Undeterred by gold price volatility, diversified allocation ensures the stable operation of FOF.

Since the second quarter of this year, international gold prices have corrected from highs, with the SGE Gold 9999 index falling over 12% in the past three months. Against this backdrop, the performance of FOF products heavily allocated to gold has become a market focus.

Industry insiders point out that the sharp volatility in gold has not fully transmitted to FOF net asset values, reflecting that multi-asset allocation still plays an important role in smoothing portfolio fluctuations. As the gold market shifts from a unilateral upward trend to high-level volatility, fund managers' asset allocation and position management capabilities are becoming core variables affecting FOF performance.

Limited Impact of Gold Price Adjustment on FOF NAV

Since the second quarter of this year, gold prices have entered a phase of consolidation and adjustment after a rapid earlier rise, with the SGE Gold 9999 index falling over 12% cumulatively in the past three months. In this context, the performance of FOF products previously heavily weighted in gold has attracted market attention.

According to statistics from Securities Times reporters, as of the end of the first quarter of 2026, among FOF products with the highest allocation to gold ETFs, although their overall performance over the past three months did not rank among the top in their category, most products still maintained positive returns. Some even outperformed the CSI 300 Index over the same period, with net value performance significantly better than the gold market's concurrent trend.

Specifically, products such as Qianhai Kaiyuan Yuzhe Dingkai, China Securities Construction Investment Ruixuan 6-month Holding A, Dacheng Diversified Allocation 3-month Holding A, Nanfang Haoyi Jinqu Selecting One-year A, and BOCOM Xingxiang One-year A had gold ETF allocation ratios exceeding 10% in the first quarter. In terms of performance over the past three months, as of June 28, the five products showed divergence: Qianhai Kaiyuan Yuzhe Dingkai returned 10.94%, while China Securities Construction Investment Ruixuan 6-month Holding A returned -3.24%.

Overall, although FOFs heavily allocated to gold did not fully benefit from the equity market rally led by tech stocks in the second quarter, compared to the SGE Gold 9999 index's concurrent decline of over 12%, their portfolio net values performed more steadily, indicating that the sharp fluctuation in gold prices was not fully transmitted to product net values.

Subtle Shift in FOF's Gold Allocation Strategy

In fact, since the first quarter of this year, FOF's approach to allocating gold assets has been subtly shifting.

According to China Merchants Securities statistics, the strong rally in gold in 2025 drove FOFs to continuously increase their holdings of gold ETFs. The number of FOFs heavily allocated to gold rose rapidly from the first quarter of 2025, peaking at 155 in the third quarter, accounting for 30.75% of all FOFs.

However, as gold prices experienced a significant correction and volatility remained high, fund managers began to gradually adjust their allocation strategies. In the fourth quarter of 2025 and the first quarter of 2026, the number of FOFs reducing gold holdings reached 116 and 98, respectively, both higher than the number increasing holdings during the same periods. As of the first quarter of 2026, the number of FOFs heavily allocated to gold had fallen to 131.

In terms of position changes, some products have actively realized gains. For example, among products with the highest gold ETF allocation in the first quarter, China Securities Construction Investment Ruixuan 6-month Holding A reduced its gold ETF holdings by approximately 700k units compared to the previous quarter, lowering the gold allocation ratio by over 14 percentage points, making it one of the products with a larger reduction.

It is worth noting that, among the above products, the actual proportion of gold in the portfolio is not as high as one might imagine. A fund evaluation professional in Shanghai pointed out that this indicates that gold serves more as a portfolio allocation tool rather than a primary source of returns—FOF's underlying holdings remain predominantly equities, bonds, and other assets.

The professional further analyzed that the continuous rise in gold over the past two years has been more of a trend opportunity, leading many FOFs to moderately increase gold allocation. However, this year, gold volatility has significantly increased, weakening the logic of simply increasing gold allocation. Controlling positions and dynamically adjusting allocations have become core issues for fund managers.

Future Focus: "How to Allocate Gold"

The aforementioned fund evaluation professional told reporters that FOFs are inherently multi-asset allocation products, and gold is only part of the underlying assets, not determining the entire portfolio return. Based on current results, it is not surprising that such products have not outperformed the equity market, but they have also not experienced significant net value declines alongside the sharp correction in gold prices.

She believes that the CSI 300 Index's performance in the second quarter of this year was clearly stronger than gold, so it is normal for FOFs with high gold allocation to have less prominent overall performance. However, compared to gold assets themselves, portfolio volatility is significantly lower, which is precisely the desired effect of multi-asset allocation. In terms of performance over the past three months, the gold price adjustment did not cause a proportional impact on the portfolio, indirectly demonstrating the effectiveness of asset allocation.

China Merchants Securities pointed out that gold's long-term risk-diversification value has not changed. Based on past performance, from 2023 to 2025, FOFs with higher gold allocation ratios had better return-to-volatility ratios and return-to-drawdown ratios than traditional equity-bond FOFs, reaffirming gold's long-term value as a multi-asset allocation tool. However, entering 2026, due to a significant increase in gold's own volatility, gold is no longer able to consistently contribute stable returns as it did in the past, raising higher demands on fund managers' macro asset allocation capabilities.

The fund evaluation professional stated that gold will remain an important allocation asset in FOF portfolios in the future, but the allocation approach may change. In the past, the market focused more on "whether to allocate gold," whereas the future will focus more on "how to allocate gold." As the gold market shifts from a trend-driven rally to high-level volatility, fund managers need to dynamically adjust positions among gold, equities, bonds, and other assets, balancing portfolio volatility while seizing opportunities across different asset rotations.

(Editor: Xu Nannan)

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