As of July 21st, the disclosure of mutual funds' second-quarter reports for 2026 has concluded. According to data from Tianxiang Investment Consulting, the latest top ten most-held stocks by mutual funds are Zhongji InnoLight Co., Ltd., New Epoch, Dongshan Precision, Cambricon, CATL, NAURA, GIGADEVICE, Yuanjie Technology, Advanced Micro-Fabrication Equipment Inc. China (AMEC), and CCTC.
Compared to the end of the first quarter of 2026, the list of heavily held stocks has undergone a significant reshuffle. Six stocks—Cambricon, NAURA, GIGADEVICE, Yuanjie Technology, AMEC, and CCTC—are new entrants to the top ten, while Tencent Holdings, Kweichow Moutai, Zijin Mining, Alibaba-W, WuXi AppTec, and Luxshare Precision have dropped out.
Zhongji InnoLight Co., Ltd. was the stock that saw the largest increase in market value held by mutual funds, whereas Tencent Holdings experienced the largest decrease.
Top Holding Maintains Its Position
Data from Tianxiang Investment Consulting shows that by the end of the second quarter of 2026, Zhongji InnoLight Co., Ltd. continued to hold the top spot as the largest mutual fund holding, with a total held market value reaching 166.253 billion yuan.
Zhongji InnoLight Co., Ltd. replaced CATL as the largest mutual fund holding at the end of the fourth quarter of 2025. It retained this position at the end of the first quarter of 2026 and remained the top holding by the end of the second quarter.
At the end of Q1 2026, the top three mutual fund holdings were Zhongji InnoLight Co., Ltd., CATL, and New Epoch. By the end of Q2 2026, CATL had fallen out of the top three, with Dongshan Precision taking its place as the third-largest holding.
In terms of increased holdings, Zhongji InnoLight Co., Ltd. saw the largest addition in market value by mutual funds during Q2 2026, amounting to 92.375 billion yuan. Excluding Q1 2026, it has been the stock with the largest increase in holdings for the previous three quarters. Additionally, mutual funds increased their holdings in New Epoch by nearly 70 billion yuan and in Cambricon by over 50 billion yuan. Other stocks that saw increases in held market value exceeding 30 billion yuan include Dongshan Precision, NAURA, GIGADEVICE, Yuanjie Technology, and CCTC.
Regarding reduced holdings, Tencent Holdings again saw the largest decrease in market value held by mutual funds in Q2 2026, with a reduction of 18.737 billion yuan. Mutual funds reduced their holdings in CATL by over 17.5 billion yuan, and decreased holdings in Kweichow Moutai, Alibaba-W, Zijin Mining, and CNOOC each by over 10 billion yuan. Stocks like Sibion Electrical, Salubris, Wuliangye, Ping An Insurance, and Chifeng Gold also saw significant reductions in held market value.
High-Performing Large Funds Focus on Semiconductors
The AI industry chain remains a key focus for fund managers seeking opportunities.
Chen Hao, a fund manager at E Fund Management Co., noted that the stock market in Q2 2026 exhibited extreme sector divergence. Based on continuous tracking and analysis of AI fundamentals, he adjusted the portfolio allocation towards AI-related beneficiaries, ultimately achieving some excess returns.
It is worth noting that fund managers who achieved over 100% returns in the first half of the year and manage funds exceeding 10 billion yuan in size have heavily concentrated their portfolios in the semiconductor sector.
Jin Zicai, a fund manager at Caitong Fund Management Co., manages assets exceeding 50 billion yuan. The fund he manages, Caitong Multi-Strategy Fuxin, delivered a return of over 170% in the first half of the year.
The fund's top ten holdings are New Epoch, Yuanjie Technology, CCTC, Nanya New Material, Dingtai High-Tech, Defu Technology, Fangbang Co., Ltd., Yunzhong Technology, Fenghua Advanced Technology, and Guanghe Technology.
In the quarterly report, Jin Zicai stated that to adapt to new supply chain dynamics, the limited portfolio allocation in Q2 was further concentrated in industries experiencing tight supply, including MLCCs within passive components and upstream PCB materials.
