According to a Financial Associated Press report on April 17 (Reporter Zhou Xiaoya), the annual performance rankings of public funds are also being reshuffled amidst a new round of market adjustments.

Only half a month has passed since the end of the first quarter, but the scene where humanoid robot-themed products once dominated the Top Gainers list has changed. As of April 16, two new SSE Health Care theme Index funds have appeared in the top 10 performance rankings of active equity funds this year.

Among the SSE Health Care theme Index funds, over 60% have achieved positive returns this year, with the highest having a net value return exceeding 44%. At the same time, there has been an accelerated Inflow into CSI Health Care ETFs.

SSE Health Care theme Index funds are overtaking.

As of April 16, the top 3 products for active equity funds (ordinary Stock Funds + Hybrid Funds) have all changed.

The two BSE theme products, China Securities Co.,Ltd. Innovative Small and Medium Enterprises Selected Two-Year Open-end and China Securities Co.,Ltd. BSE Selected Two-Year Open-end, are ranked first and second in annual net value returns for active equity funds so far this year with 51.71% and 49.46%, respectively, while the third place is Changcheng Medical Industry Selection, which has a net value return of 44.55% this year.

The previous first quarter champion, Penghua Carbon Neutrality theme, has dropped to fourth place, with an annual net value return falling from 60.26% to 42.76%.

Looking only at the performance since the second quarter, the net value of Great Wall Medical Industry Selected has also increased by 14.05%, temporarily leading active equity funds, which has rapidly improved this fund's active equity fund ranking from 20th in the first quarter.

In addition to this fund, Yongying Medical Innovative Intelligent Selection also ranks among the top ten active equity funds with a year-to-date net value return of 36.35%. Many products related to the medical theme, such as Huazhong Medical Biology, Bank of China Hong Kong Stock Connect Pharmaceuticals, Bank of China Great Health, Bank of China Innovative Medical Management, Ping An Medical Selection, and Huatai-Pb Health Life One-Year Hold have also achieved more than 30% year-to-date net value returns.

Overall, among the 151 medical theme funds included in the statistics, 98 have achieved positive returns this year, 30 have cumulative net value increases of over 15% this year, and 13 have exceeded 20%.

Inflow of funds has accelerated.

The medical theme ETF has welcomed accelerated inflow of funds. Wind data shows that since April, Huabao CSI Medical Service ETF has been net subscribed 3.373 billion shares, exceeding the total increase of the ETF's fund shares this year (2.565 billion shares), bringing the total fund share to a peak since listing (79.335 billion shares).

In addition, E Funds Csi 300 Health Care ETF has also been net subscribed 2.58 billion shares this month; GF CSI Hong Kong Innovative Drugs has been net subscribed 1.959 billion shares, with year-to-date net subscriptions increasing to 2.417 billion shares.

ICBC National Index Hong Kong Stock Connect Innovative Drugs ETF and Huatai-Pb National Index Hong Kong Stock Connect Innovative Drugs ETF were also net subscribed over 0.5 billion shares in April. In the fund issuance market, Guotai GEM Health Care ETF and Yongying CSI Hong Kong Stock Connect Medical Theme ETF also successively established in April, collectively with a scale exceeding 0.4 billion.

As the first medical theme fund to report in the first quarter of 2025, Yongying Medical Health was net subscribed 21.79 billion shares in the first quarter of this year.

Is the Health Care theme rising?

Does the short-term performance rebound mean that the Health Care theme has risen again? Liang Furui, the fund manager of Great Wall Medical Industry Selection, frankly stated: “The temperament of the Innovative Drugs Sector has really changed.”

He believes that the Innovative Drugs Sector is more determined by supply rather than demand, and in fields with weak supply and strong demand, new drugs are more likely to become "best sellers"; in the short term, the innovative drug market may be supported by important meetings in April and May.

In addition, he mentioned that innovative drug companies are expected to welcome a significant improvement in their financial reports, "this may be due to rapid revenue growth, or it may benefit from BD's 'immense wealth', which is indeed a resonant factor in the industry that cannot be ignored."

Chen Jinwei, a fund manager at Penghua, also mentioned a bullish outlook on the pharmaceutical sector, stating, "We believe that the pharmaceutical industry is not underestimated in parts, but is comprehensively underestimated."

Revisiting the strongest pharmaceutical tracks over the past few years, such as the consumer healthcare sector in 2019-2020, which was supported by Consumption Upgrade, reflecting high-end consumption represented by Moutai in the All Market; in 2021, the best-performing low-quality consumables were driven by the overseas pandemic leading to supply chains shifting domestically, with high prosperity in the export industry chain, reflecting one of the strongest main lines of the year, manufacturing exports.

He analyzed that on the micro level, the changes in the industrial logic of each sub-industry within pharmaceuticals each year are the dominant factors for their relative performance. "But is there also a possibility that the performance of these sub-industries is a reflection of a specific macro environment in the All Market?"

Based on this, he is more optimistic about the outpatient consumption healthcare that is currently undervalued by the market. In his view, the future domestic demand space for consumer attributes will be larger, but the opportunities in consumer healthcare may not be about last round's Star Stocks; he is more bullish on the essential need properties, particularly with the end-users being the elderly, benefiting from aging with home medical devices and pharmacies.

The past focus of the Medical Industry has been on demand research, but in the last two or three years, apart from Innovative Drugs, the demand of most sub-industries has been suppressed, and pharmacies may be the first sub-industry within the Medical Industry to experience a contraction in supply. Traditionally, in industries like Consumer and Cyclical, there have been tenfold stocks driven by supply even in environments where demand is stagnant or shrinking. We believe pharmacies have this potential.

Additionally, the innovation chain including Innovative Drugs and Innovative Medical Devices is also promising in Chen Jinwei's view. He noted that among all Technology companies in the All Market, Innovative Drugs have not yet become inflated, and the global competitive advantage of China's Innovative Drug companies is significantly underestimated.

Liang Furui stated that one might be more optimistic about the Innovative Drugs Sector. This is also because overseas business development has yet to materialize, and the results of quarterly and annual reports are still to be revealed. The influx of incremental funds driving the valuation increase of the sector is also worth looking forward to.