Nearly a hundred private equity firms appear in the top ten holders list of ETFs established in the first half of the year.

◎ Reporter Ma Jiayue

An increasing number of private funds are gaining access to equity investment opportunities via ETFs. The latest statistics from Private Fund PaiPai Network show that in the first half of this year, nearly 100 private fund products under these firms appeared on the top ten holder lists of ETFs established in the same period, with total holdings exceeding 1.2 billion shares. By industry, the technology sector remains a key allocation direction for private funds. In the first half of the year, private funds appeared in 18 newly established ETFs whose names include “Sci-Tech” or “Technology.” In the view of industry insiders, in the long run, a structural bull market led by technology has industrial and fundamental support. Although some popular stocks have adjusted in the short term, the tech-led rally is expected to be further played out as earnings are delivered.

Private funds become important “buyers” of ETFs

Data from Private Fund PaiPai Network shows that in the first half of this year, products from 95 private fund managers appeared among the top ten holders of 106 ETFs established in the same period, with total holdings reaching 1.214 billion shares.

In terms of the holding structure, in the first half of the year, 44 ETFs received key allocations from private fund institutions, with private fund holdings in each not less than 10 million shares. Among them, there were 11 ETFs with private fund holdings of no less than 30 million shares.

Li Chunyu, a FOF fund manager at Rongzhi Investment, believes that private funds have extended from “pure stock picking” to “using ETFs to allocate beta.” There are mainly three reasons: first, as capital markets steadily expand, limited research and investment capacity makes it difficult for private funds to achieve comprehensive coverage, increasing the difficulty of stock selection. ETFs have therefore become an important tool to replace individual stocks in portfolio allocation. Second, ETFs offer trading flexibility. Discretionary private funds can quickly express views on industry themes through industry-themed ETFs, while quantitative private funds can also use premium/discount arbitrage or stock substitution to reduce costs. Third, in recent years, private funds’ globalization and demand for alternative allocations have increased. Cross-border and commodity ETFs open up channels between overseas markets and alternative assets, enabling managers to meet their allocation needs.

Technology remains a top institutional “preference”

By industry distribution, technology-themed ETFs are an important allocation direction for private funds.

According to Private Fund PaiPai Network statistics, in the first half of the year, the private funds mentioned above held a total of 18 newly established ETFs whose names include “Sci-Tech” or “Technology,” established in the same period. Total holdings reached 180 million shares, accounting for 14.83% of the total shares. Among them, five ETFs with a high “tech content” had private fund holdings of no less than 10 million shares each.

In the view of multiple private funds, although the AI sector has already seen some degree of crowding, based on industry trends and the situation of earnings realization, AI remains an important direction for future deployment.

Zirui Xing Investment’s analysis states that the current AI cycle has a fundamental difference from the 2000 internet bubble. In 2000, most internet companies had neither revenue nor a profit path. In this AI wave, however, AI revenues from overseas cloud providers have already been realized at scale.

Gao Yuncheng, Managing Partner and CEO of Greenwoods Asset Management, said: “In the short term, AI infrastructure construction is cyclical. Historically, every technological revolution has gone through overheated capital expenditure, valuation bubbles, and phased pullbacks, and the AI industry chain is no exception. Over a longer time horizon, these changes have strong structural characteristics, because AI is essentially not a single-point product, but a new production system. ‘For example, in the past semiconductors served mainly consumer electronics; in the future, semiconductors will directly participate in knowledge production, content production, decision-making production, and improvements in productivity. The market space behind this is incomparable to the past.’” Gao said.

(Editor: Xu Nannan)

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