The Yinhua Integrated Circuit Mixed Fund, managed by Fang Jian of Yinhua Fund Management Co., saw its size increase significantly, driven by the semiconductor rally in Q2. By the end of Q2, the fund's size reached 27.85 billion yuan, a growth of nearly 20 billion yuan compared to the end of Q1. The fund's units also increased by 2.249 billion shares. The fund achieved a return exceeding 157% in the first half.
The Q2 report shows that the fund's top ten holdings at the end of Q2 2026 were Zhongke Feice, Kingsemi, Hwatsing Technology, Jingce Electronic, NAURA, AMEC, Huahong Grace, Piotech, Fortune Precision, and SMIC.
Fund manager Wu Hao of Founder Fubon Fund Management Co. manages the Founder Fubon Core Advantage Mixed Fund, which has assets under management exceeding 10 billion yuan. The A-share class of this fund achieved a return of 183.67% in the first half, ranking near the top in performance.
The fund focuses on specific segments of the chip and semiconductor industry chain, such as memory. Its top ten holdings are Puyuan Co., Ltd., Jingzhida, GIGADEVICE, Derming Li, Ingenic Semiconductor, Bewinner Storage, Jiangbolong, Shannon Core Creation, XinQi Micro, and Piotech. Many of these holdings have seen their stock prices double since the beginning of the year.
Although most funds heavily weighted in the tech sector performed well in Q2, some fund managers remain cautious about the sector's outlook.
Yang Ruiwen, a fund manager at Invesco Great Wall Fund Management Co., expressed that while he remains firmly optimistic about the tech growth sector in the long term, the valuations of some individual stocks have significantly exceeded the boundaries of traditional pricing frameworks, indicating some structural market bubbles. He suggested that the overall strong "high-beta" trend in the tech sector may be nearing its end, with the future likely shifting towards stock-picking driven structural opportunities, accompanied by noticeably faster sector rotation.
Market Rebalancing and Diversified Allocation Suggested
"Equity assets still hold relative attractiveness among all major asset classes," said Zhu Shaoxing, a fund manager at Fullgoal Fund Management Co. He noted that after the upward shift in the market index's center, bottom-up stock selection for alpha has become more important than before. Over a longer time horizon, he believes the real economy will eventually recover further, and high-quality equity assets will benefit accordingly. The medium- to long-term allocation value of equity assets deserves attention.
Looking ahead to the third quarter, several fund managers emphasized the importance of balance and diversification in investments.
Xie Zhiyu, a fund manager at China Universal Asset Management Co., stated that the market will undergo rebalancing, and the extremely divergent market conditions seen in Q2 are unsustainable. Firstly, he highly recognizes and is optimistic about the development trend of the AI industry. He views adjustments in investment pace by overseas giants as normal business decisions, not signaling that AI development has peaked or that overseas capital expenditure growth will abruptly stop. Secondly, regarding the AI inflation chain that garnered significant market enthusiasm in Q2, he cautioned that assigning high long-term price expectations and valuations to currently tight supply chain segments is very risky. Drawing parallels from the previous new energy expansion cycle, stock price inflection points often precede fundamental price turning points. Historically, the decline in infrastructure costs promotes the adoption and industrial scale expansion of new technologies and applications; excessive price increases upstream could hinder downstream application development.
Tang Xiaobin, a fund manager at GF Fund Management Co., also advised investors to diversify their allocations. For most investors, over-concentrating funds in a single industry direction essentially amplifies uncertainty. A more rational approach is to build a diversified investment portfolio, using the low correlation between different assets and styles to hedge risks and smooth volatility.
Regarding the pharmaceutical sector, fund managers Ge Lan and Zhao Lei of China Europe Fund Management Co. noted that the market exhibited significant style divergence in Q2, with the biomedical sector experiencing substantial volatility. From a valuation perspective, after previous adjustments, overall valuation risks in the pharmaceutical sector have been relatively well released, and its attractiveness compared to other sectors is beginning to show. Investment in the pharmaceutical industry during Q3 will revolve around the core theme of "innovative drugs and their industry chain." Overall, China's innovative drug sector has entered a new stage of comprehensive development and global competition. High-quality companies across the upstream and downstream of the industry chain are poised for improvements in both earnings and valuations. They plan to actively seize investment opportunities arising from the convergence of sector valuation and fundamental improvements.
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