Gold's short-term "hedging failure," multiple broker-managed FOFs heavily invested facing setbacks, weekly and monthly negative returns frequently appear

Image source: Visual China

Blue Whale News, March 26 (Reporter Hu Jie) Recently, the prices of precious metals have experienced increased volatility, particularly in the gold market, where a short-term “safe-haven failure” phenomenon has directly dragged down the performance of FOF products that use gold as a “buffer asset.”

Blue Whale News reporters noticed that some FOF products under brokerage asset management have come under pressure due to heavy positions in related assets, resulting in subpar short-term performance for some products. These include Bohai Huijin Optimal Progress 6-Month Hold A (018674.OF), Xingzheng Asset Management Golden Qilin 3-Month Hold A (970194.OF), Guotai Huitong Jun Deyi 3-Month Hold A (952013.OF), and Zhongtai Xinghui Balanced 3-Month Hold A (015264.OF), among others.

According to Wind data, Bohai Huijin Optimal Progress 6-Month Hold A (018674.OF) has a return of -8.28% over the past week and -11.81% over the past month. The reporter reviewed its fourth-quarter 2025 report, which shows that the Nonferrous 50 ETF (159652) is the fourth-largest holding in this FOF, with a position of 8.38%. Harvest Resources Selected Stock C (005661) is the seventh-largest holding, with a position of 5.1%.

Image source: Wind

The report indicates that in terms of operational strategy, this FOF will focus on allocating to pro-cyclical sectors that benefit from interest rate cuts (such as nonferrous metals), continuing the “three main lines + one buffer” asset allocation framework: the Hong Kong stock main line, leading internet and financial assets; the A-share main line, deeply exploring new productive forces and high-dividend assets; and the U.S. stock main line, focusing on technology frontiers; gold serves as the core buffer asset to address geopolitical conflicts and potential tariffs.

On a tactical level, the FOF will dynamically adjust various asset exposures through regular rebalancing and reserve some cash to capture reverse opportunities during sudden fluctuations. “By controlling the overall volatility of the portfolio through the safe-haven properties of gold, we aim to maximize risk-adjusted returns while considering the investment experience.”

However, the decline in prices of precious metals represented by gold has also impacted the two major holding funds that this FOF emphasizes, resulting in a poor investment experience for investors. The Nonferrous 50 ETF (159652) has performed poorly in the past month, recording a return of -15.87%, with a maximum drawdown of -26.07%. Harvest Resources Selected Stock C (005661) has a return of -13.53% over the past month, with a maximum drawdown of -21.87%. Although this FOF reduced its position in the Nonferrous 50 ETF (159652) by 12.51% in the fourth quarter, the overall allocation to nonferrous metals is substantial, amplifying the short-term return volatility of this FOF, which has underperformed the CSI 300 over the past six months.

Xingzheng Asset Management Golden Qilin 3-Month Hold A (970194.OF) is an equity-biased mixed FOF, and its latest allocation maintains an overweight in the pan-technology and nonferrous sectors. Among them, the Southern CSI Shunwan Nonferrous Metals ETF (512400) ranks as the sixth-largest holding, accounting for 3.96% of the overall position.

The reporter noted that the Southern CSI Shunwan Nonferrous Metals ETF (512400) is a large-cap balanced style index fund that has fallen 5.92% in the past week and 16.78% in the past month, which in turn affects the short-term returns of Xingzheng Asset Management Golden Qilin 3-Month Hold A (970194.OF), with significant declines in phase returns. Its return over the past week was -6.72%, and -8.71% over the past month, with a maximum drawdown of -10.7%.

Image source: Wind

Guotai Huitong Jun Deyi 3-Month Hold A (952013.OF), which also holds the Southern CSI Shunwan Nonferrous Metals ETF (512400), has a holding proportion of 3.5%.

The fourth-quarter 2025 report shows that this FOF portfolio invests 80% in equity funds, maintaining a balanced allocation approach, using performance-oriented quantitative managers and balanced growth-style managers as the underlying configuration, skewing towards cyclically advantageous assets with relative returns, and structurally emphasizing overlapping sectors with multiple logical connections. For commodities, this FOF portfolio aims to seize performance growth opportunities arising from supply and demand mismatches, focusing on industrial metals (copper), gold, and chemicals.

However, this FOF’s recent returns have underperformed the CSI 300. Its return over the past week is -3.2%, and -6.37% over the past month, while the CSI 300’s returns during the same period were -2.59% and -4.19%, respectively; this FOF’s maximum drawdown over the past month reached -9.58%.

Image source: Wind

Zhongtai Xinghui Balanced 3-Month Hold A (015264.OF) has a return of -2.09% over the past week, -3.59% over the past month, and a maximum drawdown of -4.82% over the past month.

Its holding details show that Huashan Gold ETF (518880) ranks as the fifth-largest holding, with a position of 6.32%, but this ETF has fallen 8.69% in the past week and 11.41% in the past month, with the related commodity index being Gold 9999 (AU9999).

Image source: Wind

The reporter observed that with international gold prices previously reaching new highs, the upward space for gold ETFs has been limited. Starting from the fourth quarter of 2025, many FOFs have shifted to increase their holdings in gold stock funds (including gold stock ETFs). The aforementioned Nonferrous 50 ETF (159652), Harvest Resources Selected Stock C (005661), and Southern CSI Shunwan Nonferrous Metals ETF (512400) can all be categorized as the latter.

Market analysts point out that due to differences in mineral reserves and production costs of gold stocks, there is potential for Alpha extraction. However, gold stocks are essentially equity assets, and if the overall market’s risk appetite declines, gold stocks will also come under pressure, potentially diminishing the hedging effect and even turning the “buffer” effect into a volatility “amplifier,” which places higher demands on FOF allocation strategies.

The core advantage of FOF funds lies in diversifying risks through the multi-asset and multi-strategy allocation to capture more opportunities and enhance return potential. However, multi-asset allocation currently faces a homogenization issue in the types of assets allocated, and appropriate dynamism is needed to avoid the continuous accumulation of risks from single assets.

Tian Hongwei, assistant general manager of Zhongtai Asset Management and head of the portfolio investment department, stated that many managers’ allocation directions are highly concentrated in limited categories such as A-shares, U.S. stocks, Hong Kong stocks, bonds, and gold. In the context of increasing resonance between the volatility of traditional defensive assets and the stock market, it has become difficult to achieve the goal of risk reduction through multi-asset allocation. “In our view, the core of multi-asset allocation should be the understanding of macro and industrial cycles and risk control capabilities. This process is dynamically changing rather than static. Additionally, in the short term, when it is difficult to significantly increase the types of assets in multi-asset allocation, the diversification of allocation strategies (i.e., multi-strategy) should be strengthened.”