How Should Public Funds Navigate the Final 100-Day Sprint?

This year, embracing the technology narrative has become a key strategy for fund managers to achieve high returns, though sharp volatility in overheated sectors continues to test investors. Notably, even some consumer-focused funds have adopted a "marching straight into the tiger’s den" approach, willingly enduring fluctuations to invest in tech stocks. This underscores how sluggish consumer sectors still struggle to attract fund repositioning. Against this backdrop, another facet of tech stocks is coming into focus—those that offer resilience against valuation risks without deviating from the tech narrative are gradually becoming the preferred choice for many tech fund managers rebalancing their portfolios.

Supported by ample liquidity and improved market risk appetite, actively managed equity funds have seen their best performance in nearly three years this year. The top-performing fund, Yongying Technology Selective Hybrid, achieved a return of 194.49% in the first three quarters. Forty-two actively managed equity funds doubled their returns during this period, while over 900 such products yielded returns above 50%, accounting for nearly 20% of the total.

Chu Wenyu, Deputy General Manager of the Research Department at Great Wall Fund, noted that active capital in the market has been concentrated in sectors with strong short-term catalysts and high growth potential, rapidly driving up sector popularity and creating a "wealth effect." However, as indices reach short-term highs, pressure for consolidation and rotation intensifies, potentially leading to periodic adjustments and sector rotation. Investors should monitor potential risks, including disruptions to technological innovation due to external factors and ongoing global geopolitical tensions.

Funds that hastily pivot to tech and aggressive strategies in the final stretch may face net asset value (NAV) declines in the coming 100 days. For example, Nanhua Ruiying Mixed Fund, heavily invested in consumer stocks, experienced a significant NAV deviation on October 10. While nearly all of its top ten holdings rose, the fund’s NAV plummeted 8.4%, mirroring the tech sector’s downturn. It became the worst-performing actively managed equity fund that day, erasing most of its year-to-date gains in a single session.

Yang Delong, Portfolio Manager of Qianhai Kaiyuan Shanghai-Hong Kong-Shenzhen Juruí Fund, suggested that given the substantial short-term gains in some stocks and significant profit-taking pressure in certain tech names, investors may consider locking in profits and reducing exposure to such assets. He also warned that the sharp decline in U.S. stocks could negatively impact A-shares and Hong Kong stocks in the coming week.