Xiao Lin (a pseudonym) is a risk-averse investor who previously parked most of his funds in bank fixed deposits. As deposit rates declined, structured deposits gradually became his primary investment avenue. "I recently had a fixed deposit mature and just switched it to a gold-linked structured deposit," Xiao Lin shared. "At least the principal is protected. In the worst-case scenario, it's like keeping the money in a demand deposit. If I'm lucky enough to achieve a medium or high-tier return, it's still considerably higher than the yield on a fixed deposit of the same term." Research indicates that, for example, considering the longest-term fixed deposit product (5-year), the annual interest rates at major banks are mostly maintained around 1.30% currently. For shorter-term products, such as 1 to 6-month fixed deposits, the annualized rates at some banks have already fallen to levels starting with "0." It is important to note that although structured deposits promise principal protection, they remain investment products. For clients wishing to invest in these products, many banks still require investors to undergo an in-branch risk assessment at the counter before purchasing. Zeng Fangfang cautions investors that the currently popular gold-linked structured deposits carry return uncertainty, and actual yields can fluctuate significantly. She advises against blindly trusting the highest收益率 advertised in promotions. "Additionally, investors need to pay close attention to liquidity constraints," Zeng Fangfang further suggested. "These products often have a lock-in period, potentially tying up funds. Investors should match this with their own cash flow needs. Furthermore, investors should focus on the complexity of the terms and conditions, carefully reviewing details like return trigger conditions and tenure. They should look beyond the 'principal protection' facade, recognize that these are essentially floating-return products, assess their own risk tolerance, and rationally allocate their asset proportions."
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