The second-quarter fund reports for 2026 are now being released at a peak rate, revealing the portfolio adjustments made by star fund managers. Products focused on the technology theme have captured significant excess returns, while those holding traditional value sectors face pressure from net asset value drawdowns.
In the second quarter of this year, the A-share market exhibited a pronounced "K-shaped" divergence. The Shanghai Composite Index gained 5.20%, the CSI 300 Index rose 11.90%, and the ChiNext Index surged 36.35%. Sentiment was high in the technology sector, particularly for AI infrastructure, while traditional cyclical and domestic demand sectors remained under pressure.
Portfolio Strategies of Prominent Fund Managers
Amid this highly polarized market, the investment approaches of prominent public fund managers varied significantly. An analysis of their holdings shows that Zhang Kun increased his exposure to technology while reducing consumer stocks, with substantial cuts to baijiu and Hong Kong-listed internet names. Li Xiaoxing executed a major portfolio overhaul, showing a clear preference for the technology sector, including optical module leaders like Zhongji Innolight and Eoptolink Technology Inc., Ltd.. Liu Gesong maintained heavy positions in AI computing power and the semiconductor supply chain.
Zhang Kun Reduces Baijiu and Internet Holdings
Zhang Kun currently manages four funds and, at his peak, oversaw assets exceeding one hundred billion yuan, making him one of the most recognizable fund managers in the public fund industry.
His personal adjustment strategy is best reflected in the E Fund Quality Enterprise Three-Year Holding Period Mixed Fund. This fund only added Zhang Qi as a co-manager with Zhang Kun on June 27th. According to the fund's second-quarter report disclosed on July 21st, nine of its top ten holdings were reduced by 10% to 30%. The "big four" baijiu stocks—Kweichow Moutai, Shanxi Xinghuacun Fen Wine Factory, Luzhou Laojiao, and Wuliangye Yibin—were reduced by 2.84 million, 192.8 thousand, 491.5 thousand, and 454.7 thousand shares respectively, representing cuts of 19.19%, 13.85%, 24.09%, and 21.97%. Hong Kong-listed internet giants Tencent Holdings and Alibaba Group Holding Limited were sold off by 102.3 thousand and 510 thousand shares, with reduction rates reaching 21.01% and 27.42% respectively. Holdings in Yum China Holdings, Inc., China Merchants Bank Co., Ltd., and CNOOC Limited were cut by 23.78%, 37.50%, and 29.35%.
The strategy was broadly similar for the larger E Fund Blue Chip Selected Mixed Fund, which also added a co-manager in May. By the end of Q2, its top seven holdings were, in order, Tencent Holdings, Kweichow Moutai, Yum China Holdings, Inc., CNOOC Limited, Luzhou Laojiao, Wuliangye Yibin, and Shanxi Xinghuacun Fen Wine Factory. During the reporting period, these positions were reduced by 47.98%, 47.13%, 46.34%, 41.40%, 51.76%, 70.68%, and 70.91% respectively. The tenth-largest holding, Alibaba Group Holding Limited, saw a drastic reduction of 75.40%, leaving its holding value at just 4.66 billion yuan. Meanwhile, two technology growth stocks, SMIC and Dongshan Precision Manufacturing Co., Ltd., entered the top ten, with their share prices rising 76.33% and 153.97% respectively during the quarter.
The E Fund Asia Select Fund, managed solely by Zhang Kun, significantly reduced its holdings in South Korean semiconductor stocks in Q2. Although Samsung Electronics Co., Ltd. and SK Hynix Inc. were cut by 39.48% and 56.36%, they remained the fund's first and second-largest holdings.
"Judging from economic indicators such as retail sales and employment, the pressure of economic downturn has exceeded expectations," Zhang Kun's team analyzed in the quarterly report. They noted that in Q2, listed companies primarily exposed to domestic demand generally faced significant operational pressure, with their stock prices experiencing declines in both earnings and valuation multiples. The current valuation levels of domestic demand companies are mismatched with the development potential of a developing nation moving towards becoming a moderately developed country.
Li Xiaoxing's Major Portfolio Overhaul
In the second quarter of 2026, well-known Yinhua Fund manager Li Xiaoxing made bold and sweeping adjustments to his portfolio.
