As 2026 reaches its midpoint, market turbulence and divergence are presenting fresh challenges for investors. With sector rotation speeding up, the debate over chasing growth versus holding value has intensified since the start of the year. At the same time, falling interest rates are making high-quality assets that deliver steady returns increasingly scarce, prompting many to consider diversified allocation as a potential solution. Yet with options like cash management products, fixed income plus strategies, dividend stocks, ETFs, and QDII funds all on the table, how should a portfolio actually be structured?
For Wang Jiapeng, the proposed fund manager of the Yinhua Huaying Multi-Asset Allocation Six-Month Holding Period Fund of Funds, the answer may lie in a simple principle: everything moves in cycles. "Asset valuations don't trend in one direction forever; what rises sharply may correct, and what falls deeply may recover," he explains. Guided by this cyclical philosophy, Wang's Yinhua Huafeng Three-Month Holding Period Fund of Funds A, launched in January 2025, has delivered a cumulative return of 5.68% against a performance benchmark of -1.49%, generating excess returns of 7.17%. Data from fund periodic reports covers January 22, 2025, to June 30, 2026, though past performance does not guarantee future results. The new Yinhua Huaying Multi-Asset Allocation Six-Month Holding Period Fund of Funds, currently being offered under Wang's management, will continue this investment approach.
From Correlation Traps to Dynamic Positioning: When diversifying, some investors rely heavily on historical low-correlation data between assets. Wang cautions that this traditional framework has limitations, as correlations can shift when market conditions change. "You can't just look at historical correlation coefficients; you need to understand the drivers behind asset correlations and recognize when low correlation might turn into high correlation," he stresses. In his investment system, asset allocation is not a static mix but a dynamic reconstruction based on cyclical positioning, with the core being the trade-offs made according to where each asset stands in its cycle.
This philosophy translates into a three-tiered decision framework. The first layer is strategic asset allocation, which serves as the portfolio's top-level design, setting medium-to-long-term target ratios based on the product's risk budget and the long-term risk-return profiles of various asset classes. The second layer, tactical asset allocation, is where Wang dedicates most of his daily effort, focusing on determining the current cyclical position of each asset class to decide whether to deviate from the strategic anchor. "When assets become overheated and crowded, I consider reducing exposure; after declines make valuations attractive, I gradually increase exposure," he notes. The third layer involves fund selection, where suitable funds are chosen within each sub-sector to execute the allocation, whether actively managed or ETFs, both serving the allocation goals without preference for specific product types.
These three layers contribute to performance in descending order of importance: strategic allocation outweighs tactical, which outweighs fund selection. "Over the long term, asset allocation largely determines a portfolio's return and risk characteristics," Wang states. "Within the same asset class, the return gap between different funds is likely much smaller than the gap between different asset classes." To generate excess returns, Wang relies on three tactical allocation paths. First, trend-based asset class switching: when an asset enters the early stage of an upward cycle, he shifts from low to high attention, noting that "this directional adjustment doesn't require frequent action, typically just two or three times a year." Second, contrarian positioning through mean reversion, staying alert to pullbacks after gains and opportunities after declines. Third, crowding management: when capital floods into an asset and market expectations become overly uniform, "even if fundamentals are still improving, I gradually reduce attention." Though these paths may sound contrarian, Wang clarifies that the essence is not contrarian but cyclical: "Follow the major cycle's direction, and stay vigilant when cycles reach extreme positions."
Fund Selection: Quantitative Screening as a Starting Point, Qualitative Judgment as the Final Step: The implementation of FOF investments ultimately hinges on selecting specific fund products. Wang has built a two-dimensional framework examining both the product and the manager. On the product side, he focuses on three key metrics: style stability to avoid drastic drift, consistency of excess returns over the long term rather than one-year bursts, and drawdown control under extreme market conditions, which he sees as the true test of risk management. On the manager side, he evaluates whether investment philosophies are coherent and whether actions align with stated beliefs. "Be wary of managers whose holdings contradict their stated principles; don't be swayed by short-term performance sharpness, but value long-term win rates," he advises. Fund size relative to strategy capacity is also crucial, as "some strategies see diminishing returns after scaling up." In his view, quantitative screening indicators merely narrow the candidate pool. "Data is a starting point, not the endpoint; final judgments often rely on qualitative analysis to understand the logic behind a manager's performance and assess whether that methodology can persist." He likens FOF research to "secondary research," which doesn't require extreme depth in a single industry but demands broad coverage and sharp discernment to identify truly outstanding managers across fields.
