Dragged down by the volatile market, the "professional players" who specialize in buying funds also failed to escape the market pullback, producing a rebalancing map marked by losses. Wind data shows that FOFs came under pressure in the third quarter, with a combined single-quarter loss of 9.4 billion yuan. Behind the drawdown, what exactly have these "professional fund investors," who focus on asset allocation, been adding to and what have they been abandoning amid the volatility?
Overall, bond funds remain the core safety cushion for FOF portfolios, but the internal structure of fixed income has undergone clear adjustments; alternative assets have become an important tool for diversifying risk, with gold allocations expanding sharply, extending from gold ETFs to gold industry equity funds and relying on low correlation to hedge portfolio volatility; on the equity side, the pace of cautious rebalancing has been maintained. As fourth-quarter market conditions stirred up new waves, the performance gap among FOFs continued to widen, with fewer than 20% of products posting positive returns year to date and a spread of more than 61 percentage points between the best and worst performers. Looking ahead, fund managers' views diverge: some remain long-term optimistic and allocate in a balanced way; others prioritize defense, insisting that "win rate matters more than odds" and waiting for certainty to materialize.
Bond Funds Remain the Main Allocation
Wind data shows that, as of the end of the third quarter, a total of 1,886 fund products appeared among the top ten holdings of public FOFs (different share classes calculated separately, same below), down 22 products quarter on quarter; holdings value stood at 178.748 billion yuan, a slight quarter-on-quarter decrease of 3.22%. Bond funds remained the main heavily weighted category for FOFs, with 937 funds held heavily, accounting for nearly half (49.6%), a total of 102.556 billion units held, and holdings value of 139.726 billion yuan, accounting for nearly 80% (78%).
On the whole, core-position thinking and diversified allocation remain the central logic of FOF product allocation, but the core-position varieties have changed somewhat. Short-term pure bond funds were the category with the largest reduction, with holdings falling by 5.629 billion units in the third quarter; meanwhile, medium- and long-term pure bond funds were favored during the same period, with an increase of 3.097 billion units in a single quarter. Between the reduction and the increase, FOFs chose to extend duration in exchange for greater return potential. In addition, the number of bond ETFs entering FOF heavy holdings also increased, from 29 to 40 by the end of the third quarter, with 57.17 million units added in the single quarter, and total heavy holdings value rising from 18.906 billion yuan to 20.06 billion yuan.
By holdings value, the top ten on the list were all bond funds. Haitong SSE Urban Investment Bond ETF was heavily held by 76 FOF products, with holdings value reaching 2.093 billion yuan, making it the fund product with the highest holdings value among FOFs. The product received an increase of 51.4439 million units in the third quarter, after being heavily held by 67 FOFs with 149 million units in the previous quarter. E Fund Suifeng Tianli C and GF Jingning Pure Bond A, although reduced, still remained in the top three, with FOF holdings value at the end of the third quarter both exceeding 2 billion yuan, at 1.6 billion yuan and 1.7 billion yuan respectively, heavily held by 16 and 17 products. In addition, seven funds including Ping An ChinaBond Medium-High Grade Corporate Bond Spread Factor ETF and Xingquan Hengxin A were heavily held with more than 1.5 billion yuan each.
From the perspective of the number of heavy holdings, Haitong CSI Short-Term Financing ETF took first place, heavily held by 82 FOFs in total, with holdings value of 1.818 billion yuan. However, the product's holdings units were sharply reduced to 15.95 million, nearly halved from the previous quarter. Gold, which has low correlation with stocks and bonds, is another clear heavy holding direction in a volatile market. Wind data shows that gold-related products entering the FOF heavy holdings list expanded from 12 to 18, with total holdings value reaching nearly 3.66 billion yuan, up 134% in a single quarter; total holdings units reached 625 million, up 239% quarter on quarter in a single quarter. The vast majority of gold targets saw significant increases, not only gold bar ETFs but also gold miner equity ETFs were increased in tandem.
The number of FOFs heavily holding Yongying CSI Shanghai-Hong Kong-Shenzhen Gold Industry Equity ETF jumped from 2 at the end of the second quarter to 24 at the end of the third quarter; at the same time, holdings increased by more than 187 million units quarter on quarter to 190 million units, with holdings value reaching 357 million yuan. In addition, several products including China AMC CSI Shanghai-Hong Kong-Shenzhen Gold Industry Equity ETF, Huaan CSI Shanghai-Hong Kong-Shenzhen Gold Industry Equity ETF, Qianhai Open Source Gold ETF, and Zhongou CSI Shanghai-Hong Kong-Shenzhen Gold Industry Index C newly entered the heavy holdings list, while Shanghai Gold ETFs under Fullgoal and GF, as well as gold ETFs under fund companies such as Huaan and E Fund, all received varying degrees of incremental capital.
Equity Track Rebalanced Again
As market volatility intensified and sector rotation accelerated, FOFs began structural rebalancing on the equity side. According to Yicai statistics, equity funds, including hybrid and stock funds, received 4.542 billion units of increased holdings from FOF products in the third quarter. Among them, holdings in active equity funds increased by 1.835 billion units, while index products increased by 1.378 billion units. However, among the top 50 heavily held funds by holdings value, equity products accounted for only one seat.