Taking the largest fund, Yinhua Small and Mid-Cap Mixed Fund A, as an example, it operated with a high equity position in Q2, achieving a net asset value growth rate of 90.97% during the reporting period. Only Dongshan Precision Manufacturing Co., Ltd. was retained among the top ten holdings; the other nine stocks were completely replaced. New entrants included Shennan Circuits Co., Ltd., Sanan Optoelectronics Co., Ltd., Zhongji Innolight, Zhongtian Technology Group Co., Ltd., Hengtong Optic-Electric Co., Ltd., Eoptolink Technology Inc., Ltd., Yuanjie Semiconductor Technology Co., Ltd., Yongding Co., Ltd., and Defu Technology Co., Ltd., a clear bet on the optical communication sector.
Similarly, the Yinhua Xinjia Two-Year Holding Period Mixed Fund reported a net asset value growth of 39.17% for the period, with half of its top ten holdings replaced. Stocks like Hygon Information Technology Co., Ltd., Alibaba Group Holding Limited, Zhangyuan Tungsten Co., Ltd., China Coal Energy Company Limited, and GigaDevice Semiconductor (Beijing) Inc. exited the top ten, while Eoptolink Technology Inc., Ltd., Zhongji Innolight, Luxshare Precision Industry Co., Ltd., Foxconn Industrial Internet Co., Ltd., and Shennan Circuits Co., Ltd. entered. Among these, the two optical module leaders, Eoptolink Technology Inc., Ltd. and Zhongji Innolight, had holding values as high as 4.65 billion and 4.35 billion yuan respectively, ranking as the top two holdings.
In the investment strategy and operational analysis section of the Q2 report, Li Xiaoxing's team also provided nearly 1,800 words of substantive content. Looking ahead to the second half of the year, the team believes overall market risk is limited. Although certain sub-sectors within technology show signs of overheating, if expected returns are not set too high, a large number of targets across the market can still be selected that can deliver absolute and relative returns over the medium to long term. The AI narrative remains strong and can still be overweighted in the overall portfolio allocation, while investment opportunities in other sectors are gradually emerging.
Liu Gesong Focuses on AI and Semiconductors
Liu Gesong, who focuses heavily on the technology sector, enjoyed a "harvest season." The four funds he manages (different share classes combined) have a total size of 257.35 billion yuan, all recorded positive returns in Q2 and significantly outperformed their benchmarks.
The largest, GF Technology Pioneer Mixed Fund, managed solely by Liu Gesong, had a top ten holdings list at the end of Q2 consisting of GigaDevice Semiconductor (Beijing) Inc., Cambricon Technologies Corporation Limited, Eoptolink Technology Inc., Ltd., Dongshan Precision Manufacturing Co., Ltd., Zhongji Innolight, SMIC, SG Micro Corp, Shengyi Technology Co., Ltd., Advanced Micro-Fabrication Equipment Inc. China, and NAURA Technology Group Co., Ltd., concentrated in AI computing power and the semiconductor industry chain.
Compared to the previous quarter, holdings in Cambricon Technologies Corporation Limited, Eoptolink Technology Inc., Ltd., SMIC, and Advanced Micro-Fabrication Equipment Inc. China were increased by 19.18%, 28.36%, 17.68%, and 36.14% respectively. Dongshan Precision Manufacturing Co., Ltd. and Zhongji Innolight were reduced by 4.0878 million and 296 thousand shares, representing cuts of 53.71% and 29.38%. New entrants to the top holdings primarily included GigaDevice Semiconductor (Beijing) Inc., SG Micro Corp, and NAURA Technology Group Co., Ltd., all from the semiconductor sector.
In the Q2 report, Liu Gesong stated that when searching for investable industries from a supply-demand perspective in the first half of the year, it was found that demand in AI-related industries is still in a phase of rapid explosion, with a stable supply structure, and market share may further concentrate towards leading companies. Analyzing from the dimensions of industry prosperity and supply-demand patterns, he believes AI-related industries are the most promising investment direction for the second half of the year and even next year. Using past mean reversion frameworks to view this industrial trend would mean missing out on the dividends of the era.
Market Outlook for the Coming Period
Looking ahead, Yang Delong, Chief Economist at Qianhai Kaiyuan Fund, commented that the recent institutional symposium convened by the China Securities Regulatory Commission signaled a determination to stabilize the market, with financial institutions including insurers also stepping in. Driven by multiple policy tailwinds, technology stocks rebounded strongly on July 21st. While this does not necessarily indicate a market reversal, it has at least effectively boosted market confidence and laid a solid foundation for a new round of market activity.
Yang pointed out that from a market perspective, after nearly a month of adjustment, many technology stocks have seen cumulative declines of close to 50%, largely digesting earlier profit-taking pressure. In the second half of the year, the market is expected to shift from technology being the "sole standout" to multiple sectors moving in tandem, potentially further spreading the赚钱 effect across the market.
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