The second quarter reporting season for mutual funds has commenced.
Financial Investment News notes that as of July 13th, among the more than 30 funds that have disclosed their Q2 reports, over 10 actively managed equity funds have achieved returns exceeding 100% in the first half of the year, making their second-quarter holdings a focal point of attention. These funds are primarily from Hongtu Innovation Fund, Jinxin Fund, Rongtong Fund, and Tongtai Fund.
Differing Paths Within a Common Theme
The Q2 reports show that while these leading funds maintained a focus on the technology sector, they pursued different portfolio adjustment strategies. Some funds significantly overhauled their major holdings in semiconductors and communication equipment, increasing exposure to core assets in AI computing infrastructure. Other funds, adopting a more cautious stance regarding high valuations, made structural reductions in high-priced semiconductor stocks to optimize their detailed allocations.
Furthermore, several top-performing funds saw their assets under management swell significantly due to their strong first-half performance. Their portfolio adjustment strategies, investment logic under capital expansion, and outlook for the market provide valuable insights for current technology sector investing.
Adherence to the AI and Tech Investment Theme
Multiple funds with over 100% returns continued to anchor their investments in core sectors like artificial intelligence, semiconductors, and communication equipment during the second quarter, executing significant changes to their top holdings while operating at high equity exposure levels.
The Hongtu Innovation New Technology Fund achieved a return of 143.57% in the first half of the year. Its Q2 report indicates the fund maintained a high equity position of around 90%, but its top ten holdings underwent notable changes.
Six of these positions were new additions, including Beijing Junzheng, Kema Technology, Jiangsu Etern Company Limited (ASX: 600105), Hengtong Optic-Electric Co.,Ltd. (ASX: 600487), Hangzhou Changchuan Technology Co.,Ltd. (ASX: 300604), and Verisilicon Microelectronics(Shanghai)Co.,Ltd. (ASX: 688521), primarily in the semiconductor and communication equipment industries.
Among holdings carried over from the end of Q1, Zhongji Innolight Co.,Ltd. (ASX: 300308), Eoptolink Technology Inc.,Ltd. (ASX: 300502), and Yuanjie Semiconductor Technology Co.,Ltd. (ASX: 688498) received substantial additional investment in Q2. Compared to the end of Q1, the fund's weighting in semiconductors increased.
Benefiting from its strong performance, the fund's assets under management grew from approximately 1 billion yuan at the end of Q1 to around 3.4 billion yuan by the end of Q2, providing ample capital for portfolio adjustments. Despite this significant growth, the fund's equity allocation remained level with Q1, indicating swift repositioning by the fund manager. Manager Gai Junlong expressed continued optimism for the AI field, including developments in computing infrastructure and AI applications.
Other funds managed by Gai Junlong, such as Hongtu Innovation Prosperity Return, Hongtu Innovation Transformation Selection, and Hongtu Innovation Intelligent Manufacturing, followed similar adjustment directions.
The portfolio adjustments for the Tongtai Digital Economy Fund in Q2 also centered on semiconductors. Semiconductor holdings like Hangzhou Changchuan Technology Co.,Ltd. (ASX: 300604), Kema Technology, Shengke Communication-U, and Jiangfeng Electronics, which were held at the end of Q1, were all reduced in Q2. Except for Changchuan Technology, the others exited the top ten holdings list.
Simultaneously, the fund established new positions in semiconductor stocks such as Hygon Information Technology Co.,Ltd. (ASX: 688041), Verisilicon Microelectronics(Shanghai)Co.,Ltd. (ASX: 688521), and Gigadevice Semiconductor Inc. (ASX: 603986). Additionally, the fund increased its stakes in Jingce Electronics, Zhongji Innolight Co.,Ltd. (ASX: 300308), and Eoptolink Technology Inc.,Ltd. (ASX: 300502) during the quarter.
Cautious Reduction in Semiconductor Holdings by Some Funds
While the technology sector performed strongly overall, some funds initiated a more prudent adjustment mode based on market valuations and the macro environment to mitigate risks from potential periodic volatility. Several funds under Jinxin Fund were among the first to adjust their strategy. Although their equity exposure increased slightly, they proactively reduced holdings in several semiconductor stocks that had seen substantial cumulative gains.
The Jinxin Selected Growth Fund trimmed its positions in semiconductors and other high-gaining holdings during the second quarter.
Its Q2 report shows assets under management were 460 million yuan, up from the end of Q1. Its equity position reached 90%, a slight increase from Q1. However, the size of holdings for many stocks within its top ten list was reduced. Positions in stocks like Maolai Optics, Strong One Shares, Kingsemi, and Zhongke Feice were cut back; these are primarily concentrated in the semiconductor industry. Concurrently, the fund's newly added top holdings included Huicheng Vacuum, Xinlai Yingcai, and Yutai Micro-U, which belong to the specialized equipment, general equipment, and semiconductor sectors, respectively.
Fund manager Kong Xuebing stated that since Q2, all sub-sectors of domestic semiconductors have seen significant cumulative gains. Facing the reality of limited macro visibility and insufficient long-term capital, structurally high valuations have entered a phase of earnings verification. Following a period of extreme market style performance, volatility may increase noticeably, warranting a proactive yet cautious approach. Funds also managed by Kong Xuebing, Jinxin Steady Strategy and Jinxin Industry Selection, executed similar structural reductions, also trimming semiconductor holdings.
The equity position for the Rongtong Industry Trend Stock Fund decreased by approximately 8 percentage points compared to the end of Q1, possibly related to its asset growth outpacing timely portfolio adjustments. Its assets grew from less than 400 million yuan at the end of Q1 to over 2.1 billion yuan by the end of Q2.
Regarding its top ten holdings, the fund primarily held AI-related stocks. Compared to the end of Q1, it substantially increased its stakes in Eoptolink Technology Inc.,Ltd. (ASX: 300502), Zhongji Innolight Co.,Ltd. (ASX: 300308), Dongshan Precision, Yuanjie Semiconductor Technology Co.,Ltd. (ASX: 688498), Jiangsu Etern Company Limited (ASX: 600105), and Cambridge Technology. It also established new positions in stocks like Jin'an Guoji, Kingboard Holdings, and Hua Hong Grace Semiconductor Limited (ASX: 688347), mainly in the component and communication equipment sectors.
Comments