Seize the market correction opportunity as some new funds accelerate their "building positions"

Recently, the market has adjusted, and the issuance of new funds has cooled down somewhat; however, many fund companies are still launching new products at low levels against the trend. At the same time, many recently established funds are quickly building positions. Institutional insiders indicate that short-term external disturbances do not alter the mid-to-long-term investment value of A-shares. The rapid position building of new funds during the market adjustment is due to optimism about mid-to-long-term investment opportunities in A-shares, hoping to actively seize the opportunities brought by the adjustments. However, some new funds are being cautious with their position building, remaining inactive after establishment.

New fund issuance has cooled down

Recently, the A-share market has experienced fluctuations and adjustments, leading to a decrease in the number of new fund issuances compared to the previous hot period. According to Wind data, in the first week of March (March 2 to March 6) and the second week (March 9 to March 13), 45 and 40 new funds (based on subscription start dates) were launched, respectively. In the third week of March (March 16 to March 20), the number of newly issued funds dropped to 25. As of March 26, 22 new funds began issuing this week.

Market fluctuations have somewhat affected investors’ enthusiasm for subscribing to new funds, but some funds have still completed fundraising in a relatively short time. Funds such as Xinyuan Cycle Select and Dongfanghong Cycle Research Select completed their fundraising in just one day, while the fundraising time for the E Fund CSI Hong Kong Stock Connect Information Technology Comprehensive ETF and Anxin Balanced and Far-reaching Mixed Fund was only 5 days. Notably, the fundraising scale of the Anxin Balanced and Far-reaching Mixed Fund reached 2.015 billion units.

Some fund companies have chosen to launch new products against the trend during market adjustments. Wind data shows that from March 27 to April 4, another 27 new funds began issuing.

It is worth mentioning that the China Securities Regulatory Commission has recently approved a new batch of hard technology theme fund products, totaling 15 products, including passive funds tracking the “Double Innovation” artificial intelligence index and actively managed funds based on the China Strategic Emerging Industries Index, focusing on core technology and the growth direction of strategic emerging industries. The Bank of China CSI Innovation and Entrepreneurship Artificial Intelligence Index began issuing on March 23, while the Xingyin CSI Innovation and Entrepreneurship Artificial Intelligence Index and the E Fund CSI Innovation and Entrepreneurship Artificial Intelligence ETF began issuing on March 27 and March 30, respectively. Other approved products are expected to gradually start fundraising soon.

New funds’ pace of position building varies

Recently, in light of market corrections, many newly established equity funds are actively seizing opportunities brought by the market downturn and are quickly building positions. The Xinyang Medical Selected Stocks Fund was established on March 4, and by March 6, the net value of its A-share had already changed to 0.9999 yuan, indicating that the fund may have started building positions.

The Yifangda Research Smart Select Stock Fund was established on March 17, and by March 20, its A-share net value had changed to 0.9988 yuan. The net value of the Jiao Yin Vision Selected Mixed Fund, which was established on the same day, also quickly changed; on March 20, its A-share net value became 0.9990 yuan. The net value of the Huatai Pinebridge Consumer New Opportunities Mixed Fund, established on March 10, changed to 1.0014 yuan on March 13 and then to 0.9924 yuan on March 20. The changes in net value indicate that these new funds may have quickly built positions shortly after their establishment.

However, some funds have chosen to remain inactive. The Baijia Bayou Growth Mixed Fund was established on March 19, and currently, its net value remains at 1 yuan. The net values of other newly established funds such as the PICC Ruiyi Smart Select Mixed Fund, Huaan Innovative Momentum Mixed Fund, Invesco Great Wall Hengrui Selected Mixed Fund, and Anxin Balanced and Far-reaching Mixed Fund also remain at 1 yuan, suggesting that they may not have started building positions.

A-shares’ mid-to-long-term direction remains unchanged

Industry insiders indicate that the rapid position building of new funds during market adjustments is due to optimism about mid-to-long-term investment opportunities in A-shares, hoping to actively seize the opportunities brought by the adjustments. Looking ahead, Invesco Great Wall Fund believes that the short-term market has already released considerable risks but is still affected by geopolitical disturbances, with a relatively optimistic medium-term outlook. The trend in the AI industry is bringing productivity improvements, driving growth in many sectors. From an allocation perspective, given the current uncertainty in external situations, attention can be paid to defensive sectors and niche industries less impacted by geopolitical shocks: first, the upstream energy and raw materials sector, especially those that have been reducing capacity for several years and benefit from supply shocks; second, defensive sectors, particularly high-dividend targets with strong cash flow and dividend-paying capacity; third, external demand lines with intact fundamentals; fourth, growth tracks that combine trends in prosperity with certainty in earnings realization.

Weifeng Chun, chief economist at Changjin Hexin Fund, states that under the major trend of technology revolution and industrial upgrading led by AI, geopolitical situations will only alter investment rhythms and reinforce structural differentiation, but will not change the mid-to-long-term direction. The current market is in a turbulent phase, and uncertainty remains. Investors should adhere to a strategy focused on stability, concentrating on certainty assets. The “HALO strategy” (heavy assets, low elimination rate) and hard asset strategies continue to be effective. It is crucial to firmly position in hard assets such as energy and coal that possess safety attributes and supply-demand rigidity to build a secure cushion for the portfolio. The technology growth direction should not be easily abandoned; focus should be on genuine growth varieties with real technological barriers and performance realization capacity, especially around AI infrastructure, advanced computing power, robotics industry chain, and biomanufacturing.

Minsheng Jiyin Fund states that geopolitical conflicts have shifted the market’s core contradiction towards supply security and strategic resources, with the driving logic shifting from risk aversion to concerns over re-inflation. Rising oil prices reinforce inflation expectations, suppressing prospects for Federal Reserve rate cuts, impacting most assets. The recent upward trend in oil prices leading to re-inflation trades and delayed Fed rate cut expectations may have a certain impact on market risk appetite, suggesting that A-shares may primarily experience fluctuations, with significant market structure differentiation. If geopolitical conflicts ease, risk appetite and liquidity are expected to recover. Overall, under liquidity shocks, the short-term market may primarily focus on structural trends, with recommendations to pay attention to opportunities in AI and resource-related industries.

(Edited by Xu Nannan)

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