Among active equity categories, more than half of the products received FOF increases, among which E Fund Supply Reform was the active equity fund most heavily held by FOFs at the end of the third quarter, heavily held by 27 FOFs, with an increase of 4.21 million units in the single quarter. In addition, six products including E Fund Xinxiang C and China AMC Youjia Life C saw holdings increase by more than 100 million units. However, among these 258 active equity products that received increases, fewer than 40% achieved positive returns in the third quarter. The highest, China Merchants Healthcare Industry, had a single-quarter return of 40.62%, while the lowest, Founder Fubon Core Advantage C, had a return of -41.88% over the same period.
The rebalancing signals on the ETF side were even clearer. In addition to the gold track, ETF products in directions such as Hong Kong Stock Connect technology, Hong Kong Stock Connect internet, and semiconductor materials and equipment each saw holdings increase by more than 100 million units; science and technology innovation index products such as ChiNext Growth and STAR 50 became key reduction targets.
"The product selection logic of FOF products is generally not tied to short-term market performance, but focuses on portfolio matching and investment cost-effectiveness," a Shanghai-based FOF investment research professional said in an exchange with Yicai, adding that in a changing market environment they would not concentrate investment in a single market style or industry track, and would give more patience and maintain close tracking for funds with long investment logic and realization cycles.
Fund managers' quarterly reports also made this approach very clear. For example, Zhang Haoran, fund manager of E Fund Advantage Value One-Year Holding, mentioned that in the third quarter the portfolio shifted from a technology-concentrated structure to a balanced and diversified structure of "technology core base position + small and micro-cap diversification + dividend value defense." "By substantially reducing technology concentration and increasing allocations to small and micro-cap quant and dividend value assets, style diversification and volatility control were achieved." At the same time, he shifted the product's fixed-income base position from secondary bond funds to hybrid partial-debt funds, cleared technology-oriented secondary bond funds, and added several hybrid partial-debt IPO participation funds to strengthen fixed-income defensive attributes. "The portfolio increased its allocation to the Hang Seng Index in July and added gold in August, then reduced the portfolio's risk asset position again in September, while bond assets maintained a market-neutral duration."
Wang Qingzhou, fund manager of Southern Wenjian 3-Month Holding, also said that, in light of market conditions, the portfolio still adhered to an absolute return operation approach, did a good job in major asset allocation, and adjusted the portfolio's risk asset position in a timely manner.
How to Allocate in a Volatile Market
In the fourth quarter, A-shares once again entered a volatile range, and the year-to-date performance landscape of FOFs completely diverged. Wind data shows that, as of November 3, among the 678 FOF products with available data (only initial funds calculated, same below), fewer than 20% achieved positive returns year to date, and only 5 rose by more than 10%. Among them, E Fund Advantage Value One-Year Holding A had a cumulative return of 21.95% so far this year, while E Fund Advantage Navigator Six-Month Holding A and E Fund Advantage Drive One-Year Holding A had returns of more than 18% over the same period; Guotai Industry Rotation A, which temporarily lagged, fell 39.36% year to date, and the performance gap between the best and worst had exceeded 61 percentage points.
Facing the volatile market outlook, how will these "professional fund investors" respond to the market ahead? Observations show that fund managers still have somewhat divergent views on the market. Some fund managers are relatively optimistic, believing that more risk has been released after the market pullback; others believe further observation is still needed, and will take obtaining certain returns as the primary investment goal, allocating to directions with higher certainty of return enhancement while controlling overall portfolio risk.
"Strategically, we maintain a positive and optimistic view on A-shares over the medium and long term; tactically, we allocate in a balanced way, appropriately taking into account both large-cap and small- and mid-cap styles," Wang Qingzhou said, adding that going forward she would focus on directions with high certainty of earnings verification and support from industrial trends, while avoiding highly crowded sectors and short-term overbought sectors. In the bond market, she judged that yields may show range-bound fluctuations, with relatively limited downside space. Strategically, she would focus on coupon strategies, supplemented by duration management and band trading, with a barbell allocation. She would remain alert to potential disturbances such as the stock-bond "seesaw" effect, supply pressure, and fluctuations in funding conditions.
Huang Yilei, fund manager of E Fund Advantage Fenghua Six-Month Holding, said the market in the fourth quarter may remain volatile, but it is necessary to remain keenly observant of the market, and in terms of allocation thinking the overall approach will be more defensive, striving to steadily preserve this year's returns. In his view, "win rate" is more important than "odds," so overall he will maintain a steady and defensive posture and act only when there are certain opportunities.
"The equity market still needs to pay attention to the combined impact of industry prosperity, earnings realization, and liquidity changes," said Gao Ying, fund manager of Ping An Steady Pension One-Year. She believes that industrial trends in technology-related fields remain an important direction to watch, but after the earlier market moves, valuations, trading crowding, and earnings realization ability within the sector may further diverge. Based on this, she will maintain moderate equity participation, focus on directions such as AI computing power, semiconductors, and the data center power chain, and adjust the allocation pace in light of valuation and fundamental changes; at the same time, she will pay attention to value assets with relatively low positions, solid fundamentals, and room for returns. As part of diversified allocation, gold's allocation value should be assessed in light of changes in the dollar, real interest rates, and market volatility. MACD golden cross signals have formed, and these stocks are rising well!
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