In the third quarter of this year, the A-share market narrative shifted dramatically. Since July, the Science and Technology Innovation 50 Index has suffered a notable pullback, while the CSI Dividend Low Volatility 100 Total Return Index has risen against the tide. Amid this sharp style rotation, a set of interim report data has revealed how "smart money" positioned itself ahead of the curve: the 2026 interim reports of A-share listed companies show that the top ten heavyweight holdings of insurance funds and social security funds are concentrated in high-dividend sectors such as banking, utilities, and home appliances, carrying a distinctly defensive tone. Data source: Wind, interim disclosures as of June 30, 2026.
Gong Lili, Deputy General Manager of the ETF and Innovative Investment Department at Invesco Great Wall, stated that long-term capital represented by insurance and pension funds has a natural demand for dividend assets, providing a solid foundation for the asset class. In her view, dividend investing is not a cyclical style rotation but a long-term allocation direction suited to a new stage of development.
Behind the Insurance Capital Build-Up: Institutional Tailwinds and Room for Allocation
The scale of insurance capital allocation to dividend assets is breaking historical records. Research data from Huatai Securities shows that in the first half of 2026, the secondary equity positions of listed insurance companies reached 19.4%, the highest level on record. Among these, FVOCI-designated stocks, which essentially represent dividend shares, accounted for 6.3%, up 96 basis points from the start of the year, with total additional allocation amounting to 288.5 billion yuan. Huatai Securities estimates that as of the first half of the year, the insurance industry had allocated approximately 2.1 trillion yuan to dividend stocks, with roughly 1.9 trillion yuan in additional purchasing capacity remaining that could be deployed gradually over the next two to three years.
The insurance capital build-up is not simply a style preference but reflects clear institutional logic. After listed insurers adopted new accounting standards in 2023, stock price fluctuations under FVOCI accounts are not recognized in current profit or loss, with only dividend income flowing through to earnings. This makes high-dividend assets particularly attractive to insurance companies focused on financial statement stability. According to Huatai Securities estimates, the industry-wide under-allocation to dividend stocks stands at approximately 1.9 trillion yuan. If deployed evenly over two to three years, this would imply annual incremental capital of roughly 630 billion to 950 billion yuan. For ordinary investors, rather than gambling on short-term style shifts, it may be wiser to focus on the long-term trend of this institutional capital inflow.
Gong Lili believes this allocation process by insurance capital aligns closely with policy direction. In a recent interview, she noted that the 15th Five-Year Plan, for the first time in a five-year plan, explicitly requires promoting institutionalized management of listed companies' dividend incentive mechanisms, optimizing the supply side of dividend assets from a policy perspective. Previously, dividend payments by listed companies were largely voluntary, but now clear institutional constraints have taken shape, and more listed companies will be willing to participate in dividend distribution in the future. Meanwhile, following the release of the new "Nine National Articles," market expectations for listed company dividends have become more explicit. In her view, the institutional entry of long-term capital and the improvement in dividend quality of listed companies are creating a "double boost" in both supply and demand for dividend assets.
What Insurance Capital Chooses: Dividend Low Volatility as the Anchor
The allocation direction of insurance capital provides a window for observing the market. Judging from the industry distribution of insurance heavyweight holdings in the first half of the year, high-dividend, low-volatility sectors such as banking, utilities, and transportation dominated. From an accounting perspective, while FVOCI accounts shield the income statement from stock price fluctuations, the precondition is that the underlying asset itself has controllable volatility and stable dividends. If high-volatility stocks are purchased, even with an attractive dividend yield, a sharp price decline would not affect current profit but would erode net assets and thereby impact solvency metrics. Consequently, within dividend assets, insurance capital naturally prefers low-volatility targets rather than purely chasing high dividend yields.
In Gong Lili's view, the dividend low volatility strategy can be simply understood as "high dividends plus low volatility." Low volatility does not mean no price appreciation; rather, it means the target has low trading disagreement and has not been excessively speculated upon, effectively adding another layer of defense on top of the defensive nature of dividends. Its overall stability in the A-share market is very prominent. She further analyzed that a pure dividend strategy might select stocks whose dividend yields have been passively elevated by sharp price declines, and such targets often have already deteriorating fundamentals. The dividend low volatility strategy, by contrast, filters out such targets through a volatility factor, and the resulting constituent stocks have more reliable quality.
For ordinary investors, Gong Lili suggested that dividend low volatility products could serve as the core holding of an equity portfolio, paired with some growth-oriented assets to strive for a combination that balances offense and defense. Investors should not make an extreme either-or choice between growth and dividends, as the two have strong complementary attributes, and a barbell allocation can help reduce overall portfolio volatility. Her proposed barbell strategy is "dividend low volatility plus prosperity directions," meaning any prosperity direction that investors favor, including AI, China special valuation, or new energy, can be paired with dividend low volatility to build a portfolio.
Regarding cross-border allocation, Gong Lili pointed out that Hong Kong dividend assets trade at a valuation discount relative to A-share dividends and offer higher dividend yields. Wind data shows that the current dividend yield of the A-share dividend index is roughly in the 4% to 5% range, while Hong Kong dividend yields are approximately 5.5% to 6%. However, she also cautioned that the industry structure of Hong Kong high-dividend assets skews traditional, with banking, energy, coal, and telecommunications operators accounting for a relatively high proportion, resulting in weaker growth elasticity, and investors need to consider their own circumstances comprehensively.
It is understood that Invesco Great Wall has built a "Dividend Plus" product matrix covering both A-shares and Hong Kong stocks, encompassing strategies such as "dividend plus low volatility," "dividend plus quality," and "dividend plus momentum." On the A-share side, the Dividend Low Volatility 100 ETF (515100) emphasizes defense, while the Dividend 100 ETF (159188) introduces a momentum factor to enhance elasticity. On the Hong Kong side, the Hong Kong Central SOE Dividend ETF (520990) focuses on high-dividend central state-owned enterprises, and the Hong Kong Dividend Low Volatility ETF (159569) provides a Hong Kong dividend allocation tool with lower volatility. Investors can match A-share core holdings with Hong Kong satellite positions according to their own risk preferences.
Risk disclosure: The above views represent only the opinions at the time and may change in the future. They are for reference only, do not constitute investment advice or guarantees, and are not intended as any legal document. A MACD golden cross signal has formed, and these stocks are performing well.
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