How to allocate personal pension in a volatile market?

The Middle East conflict is now approaching one month, and both intensity and spillover scope have clearly broadened. Global markets have recently been continuously shrouded by risks such as the Iran conflict. In the first half of this week, the U.S. and Iran were locked in a tense standoff, each side applying extreme pressure on the other. Market panic sentiment was further amplified, and the market repeatedly swung back and forth between the two sides’ face-off cycles of “escalation - de-escalation - escalation.”

Amid the turbulence, how do you stay steady and hold on tight—“stabilize” your investment mindset?

Actually, in the face of a global synchronized downturn, panic is the least useful, while response is the most useful.

The real safe harbor is never a single product or a single sector, but rather a system that isn’t swayed by emotions.

Geopolitical trends, oil price peaks, and market bottoms cannot be accurately predicted. What you can do is to acknowledge the reasonableness of volatility, not guess the bottom, not stubbornly hold through, and not bet on one-way moves.

By broadening your perspective, every major geopolitical crisis, in the long arc of history, ultimately is just a footnote to the long-term trend.

UBS’s《2026 Global Investment Returns Yearbook》, based on analysis of the return-to-geopolitical threat index of 126 years and stock market returns, finds that whether for the short term of one month or the long term of one year, the two are almost unrelated.

Those who are in a hurry to get off the train during geopolitical crises and have made overly frequent trades—looking back, they may only have shared the trading fees with the market.

A more rational approach is to observe how institutions’ “smart money” quietly acts when the market pulls back.

“Smart money” uses broad-based ETF “to sweep up inventory”

According to First Financial Daily, on March 23, the three major indices fell sharply. When market sentiment was low, **broad-based ETFs—despite being heavily allocated by long-term funds represented by the “national team”—**became the main force pulling in capital, with total net inflows of over RMB 15.6 billion. Meanwhile, the total net inflows of ETFs across the entire market that day exceeded RMB 19 billion, setting a new high in nearly 13 trading days.

Such a storyline is actually nothing new. Less than a year earlier, on April 7, 2025, due to a sudden disruption from U.S. tariff policy, the Shanghai Composite Index plunged by more than 7%. At that time, Central Huijin, China Chengtong, China Reform Corporation, and others announced that they would increase their holdings of ETFs one after another. On that day, over RMB 57 billion in funds flowed net into broad-based ETFs. In A-share history, large-scale net inflows into broad-based ETFs are often highly correlated with the market’s bottom-area region.

Looking back, these smart money investors indeed bought at good timing.

Of course, this is not an encouragement for everyone to All in on so-called “picking the bottom.” The market changes in an instant. Compared with ordinary retail investors, there is a significant information gap between retail investors and institutions, and blind bottom-picking may end up picking halfway up the mountain.

The rational option is to return to allocation, using balance to counter extremes. In the short term, volatility control is the focus, and defense is the foundation. To a certain extent, move away from high-volatility, high-valuation, and high-leverage products, and instead consider assets with stable cash flows, reasonable valuations, and that benefit from inflation or have attributes of rigid demand—for example, low-volatility dividend/“risk premium” style, or broad-market broad-based ETFs.

From last year’s shift from growth rotation to the current value style, facing an external environment where volatility is intensifying, capital has started to seek core asset allocations with relatively higher certainty. Because broad-based ETFs diversify risk and represent the overall market trend, they have become an important choice for investors seeking to hedge against risk. This round of capital inflows is also mainly tilted toward large-cap value broad-based ETFs.

“Barbell strategy”: conservative + proactive

For friends who make allocations through personal pension accounts, you can consider a “barbell strategy.”

A barbell strategy (Barbell Strategy), put simply, is an investment method that balances risk and return through extreme allocation: putting most assets (such as 80%-90%) into extremely safe hedging instruments, while allocating a small portion of assets (such as 10%-20%) into high-risk, high-upside areas, avoiding assets where both risk and return are at a moderate level, thereby forming a “heavy on both ends, light in the middle” structure.

For example, if your marginal tax rate is 20% and you contribute 12k per year, you can get 2,400 yuan in tax credits—then use these 2,400 yuan to invest monthly in Y-share index funds with higher allocation flexibility. Even if you lose money, you are only losing this “extra benefit,” with limited downside space but large upside potential;

the remaining 9,600 yuan can be allocated to pension savings, government bonds, or conservative/stable pension target-date funds, with the latter acting as the ballast while the former seeks higher returns on the premise of controlling volatility.

More specifically, on the heavily allocated “conservative” side, investors can choose Huaxia Conservative Pension One Year Y (017359). Judging from its top holdings, most are intermediate-to-short-term bonds, money market funds, and pure bond funds, which have experienced lower drawdowns in various market turbulences.

On the other side of the “proactive” end, investors can choose monthly investments in large-cap broad-based funds, such as Huaxia CSI A500ETF Index FundY (022979). Simply put, buying large-cap broad-based ETFs is like buying the country’s fortunes. Conflicts will eventually ease, and emotions will eventually settle. The economic规律, industrial trends, and the country’s resilience will once again become the main storyline of the market.

From a medium-term perspective, China’s complete industrial chain, stable energy supply, and the新能源 industry that is continuing to rise could demonstrate unique cost advantages and competitiveness under a global environment of stagflation.

And compared with a one-time investment, the monthly investment (“staggered entry”) approach is more recommended when the market is volatile. Taking the monthly investment in the CSI A500 index as an example, even if you accidentally start investing near a few historical major tops, if you stick with monthly investments, compared with a one-time investment, not only does the proportion of achieving positive returns increase significantly, but the magnitude of drawdowns in between is also greatly smoothed. Moreover, when the next bull market arrives, you often reap substantial gains.

Source of data: Wind. This simulated return is based on historical simulation returns. The simulated returns do not represent actual historical returns, nor do they represent any future expected returns. Past performance of an index does not predict its future performance, and it does not represent the returns of fund products. Starting from near the peak at 1 and investing monthly on a fixed amount basis, the annualized returns for 1 year, 2 years, 3 years, up to the next bull market (2015/6/15) are respectively -20.8%, 9.6%, 4.1%, and 10.0%. Starting from near the peak at 2 and investing monthly on a fixed amount basis, the annualized returns for 1 year, 2 years, 3 years, up to the next bull market (2021/2/18) are respectively -6.2%, 3.3%, -0.5%, and 7.0%. Starting from near the peak at 3 and investing monthly on a fixed amount basis, the annualized returns for 1 year, 2 years, 3 years, up to the next bull market (2021/2/18) are respectively -10.7%, 5.1%, 12.0%, and 11.8%. Starting from near the peak at 4 and investing monthly on a fixed amount basis, the annualized returns for 1 year, 2 years, 3 years are respectively -5.5%, -4.0%, and -6.0%. The monthly investment date is the day-of-month in the month after the investment start date. This calculation does not consider subscription and redemption fee rates. The compound annual average return is calculated by splitting the chosen time period into n intervals based on the calculation period (by day), and the compound annual average return = [(1 + daily return) ^ (365 / number of days in the calculation period) − 1] × 100%.

Every time the market experiences severe volatility, at its core, it is a game between “human fear” and “pricing logic.” Humans are naturally risk-averse. A consistent investment strategy, such as the barbell strategy and monthly investment strategy, is like a steadfast “anchor” in the chaos of the disorderly era, ensuring we can stay “in the game” even in the toughest moments—until the rain clears and the skies brighten.

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