The July A-share market saw a brutal sell-off in the tech sector, with the STAR 50 index plunging 25.9% and the ChiNext index dropping 23%. Many funds that had doubled in the first half saw their gains erased by over 30%. As the market searched for survivors, a few names from equity and balanced funds emerged, but one often-overlooked "fixed-income plus" manager stood out—Zhang Yongzhi, head of the multi-asset investment department at HuaShang Fund. His managed funds, including the HuaShang Convertible Bond Fund, the HuaShang Ruixin Periodic Open-End Fund, and the HuaShang Stable Double Income Bond A, claimed three of the top five spots in the bond fund performance rankings for the year to date.
Despite having all their top ten holdings in tech stocks at the end of the second quarter, these funds barely moved in July, absorbing the tech rout with minimal damage. The strategy behind this deserves a closer look.
From a Bank Teller to a Multi-Asset Veteran
Zhang Yongzhi's career began in 1999 as a teller at a branch of the Industrial and Commercial Bank of China in Qingdao, a role he held for nearly four years. He then obtained a master's degree in finance in 2003 and joined the bond department of Haitong Securities as a trader in 2006. Two years later, he moved to HuaShang Fund, again as a trader. The trading desk is where one learns the market's raw mechanics—bid-ask spreads, liquidity, and interest rate fluctuations—through direct, hands-on experience, not just theory. In August 2010, he transitioned to assistant fund manager, becoming a full fund manager in 2012. He then rose through the ranks from assistant general manager of the fixed-income department to deputy general manager, and finally to general manager of the multi-asset investment department and a member of the investment decision committee. With 19 years at HuaShang Fund, he is one of the most senior members of the research team. He currently manages eight products across pure bond, secondary bond, convertible bond, and primary bond categories, with total assets exceeding 250 billion yuan. His journey from a bank teller in Qingdao to the manager of a 250-billion-yuan fixed-income plus matrix has taken over two decades—steady, but never stopping.
Investment Philosophy: A Three-Pronged Approach
Zhang's investment framework is built on three pillars: bonds as a foundation, stocks for offense, and convertible bonds for flexibility. Bonds serve as ballast, providing coupon income and capital gains, forming the base return of the portfolio. Stocks are used to enhance returns. Unlike pure bond managers, he does not shy away from equity exposure. His core metric is the "equity-bond valuation," where he increases equity allocation when stocks are cheap relative to bonds and reduces it when they are expensive. He focuses on sectors tied to the macroeconomy, aiming to profit from cyclical upturns. Convertible bonds provide optionality, allowing the portfolio to capture market upside while limiting downside. He began managing the HuaShang Convertible Bond Fund in late 2017, a key component of his strategy. This asset class requires a deep understanding of credit, stocks, and macroeconomic cycles, where his trading background proves invaluable. The weighting of these three asset classes is adjusted based on a simple principle: buy more of what is cheap and less of what is expensive. He calls this a "scientifically balanced allocation structure." In the third quarter of 2022, he reduced stock exposure, but the timing was off, leading to poor performance. He then increased it again in the fourth quarter of 2023, this time correctly. This flexibility to adjust from mistakes, rather than stubbornly sticking to a view, is key to his framework's success.
2026 Tactics and July's Masterstroke
In 2025, Zhang made a key call by heavily investing in non-ferrous metals, which paid off handsomely and laid the foundation for the year's performance. Heading into 2026, he pivoted to semiconductors. From the end of the first quarter to the end of the second quarter, the top ten holdings of the HuaShang Stable Double Income Bond A were completely refreshed, with names like Cambricon Technologies, Shenzhen Precision Testing Technology, Changchuan Technology, NAURA Technology Group, and Konfoong Materials International—all semiconductor and AI-related stocks. The second-quarter holdings of the HuaShang Convertible Bond Fund were even more aggressive: Precision Testing Technology at 8.71%, Changchuan Technology at 6.96%, Kema Technology at 5.24%, Konfoong Materials at 4.13%, and NAURA Technology at 3.45%, with eight of the top ten being semiconductor stocks. In his second-quarter report, he stated directly, "The semiconductor industry is a long-track, deep-snow track," and "the increase in domestic substitution rate remains one of the most certain investment opportunities in the domestic semiconductor field." He planned to "closely monitor and actively allocate to chip design and manufacturing companies that can benefit from the AI wave." This move paid off significantly. The HuaShang Stable Double Income Bond A surged 15.59% in the second quarter, with its fund size growing from 53 billion to 82 billion yuan. The true skill showed in July. After July 6, the net value trajectory of the HuaShang Stable Increase Income Bond A he manages suddenly flattened, becoming almost a straight line with minimal volatility. The HuaShang Stable Double Income Bond A was similar, showing very little fluctuation throughout July. As of August 4, the fund's one-month return was +0.33%. It can be inferred that he liquidated his stock positions in early July. The move was decisive: when valuations became expensive and the risk-reward ratio deteriorated, he acted without hesitation or delay. Such discipline is rare among convertible bond managers. The results speak for themselves: as of August 6, he occupied three of the top five spots in the year-to-date performance rankings of all bond funds. Among them, the HuaShang Convertible Bond A ranked first with a year-to-date return of 31.96%. Looking ahead, he stated in his second-quarter report that a moderately accommodative monetary policy will maintain ample liquidity, and the upward trend in the equity market is expected to continue. He believes that new industries like AI and new energy, as well as traditional industry upgrades, offer stronger certainty for earnings growth. Regarding convertible bonds, he assessed that "valuations remain high, volatility depends on the underlying stock, and opportunities are becoming more structural." In his second-quarter report, he also wrote, "In a complex and changing market environment, we insist on independent thinking, do not follow the herd, make purchase and holding decisions based on absolute return thinking, and strive to create long-term stable returns for investors through flexible asset allocation and strict credit risk control." The key takeaway is "absolute return thinking." He does not chase relative rankings but focuses on the goal of "making money." The equity-bond valuation is a tool, asset allocation is the framework, and tactical timing is the method—all aiming to capture returns amidst volatility. The most valuable skill in the market is not buying precisely, but knowing when to stop.
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