Global investment markets in 2026 continue to be fueled by the fervor surrounding the AI industry chain. Within the A-share market, sectors directly involved with AI, such as optical modules/computing power and semiconductors/chips, have already experienced robust rallies. The question now arises: will this technological momentum spread to the vast and promising field of AI applications?
Starting this Monday, May 18th, the Software Development ETF (159036), which directly targets the forefront of AI applications, commenced its highly anticipated initial offering. Analysts point out that 2026 is widely regarded as the inaugural year for the commercialization of AI Agents. Concurrently, the software sector finds itself at the convergence of two major epochal trends: the "AI Industrial Revolution" and the "policy dividends from IT application innovation." A combination of favorable factors is poised to unlock the sector's growth potential, suggesting a possible revaluation window for software sub-sectors characterized by high earnings growth and currently low valuations.
The Software Development ETF (159036) is designed to closely track the "CSI All Share Software Development Index." This index offers pure exposure to the software development industry, with approximately 60% allocation to industry-specific application software and 40% to general-purpose software. As of March 31, 2026, the index comprised 117 constituent stocks, providing comprehensive and balanced coverage that enables investors to capture the beta returns of the entire A-share software industry.
The index features a constellation of leading companies. Its top ten holdings include prominent names in the computer sector such as iFlytek, Tonghuashun, Kingsoft Office, TOWIN Information, Hundsun Technologies, 360 Security Technology, Compass, HopeRun Software, Sangfor Technologies, and CAS Star. Furthermore, due to the deep integration of the software industry within the broader technology ecosystem, the index's over one hundred constituents are involved in numerous high-growth areas including AI applications, cloud computing, the IT application innovation industry, fintech, cybersecurity, and the HarmonyOS ecosystem. This multifaceted exposure may underpin the potential for dynamic performance of the Software Development ETF (159036) following its establishment and subsequent listing.
Earlier this year, narratives suggesting "large models will consume software" temporarily pressured valuations in AI application sectors like software. However, as understanding has deepened, the industry and market have come to recognize a more nuanced reality. In practice, surging computing power expenditures have not necessarily squeezed corporate IT budgets; instead, AI Agent applications are creating new revenue streams for software businesses (e.g., in marketing budgets). Additionally, while AI coding tools reduce code generation costs, the value of non-code elements like data moats has increased, potentially strengthening the competitive advantages of established application providers.
"Software vendors can build core moats through proactive transformation, including data barriers, complex process barriers, and industry know-how barriers," commented an industry observer. They noted, "Judging from the Q1 2026 earnings reports of the software sector, a number of domestic software firms with strong vertical moats have delivered better-than-expected results, driven by AI-powered product upgrades and accelerated commercialization." Historically, the initial phase of new technology adoption is often led by advancements in high-end hardware, but ultimately, the application layer tends to capture a larger share of the total market value.
Beyond "AI empowerment," the drive for "IT application innovation" is also providing a significant growth catalyst for the software industry. It is reported that, driven by the 2027 deadline mandating "100% IT application innovation substitution for all central and local state-owned enterprises," a concentrated release of related orders is currently underway.
Notably, as of March 31, 2026, the overall valuation of the software sector had retreated approximately 40% from its 2020 peak, placing it in a historically low valuation range. Meanwhile, the CSI All Share Software Development Index has demonstrated superior annualized returns compared to other similar software indices. Leveraging these multifaceted advantages, the newly launched Software Development ETF (159036) is positioned to capture the systemic opportunities presented by the AI industry transformation, embodying the concept of "soft technology with hard strength."
Note: From December 30, 2022, to March 31, 2026, the annualized return of the CSI All Share Software Development Index was 2.16%, compared to -1.97% for the CSI Software Index, -0.46% for the Software Index, and -7.35% for the Industrial Software Index.
ETF Fee Information: For subscriptions to the Software Development ETF, a fee of 0.3% applies to amounts below 1 million RMB. For amounts of 1 million RMB or above, a flat fee of 1,000 RMB per transaction applies. On-exchange trading fees are subject to the rates charged by the securities firm. When subscribing for or redeeming fund units, the subscription/redemption agent may charge a commission of up to 0.3%. Please refer to the fund's legal documents for a complete fee schedule.
Risk Disclosure: The Software Development ETF passively tracks the CSI All Share Software Development Index. The base date for this index is December 31, 2021, and its release date is March 29, 2023. The fund is issued and managed by China Resources Fund Management Co., Ltd. Distributors are not responsible for the investment, redemption, or risk management of the product. Investors should carefully read the Fund Contract, Prospectus, Fund Product Key Facts Statement, and other legal documents to understand the fund's risk-return characteristics and choose products suitable for their own risk tolerance. The fund manager assesses this fund's risk level as R3 (Medium Risk), suitable for investors with a Balanced (C3) or higher risk profile. Suitability matching opinions are subject to the assessment of the selling institution. Selling institutions (including the fund manager's direct sales channels and other distributors) evaluate the fund's risk according to relevant laws and regulations. Investors should pay attention to the suitability opinions provided by the selling institution and rely on their matching results. Suitability opinions may vary between selling institutions, and a selling institution's risk assessment of the fund product cannot be lower than the risk level assessment made by the fund manager. The description of the fund's risk-return characteristics in the Fund Contract and its risk rating may differ due to different consideration factors. Investors should understand the fund's risk-return profile and choose fund products prudently based on their investment objectives, horizon, experience, and risk tolerance, bearing the associated risks themselves. The China Securities Regulatory Commission's registration of this fund does not indicate a substantive judgment or guarantee of its investment value, market prospects, or returns. The fund's past performance and net asset value do not predict its future performance. The performance of other funds managed by the fund manager does not guarantee this fund's performance. Funds carry risks; investing requires caution.
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