While the market chases technological breakthroughs, Wu Zhenhua's framework prioritizes safety margins.
Over the past year, Wu Zhenhua, a fund manager at CITIC-Prudential Fund, delivered a 51.39% return with his flagship product, the CITIC-Prudential Growth Momentum Hybrid Fund, ranking consistently in the top 11% of its peer group. Behind this performance lies a disciplined investment approach that remains calm amid market volatility and high valuations. (Performance period: Jan 1, 2025 – Nov 30, 2025; benchmark return: 15.07%; ranking source: China Galaxy Securities Fund Research Center.)
Wu focuses on hard tech, particularly the semiconductor supply chain, but his methodology is rooted in a deep respect for **cycles** and **risk control**. He identifies two common anxieties in tech investing: the fear of missing out (FOMO) on transformative trends and the fear of buying at peak valuations.
His solution is a dual risk-control system—**"technological moat + valuation discount"**—which seeks a balance between long-term industry growth and cyclical market fluctuations.
**Path: The Making of an Industry Investor** Wu’s career—spanning strategy consulting at Accenture, systems engineering at China Securities Depository and Clearing, and sell-side research at Founder Securities—shaped his systematic approach to analyzing industries. His consulting background honed his ability to dissect business models, while his experience in financial infrastructure instilled an appreciation for system robustness. These skills help him distinguish between sustainable competitive advantages and fleeting trends in fast-evolving tech sectors.
**Core: Balancing Efficiency and Safety** Tech investing is often associated with high growth potential but also extreme volatility. Wu’s framework revolves around three principles: **focus, contrarianism, and evaluation**.
1. **Focus & Allocation**: His CITIC-Prudential Growth Momentum Fund primarily targets two themes—**overseas computing power** and **domestic substitution**—while reserving flexibility for opportunistic plays in markets like Hong Kong. 2. **Contrarian Positioning**: Wu believes tech sectors move in cycles. He capitalizes on market pessimism by conducting deep research and building positions ahead of recoveries. 3. **Dual Risk Control**: - **Technological Moat**: Assessing whether a company’s edge stems from proprietary processes, irreplicable ecosystems, or generational tech leads. - **Valuation Discount**: Determining if the market price significantly undervalues intrinsic worth, requiring precise timing of industry cycles and profit trajectories.
**Insights: Applying the Dual Framework to Five Tech Themes** Wu breaks down tech into five key areas, applying his dual metrics to each:
1. **Overseas AI Computing**: A "high-certainty arms race" driven by tech giants’ capex, multi-modal AI evolution, and clear demand growth. He favors long-term holdings in leaders like optical module firms, servers, and PCB makers. 2. **Memory Chips**: A supply-demand mismatch—linear supply growth (15% YoY) vs. exponential AI-driven demand. He tracks domestic memory leaders’ expansion but warns of rapid tech obsolescence. 3. **Domestic Substitution**: China’s "cluster computing" strategy to offset single-chip deficits, boosting demand for GPUs and high-speed interconnects. Semiconductor equipment and materials offer high visibility. 4. **Consumer Electronics**: Selective bets on structural upgrades (e.g., batteries for AI devices) and chip designers tied to major ecosystems. 5. **AI Applications & Power**: Opportunities in undervalued AI infrastructure plays (e.g., digital content rights) and power solutions for data centers.
**Dialogue: Staying Disciplined Amid High Valuations** On **valuations**, Wu acknowledges stretched 2027–28 expectations but differentiates between overseas leaders (hold through volatility) and domestic substitutes (trade event-driven cycles).
On **AI bubbles**, he sees healthy competition and monetization, with systemic risks emerging only years later from AI’s labor market impact.
**Conclusion: The Rational Prospector** Wu operates like a seasoned prospector in the tech landscape, using two maps: **industry evolution** (to gauge trends) and **market sentiment cycles** (to time entries). His tools—measuring moats and discounts—help unearth undervalued gems in AI, chips, and memory.
In a market swayed by hype and short-termism, his research-driven, margin-of-safety approach offers a steadier path—not chasing waves, but riding their long-term momentum.
*Note: Past performance is not indicative of future results. Fund holdings and strategies are subject to change. This material does not constitute investment advice.*
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