In the second quarter, the equity allocation of active equity funds reached 84.5%, an increase of 0.2 percentage points from the previous quarter. Amidst the disturbances caused by tariff disputes and geopolitical conflicts, active equity funds focused on internal allocations, increasing their holdings in small and mid-cap growth and financial sectors.
According to a research report released by China Securities Co., Ltd., in the second quarter, the equity allocation of active equity funds reached 84.5%, an increase of 0.2 percentage points from the previous quarter. Amidst the disturbances caused by tariff disputes and geopolitical conflicts, active equity funds focused on internal allocations, increasing their holdings in small and mid-cap growth and financial sectors. In terms of industry allocation, the sectors with significant increases in allocation include: telecommunications, banking, non-banking financials, and defense. In the context of a lack of substantial new capital and continued net redemptions for active equity funds, the effectiveness of the crowding indicator has increased. Currently, the sectors with high crowding levels are: nonferrous metals, defense, cars, home appliances, electronics, and telecommunications; the crowding level in telecommunications has risen rapidly, while the crowding levels in cars, home appliances, and food and beverage have improved.
The key points from China Securities Co., Ltd. are as follows:
Equity Allocation: Increased by 0.2 percentage points to 84.5%, at the 95th historical percentile
The equity allocations for general stock funds, equity-oriented hybrid funds, and flexible allocation funds reached 88.9%, 87.2%, and 75.4%, respectively, with changes of +0.6 percentage points, 0 percentage points, and +0.5 percentage points from the previous quarter. These allocations are at the 75th, 84th, and 80th historical percentiles, respectively, since 2010.
Sector Allocation: Increased holdings in small and mid-cap growth and financial sectors
In terms of sector allocation, the proportion of the Main Board decreased by 2.6 percentage points (pct), while the proportion of the GEM increased by 2.4 pct, and the proportion of the Star Market increased by 0.2 pct.
In terms of market cap, the allocation proportion for large-cap stocks represented by the Csi 300 Index decreased by 2.6 pct, while the allocation proportion for ZHONGZHENG500 constituents increased by approximately 2.1 pct.
In terms of style, active equity funds mainly increased their allocation to growth and financial sectors, with the allocation proportions increasing by 3.2 pct and 1.9 pct, respectively.
Industry Allocation: The crowding in the communication industry has increased rapidly.
1) Sectors with significant increases in allocation: Communication, Bank, Non-bank Financial, and National Defense and Military.
2) Industries with significant underweight: Food and Beverage, Cars, Electrical Equipment, Machinery, Household Appliances, Computer;
3) Industries with high allocation concentration: Nonferrous Metals, Defense and Military, Cars, Household Appliances, Electronics, Communication; the allocation concentration in the Communication industry has increased rapidly, while that in the Cars, Household Appliances, and Food and Beverage industries has improved.
Hong Kong market: Significant increase in allocation to the healthcare sector
In the second quarter of 2025, actively managed equity funds in the Hong Kong market mainly increased their allocations to healthcare, non-bank financials, computer, bank, and basic chemicals sectors, while reducing their allocations to trade and retail, cars, electronics, media, and consumer services sectors.
Risk Factors:
The analysis is based on the top ten holdings disclosed in the fund's periodic reports, which may differ from the full portfolio. This method may not fully reflect the entire holding situation, and there may be some statistical and calculation errors. Additionally, there is a time lag in data disclosure, making it difficult to reflect the latest situation. Future risks include the potential for new fund launches to cool down and unexpected redemptions from existing funds. Therefore, the guidance derived from historical data analysis is relatively limited. The historical behavior of institutional investors does not necessarily predict future actions. The content of this report does not constitute any judgment or recommendation on market trends or specific sectors or stocks.
