The Growth Enterprise Market (GEM) has recently demonstrated its characteristic high volatility once again.
On July 21st, technology sectors including semiconductors, memory chips, and computing hardware collectively surged, driving the GEM Index up 7.05% to close at 3685.97 points, marking its largest single-day gain this year. Previously, the index had reached an intraday high of 4380.41 points on June 25th, setting a new historical record. In just one month, the index experienced a shift in market conditions from hitting new highs to a rapid correction, followed by a significant rebound.
Beyond these short-term fluctuations, the core themes of technological innovation, advanced manufacturing, and industrial upgrading that the GEM represents continue to evolve. Supported by policies promoting high-quality development in the capital market and the fostering of new quality productive forces, the GEM, as a crucial platform for serving growth-oriented innovative enterprises, retains significant long-term allocation value.
Concentration of Innovative Leaders and Sharper Tech Growth Attributes
After sixteen years of development, the GEM has become a vital hub for innovative and growth-oriented companies in China. Wind data shows that as of July 22, 2026, the number of listed companies on the GEM reached 1,399, with a total market capitalization of approximately 18.3 trillion yuan.
As the core broad-based index of the GEM, the GEM Index selects the 100 stocks with the largest market capitalization and best liquidity as its constituents. As of July 22, 2026, the total market cap of its constituent stocks was about 10.33 trillion yuan, representing over 56% coverage of the GEM's total market value, with an average constituent market cap exceeding 100 billion yuan. This indicates that the GEM Index now represents a group of growth leaders with strong competitiveness and market influence within their respective sub-sectors.
As these companies have expanded in scale, their profitability has grown correspondingly. Data reveals that the combined net profit attributable to shareholders of the GEM Index constituents surged from 6.9 billion yuan in 2010 to 212.7 billion yuan by the end of 2025, representing a nearly 30-fold increase over more than a decade. This demonstrates a clear trend of expanding overall profit scale among the constituents.
Another key factor in the GEM Index's continuously strengthening representativeness is the ongoing evolution of its industrial structure.
In the early days after the index's launch, computers, machinery & equipment, and pharmaceuticals & biotechnology were the major weight sectors. With the rise of the new energy industry, the maturation of the semiconductor supply chain, and the accelerated development and penetration of AI, the index's sector focus has gradually shifted towards next-generation information technology and advanced manufacturing.
As of July 22, 2026, communications, electronics, and electrical equipment have become the top three weight sectors in the GEM Index, with weights of 30%, 24%, and 24% respectively, collectively accounting for nearly 80%. This shift in the index's sector composition aligns with the development trajectory of China's strategic emerging industries.
The increased concentration in specific industries enhances the GEM Index's responsiveness to technology and growth market trends, while also strengthening its correlation with industry cyclicality, market risk appetite, and valuation changes. High growth potential coupled with relatively pronounced volatility defines the distinct risk-return profile of the GEM Index.
Regular Rebalancing Reflects Industrial Shifts as Investment Tools Grow More Refined
The GEM Index's ability to consistently cover emerging industries is also closely tied to its regular rebalancing mechanism.
According to its compilation methodology, the GEM Index rebalances its constituent stocks every six months, promptly removing companies that no longer meet the criteria and incorporating those with stronger market capitalization, liquidity, and representativeness. This continuous "metabolism" allows the index to keep pace with changes in the GEM market and its industrial structure.
In 2025, the GEM Index methodology was further optimized by introducing an ESG negative screening mechanism and setting a maximum weight cap of 20% for any single constituent. This adjustment, while improving the quality screening of constituents, effectively reduces single-stock concentration risk, thereby enhancing the index's market representativeness. Through continuous rebalancing and rule optimization, the GEM Index is gradually evolving into a significant benchmark for observing China's innovative industries and technology growth leaders.
It is noteworthy that as the number of GEM-listed companies continues to grow and its industrial coverage broadens, structural differentiation within the sector has become increasingly pronounced. From a market cap perspective, the GEM hosts large-cap companies that have matured into industry leaders, as well as a cluster of small and mid-cap firms in rapid growth phases. From an industrial distribution standpoint, it encompasses relatively mature growth sectors like new energy and high-end manufacturing, while also covering rapidly evolving emerging fields such as artificial intelligence, software, and computing power.
Correspondingly, index products centered on the GEM have expanded from a single broad-based offering to multiple directions including index-enhanced, size-segmented, and sector-thematic strategies. Following this trend, Fullgoal Fund has initially established a multi-dimensional GEM ETF product matrix covering broad-based, size, and thematic strategies, tailored to different market cap levels and industrial characteristics within the GEM.
Specifically, on the broad-based front, there is the GEM ETF Fullgoal (159971) tracking the GEM Index and its feeder funds (Class A 161022 / Class C 013277 / Class Y 022952); as well as the GEM Enhanced ETF Fullgoal (159676), which applies a quantitative enhancement strategy on top of tracking the GEM Index, and its feeder funds (Class A 021811 / Class C 021810).
Regarding size segmentation, there is the GEM 50 ETF Fullgoal (159371) focusing on GEM core leaders and its feeder funds (Class A 023859 / Class C 023860), and the GEM 200 ETF Fullgoal (159571) primarily covering mid-cap growth enterprises on the GEM and its feeder funds (Class A 020667 / Class C 020668).
For sector themes, offerings include the GEM New Energy ETF Fullgoal (159122) concentrating on the GEM's new energy sector and its feeder funds (Class A 026816 / Class C 026817); the GEM Software ETF Fullgoal (159107) covering the software and digital application direction; and the GEM Artificial Intelligence ETF Fullgoal (159246) encompassing areas like optical modules, computing infrastructure, and AI applications, along with its feeder funds (Class A 024662 / Class C 024663).
Overall, while short-term volatility in the GEM may still be influenced by market sentiment, the underlying trends of industrial upgrading, policy support direction, and the clustering effect of innovative enterprises remain unchanged. At the current juncture, investors may benefit from adopting a long-term perspective towards growth assets and participating in GEM-related opportunities through diversified, phased, and tool-based approaches. In this context, GEM-related ETF products represent a noteworthy allocation option.
Comments