Active equity funds' technology stock holdings approach 35%. Is the sector overheating or a structural opportunity?

Questioning AI · As Tech Stock Holdings Approach a Critical Threshold, What’s the Rationale for Adding Positions?

As a fund category primarily seeking to generate excess returns, the related developments of active equity funds are drawing market attention. Recently, the 2025 annual reports of public funds have all been released, and the latest shifts in holdings by active equity funds have come to light.

From the perspective of allocation to industry directions, the long-term logic for the technology sector remains unchanged. By the end of 2025, active equity funds will have increased their holdings in the technology sector from 29.59% at mid-year to 33.10% at year-end; the manufacturing sector follows closely, with holdings rising from 23.70% at mid-year to 24.20% at year-end; the resources sector shows the most pronounced increase, surging from 8.93% at mid-year to 13.55% at year-end.

(Data source: YueSheng Financial Fund Platform)

YueSheng Financial investment advisor Li Haonan told a reporter from 21KuaiXun that in the second half of 2025, public funds focused on adding positions in the technology and manufacturing tracks, mainly benefiting from the successive momentum of technology sub-industries such as optical modules, storage, domestic GPUs, and semiconductor equipment, which has driven a clear recovery in market sentiment. By the end of 2025, the proportion of active equity fund holdings in the technology sector is nearing the 35% critical threshold, so it is necessary to judge dialectically whether there is overheating.

Specifically, at the Shenwan first-level industry level, compared with the 2025 interim report, by year-end, the proportion of active equity fund holdings in the electronics industry increased from 16.98% to 19.93%, keeping it as the top overweights sector unchanged; power equipment moved up from the previous third-largest overweights sector to become the second-largest, with a holding proportion of 10.10%; although the pharmaceutical and biological sector saw trimming, it still maintained a 9.22% holding proportion, ranking third.

It is worth noting that non-ferrous metals and communication both saw clear position increases by active equity funds. By the end of 2025, their holding proportions reached 7.70% and 7.39% respectively, becoming the newly added fourth- and fifth-largest overweight sectors and turning into new allocation highlights; meanwhile, the automotive sector and the food and beverage sector were trimmed and dropped out of the top five overweight sectors.

(Data source: YueSheng Financial Fund Platform)

Looking at the magnitude of active rebalancing, compared with the 2025 interim report, by the end of 2025, the top five industries with the largest reductions in active equity fund positions were: banks, defense and military industry, household appliances, media, and pharmaceutical and biological; the top five industries with the largest increases were: non-ferrous metals, power equipment, non-bank financials, basic chemicals, and oil and petrochemicals.

In terms of sector allocation, active equity funds show a greater preference for the ChiNext market, whose growth potential is more clearly defined. YueSheng Financial data shows that as of the end of Q4 2025, active equity funds’ holdings in main-board stocks accounted for about 58.48% of market value, down 0.49% from the end of the previous quarter; the allocation to the ChiNext board increased by 1.32%, continuing the upward trend; the STAR Market decreased by 0.69%, and the Beijing Stock Exchange decreased by 0.14%.

Revisiting the market risk appetite in 2025, Li Haonan believes that public funds are making a structural shift from “large-cap main boards + high-valuation STAR Market” to “the ChiNext board, which has stronger mid-term realization ability and clearer growth prospects.” Their tolerance for early-stage technology companies with high valuations is declining, and growth within the market is going through “de-bubbling.” Overall, the style has not shifted fully into a bull trend; public funds remain cautiously aggressive, and overall risk appetite has not increased significantly.

Looking ahead, China International Capital Corporation has a cautiously optimistic view on the persistence of excess returns for active equity funds this year. At the market level, emerging industry trends keep surfacing and sector rotation keeps accelerating, providing structural excess return opportunities for active management; at the institutional level, new regulatory rules are forcing capability upgrades, and the construction of a platform-based investment research system will safeguard the stability of excess returns; at the capital level, incremental capital entering the market is expected, and redemption pressure from existing funds is gradually easing at the margin, which may help form a positive cycle of “performance—scale.”

(Disclaimer: This article is for reference only and does not constitute investment advice. Investors act at their own risk.)