The market's Matthew effect is becoming more pronounced, with tech funds enjoying the trend! Public funds are restructuring investment logic.

(Original Title: High Volatility Reshapes Logic! Dissecting New Public Fund Investment Strategies)

As low-volatility assets gradually lose their safety advantage and high-volatility tech assets lead fund performance, the traditional investment framework of public funds is also undergoing reshaping.

With the era of widespread gains in A-shares fading, the commonly used low-volatility strategies by fund managers are gradually losing effectiveness. In the past year, one in eight A-shares has doubled in price, mostly concentrated in high-elasticity tech sectors, while the downside risk of low-volatility stocks has increased inversely, resulting in a market pattern where strong profit-making effects coexist with extreme sector divergence. “The more stable, the more it falls; the more active, the more it rises” has become the new normal in pricing. Against this backdrop, public funds are restructuring their investment logic in line with the trend, focusing on global high-growth industries and using high-volatility tech assets as key tools to seek excess returns and reshape safety margins.

Extreme Profit Disparity, Tech Funds Enjoy the Market

Over the past year, the overall profitability of A-share funds has been impressive, but the industry sources of fund performance are becoming increasingly fixed, with tech growth sectors firmly occupying the core position.

According to statistics from Chuangjin Hexin Fund, as of May 5, 2026, out of 5,512 stocks in the market, 2,846 stocks (51.63%) gained more than 20% in the past year, with more than half of stocks delivering steady returns, maintaining a relatively strong overall market profitability. Among these, 1,583 stocks (28.72%) gained over 50%; 713 stocks (12.94%) doubled in price, meaning one in eight A-shares achieved a doubling in the year, with the high-yield group reaching a three-year high.

The aforementioned fund companies believe that the current market divergence is a structural pricing result driven by the resonance of industry prosperity and institutional holdings depth. Looking at the structure of doubling stocks, over 70% are concentrated in electronics, communications, computers, and other tech growth sectors, combined with some high-growth resource sub-sectors, clearly reflecting a consensus among funds on the main trend of high-growth industries. Conversely, over 40% of stocks have still experienced negative returns in the past year, solidifying a market landscape of extreme polarization—an all-raising market is no longer the norm. Achieving investment returns now relies heavily on precise judgment of industry prosperity and capital flow trends, with tech sectors becoming the core variable in widening market performance gaps.

Fund product performance further vividly reflects the extreme market divergence. Wind data shows that among the top 50 active equity funds, nearly all are aligned with AI tech narratives; for example, GF Vian Smart Selection Fund has achieved a return of 112.29% this year, heavily invested in core AI supply chain segments like fiber optics, storage, and liquid cooling. In stark contrast, the three worst-performing active equity funds this year are all heavily invested in consumer sectors, with the worst losing up to 25%, highlighting the performance split driven by sector prosperity divergence.

Public Funds Embrace High Elasticity, Changing the Safety Margin of Low Volatility

Against the backdrop of tech sector leadership and the popularity of thematic funds, the A-share market is also experiencing two deep-seated changes: normalization of high volatility and market leadership concentration. The long-held low-volatility factor in public fund investment is gradually losing its effectiveness, with valuation systems and trading logic facing reconstruction.

From a volatility perspective, data from Chuangjin Hexin Fund shows that the average volatility of A-shares in the past year was 3.46%. Of 1,232 stocks, 22.35% had volatility above the average, reaching a three-year high. Many high-growth tech leaders have annualized volatility exceeding 8%, significantly deviating from the market median, highlighting the euphoric trading sentiment and intensified long-short capital battles in hot sectors.

It is noteworthy that the historically effective logic of low-volatility excess returns has begun to fail in reverse. Traditional defensive assets with low valuation and stable volatility are seeing their excess advantage weaken, and the market is moving into a pricing pattern of “the more stable, the more it falls; the more active, the more it rises.”

“Wealth volatility is no longer equated with high risk; it has become a necessary condition for public funds to earn excess returns. The overall volatility center of A-shares has entered a phase of systemic elevation,” said Wei Fengchun, Chief Economist of Chuangjin Hexin Fund. He believes that current capital is more inclined to chase high-elasticity tech targets supported by both industrial policies and technological iteration. Investment strategies are shifting from traditional defensive positions to trend-based sector battles.

Meanwhile, the top-tier effects in market value and trading volume continue to strengthen. Market value-wise, the top 10% of stocks account for over 60% of total market value, and the top 20% surpass 70%, with less than one-fifth of core targets holding over 70% of the total market value. Besides tech giants, traditional industry leaders like commercial banks also hold significant market value weights, with bank giants alone accounting for over 9%, further consolidating their influence over market pricing.

Fund managers’ holdings are also deeply affected by the siphoning effect of core stocks. The concentration trend in trading volume is even more pronounced: in the past month, the top 80 stocks by daily average trading volume accounted for over 15% of total market volume, mainly concentrated in high-growth tech sectors like AI, optical communications, and semiconductors, locking in market liquidity. Conversely, many small and mid-cap stocks with low trading activity (less than 50 million yuan daily) face liquidity shortages, with some even in liquidity drought, further highlighting the market’s Matthew effect.

Abandon Old Frameworks, Focus on Tech in the New Normal

In response to the deep structural adjustments in A-shares and the dominance of tech trends, public funds have formed a consensus on holding tech assets, avoiding the pitfalls of rigid traditional frameworks.

Morgan Stanley analysts note that US AI capital support continues to expand, sustaining high prosperity in the global computing power industry; domestically, AI industry investments are keeping pace with global trends, with growth potential expected to be continuously released. As infrastructure construction accelerates, the domestic computing power industry’s prosperity is expected to steadily rise. In the short term, growth rates of domestic computing power companies are relatively slow, and valuations remain high, but with ongoing iteration of large domestic models and increased capital expenditure by cloud providers, valuation and performance growth are gradually aligning, and capital allocation is likely to shift steadily toward domestic computing power sectors.

Wei Fengchun, Chief Economist and Fund Manager of Chuangjin Hexin Fund, states that analyzing tech markets requires a global macro perspective. The current global Kondratiev cycle has just begun, and the long-term industry landscape remains uncertain. Investment is essentially about rational risk pricing, respecting the inherent “animal spirits” of technological innovation, and not dismissing the growth potential of emerging industries. Practically, it is crucial not to apply outdated market rules from previous cycles to the new forms of tech sectors. Looking at the performance of major global markets from 2026, tech stocks in the US, China, Japan, and South Korea show clear structural differentiation, and the current tech market in A-shares is a microcosm of the deep restructuring of the global tech industry landscape.

Yang Weiwei, Fund Manager of Great Wall Innovation-Driven Fund, believes that overseas AI industries have undergone four years of intensive investment, leading to a mature supply chain with limited overall upside, only offering some localized structural opportunities. In contrast, China’s AI industry is developing at a relatively slower pace, with the full industry chain’s value potential not yet fully unleashed. The sector has a longer growth cycle and greater upside space. As domestic large models accelerate their development, the demand ceiling for the computing industry continues to rise, making long-term growth logic solid and reliable.