The 2026 second-quarter reports for public mutual funds have been released. The following analysis is based on the funds' top holdings and their sector allocations.
Analysis of Fund Top Holdings
The latest 2026 Q2 reports for public mutual funds reveal several key characteristics regarding their major stock holdings.
Firstly, regarding the sector distribution of the top 50 holdings, the list is dominated by this year's popular themes: communications, semiconductors, non-ferrous metals, new energy, Hang Seng Tech, and innovative pharmaceuticals. Notably, Kweichow Moutai, a traditional representative of the baijiu sector, has seen its holding value drop unusually to 15th place. Meanwhile, all the stocks from the popular thematic groups have entered the top 50. This includes the "Yi Zhong Tian" group, comprising Zhongji Innolight Co.,Ltd., Eoptolink Technology Inc.,Ltd., and Tianfu Communication, as well as the "Ji Lian Hai" group, featuring Cambricon Technologies Corporation Limited, Industrial Fulian, and Hygon Information. Among these, Zhongji Innolight Co.,Ltd., Eoptolink Technology Inc.,Ltd., and Cambricon Technologies Corporation Limited have even broken into the top three positions.
Secondly, the concentration of these top holdings remains high, showcasing an extreme focus on technology stocks. In terms of concentration metrics, the cumulative market value of the top 3 holdings exceeds 12%, the top 10 surpasses 24%, the top 20 exceeds 34%, the top 40 is over 47%, and the top 50 accounts for more than 51%. The top 245 stocks already represent 80% of the total. The total market value of the top 50 holdings reached 2.5 trillion yuan.
Thirdly, among the top 50 holdings, 27 stocks saw increased positions, primarily within the communications and semiconductor sectors. However, there were also some reductions within these same sectors, indicating internal divergence. Sectors experiencing net selling included Hang Seng Tech, new energy, non-ferrous metals, and innovative pharmaceuticals—areas essentially being drained of capital by the magnetic pull of the technology sector. In summary, technology stocks overwhelmingly dominated the Q2 reports, with fund managers once again pushing the characteristic of concentrated bets in public funds to its peak.
Analysis of Fund Sector Allocation
Based on the 2026 Q2 fund reports and observing market value changes across the 31 Shenwan industries, the following trends are evident.
Firstly, from the perspective of sector concentration, the combined investment value of the top two industries accounts for 49.37%. Since both electronics and communications are technology sectors, this equates to nearly 50% of assets being concentrated in the technology theme, far exceeding the 30% critical threshold. The top five sectors already represent two-thirds of the total allocation.
Secondly, looking at the mainstream investment sectors, aside from electronics and communications, pharmaceuticals, power equipment, and non-bank financials round out the top five. The food and beverage sector, which had long been a dominant force, has now retreated to 9th place.
Thirdly, in terms of changes in sector weightings, electronics and communications have seen significant increases, with electronics notably rising by 11 percentage points.
In conclusion, the current sector concentration within public mutual funds is exceptionally high. However, historical experience suggests that excessively high concentration often signals underlying risk. Indeed, the sharp decline in technology stocks witnessed in July can be seen as an early indication of this concentrated positioning beginning to unwind.
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