The Yinhua Huaying Multi-Asset Allocation Six-Month Holding Period Fund of Funds, currently in distribution, extends this cyclical allocation framework. With over 80% of assets invested in public funds, equity exposure is set between 5% and 40%, anchored by fixed income for stability while seeking enhanced returns through diversified assets. Specifically, the fixed income side focuses on pure bond funds, while the equity side emphasizes broad-based indices and balanced strategies as core holdings, supplemented by overseas assets, commodities, and growth sectors. According to Wang, the fund offers four key highlights: first, a long-term absolute return orientation that prioritizes holder experience over chasing short-term hotspots; second, diversified global asset allocation covering Chinese bonds, A-shares, Hong Kong stocks, US stocks, and gold, going beyond simple diversification by dynamically adjusting weights based on cycles and flexibly using both active funds and ETFs; third, a drawdown-first approach aimed at strict risk control to help investors stay invested; and fourth, cycle-driven thinking that doesn't rely on predicting market direction but instead judges asset cycle positions to decide what and how much to allocate.
Market Outlook: Five Assets, Five Cyclical Positions: As of August 2026, the A-share market is consolidating around the 3,900 level, the Hang Seng Index has rebounded to near 25,000, and the 10-year government bond yield has fallen below 1.70%. London spot gold has pulled back from earlier highs to around $4,600 per ounce, while the S&P 500 hovers near record highs. Wang assesses where each asset class currently stands in its cycle. Data from Wind shows the 10-year Treasury yield as of August 25, 2026, and other figures as of August 24, 2026, with the S&P 500 tracked from January 3, 1928, to August 24, 2026, and London gold spot from August 19 to August 24, 2025; index historical performance does not indicate future results.
For A-shares, Wang is broadly optimistic, noting that valuations have corrected significantly from year highs, making them attractive with clear structural opportunities. He highlights three main threads: cyclical and domestic demand sectors, where economic recovery could provide positive catalysts; dividend assets, which may remain scarce in a low-rate environment; and AI and advanced manufacturing, which boast independent industrial growth logic. On bonds, his stance is neutral, prioritizing coupon income and safety. In a low-rate, low-spread environment, he believes credit downgrading for yield offers poor value with risks far outweighing returns, so he prefers bond funds with solid duration management and strict credit controls.
Hong Kong stocks are one of his favored directions, as dividend yields there generally exceed comparable A-shares, and internet and innovative drug leaders trade at significant discounts to US counterparts, offering good overall value. For US stocks, his view is more positive than at the start of the year, as AI industry profit conversion has improved valuation levels and relative attractiveness, though he remains cautious about Fed policy uncertainty and geopolitical risks. On gold, the long-term logic is supported by central bank buying trends, but gains over the past five years have deviated significantly from long-term averages. After sustained adjustment and volatility reduction this year, value is emerging, and he suggests considering adding exposure on dips rather than chasing highs. Data from Wind covers August 24, 2021, to August 24, 2026.
Standing in the middle of 2026, Wang's advice to investors is measured and restrained. "Divergence across asset classes is widening, and no single asset can offer a one-size-fits-all solution; the right approach is not to go all-in on any one asset," he emphasizes. "The key is to build a diversified portfolio, capture cyclical dividends from different assets, and rely on disciplined risk control to minimize major mistakes." When asked what investors should do now, he responds firmly: "Most of the time, the market lacks a clear direction, so balanced allocation and patient waiting may be the best choice. When windows emerge with clear lows or confirmed trends, then act decisively."
Risk Disclosure: Yinhua Huaying Multi-Asset Allocation Six-Month Holding Period Fund of Funds fees: For A class subscription, rates are 0.50% for amounts under 5 million yuan, and a fixed 1,000 yuan per transaction for amounts at or above 5 million. A class purchase fees follow the same structure. No redemption fees apply to A or C classes due to the six-month minimum holding period, with redemptions available only after that period. Management fee is 0.60% per year, and custody fee is 0.15% per year. Fee details are per the fund's product information summary as of July 31, 2026, and subject to the latest announcements and legal documents. Yinhua Huafeng Three-Month Holding Period Fund of Funds fees: A class purchase rates are 0.80% for amounts under 1 million yuan, 0.60% for 1 to 2 million, 0.40% for 2 to 5 million, and a fixed 1,000 yuan per transaction at or above 5 million. A class redemption rates are 0.50% for holding periods under 180 days and 0 for 180 days or more. Management fee is 0.60% per year, custody fee is 0.15%, and C class sales service fee is 0.40% per year. Fee details are per the product information summary as of December 12, 2025, subject to the latest announcements and legal documents.
Wang Jiapeng's background: He holds a master's degree and previously worked at China Construction Fund Management, joining Yinhua Fund Management in March 2023. He currently serves as a fund manager and assistant fund manager in the FOF investment management department. His current funds include Yinhua Huali Balanced Selection One-Year Holding Fund of Funds (since December 16, 2024), Yinhua Huafeng Three-Month Holding Period Fund of Funds A/C (since January 22, 2025), Yinhua Juxiang Multi-Asset Allocation Three-Month Holding Period Fund of Funds A/C (since November 17, 2025), Yinhua Huayuan Multi-Asset Allocation Six-Month Holding Period Fund of Funds A/C (since February 10, 2026), and Yinhua Huarui Multi-Asset Allocation Three-Month Holding Period Fund of Funds (since June 25, 2026). Performance data: Yinhua Huali Balanced Selection One-Year Holding Fund of Funds, established August 31, 2022, has net value growth rates of -7.24%, 1.57%, 6.28%, and 1.82% for 2023, 2024, 2025, and since inception, respectively, against benchmark returns of 1.24%, 9.61%, 3.66%, and 17.59%. Yinhua Huafeng Three-Month Holding Period Fund of Funds A, established January 22, 2025, has a net value growth rate of 5.68% since inception, against a benchmark of -1.49%. The C class has a growth rate of 5.07% against the same benchmark. Yinhua Juxiang Multi-Asset Allocation Three-Month Holding Period Fund of Funds A, established November 15, 2025, has a growth rate of 1.89% since inception, against a benchmark of 0.55%, while the C class has 1.64% against the same benchmark. Data sources are fund periodic reports as of June 30, 2026.
Investing carries risks, and caution is required. Funds are long-term investment tools designed to diversify and reduce individual security risk. Unlike bank deposits that offer fixed income expectations, funds may generate returns or losses based on holdings. Before making investment decisions, please carefully read the fund contract, prospectus, and product information summary, fully understand the fund's risk-return characteristics, consider personal investment objectives, time horizon, experience, and financial status, and make rational decisions based on risk tolerance and sales suitability advice. Yinhua Fund Management makes the following risk disclosures: First, funds vary by type, including equity, hybrid, bond, money market, fund of funds, and commodity funds, each with different return expectations and risk levels; generally, higher expected returns come with greater risk. Second, funds face market risk, management risk, technical risk, and compliance risk during operations. Redemption risk is unique to open-end funds, where net redemption requests exceeding a certain threshold (10% for open-end funds, 20% for periodically open funds, excluding special products approved by the CSRC) may delay full redemption or payment. Third, regular fixed-amount investment differs from savings plans; it encourages long-term investing and cost averaging but does not eliminate inherent fund risks, guarantee returns, or serve as a savings substitute. Fourth, special product risks include the minimum holding period, which imposes liquidity constraints, and potential investments in Hong Kong Stock Connect securities, which carry specific risks from differing investment environments, market systems, and trading rules. Fifth, the fund manager commits to managing assets with integrity and diligence but does not guarantee profits or minimum returns; past performance does not indicate future results, and other funds' performance does not constitute a guarantee. Yinhua Fund Management reminds investors of the buyer-beware principle, where investment risks from fund operations and net value changes are borne by investors after decisions are made. Managers, custodians, distributors, and related institutions make no promises or guarantees on returns. Sixth, this fund is registered with the CSRC, and legal documents are publicly disclosed on the CSRC fund electronic disclosure website and the manager's website. CSRC registration does not imply endorsement of investment value, market prospects, or returns, nor does it indicate absence of risk.
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