Leading mutual funds in the first quarter exhibited a distinct "barbell" strategy in their sector allocations. Top-performing funds either focused on technological innovation—such as chips, artificial intelligence, commercial aerospace, and humanoid robotics—or heavily invested in HALO assets, including non-ferrous metals, chemicals, coal, oil and gas, power grid equipment, and new energy storage.
However, the adjustment strategies of star fund managers varied significantly during the quarter, with both reductions and increases in positions, and diverging preferences between technology and consumer sectors.
Data from Wind shows that the total share volume of mutual funds increased from 32.04 billion shares at the beginning of the year to 32.73 billion shares in the first quarter of 2026, a rise of approximately 2.14%. However, the total assets under management decreased slightly from 37.67 trillion yuan to 37.53 trillion yuan, a marginal decline of 0.38%.
According to Geshang Fund data, among active equity funds, the share volume of general equity funds decreased by about 11.8 billion shares, while hybrid equity-focused funds increased by approximately 11.7 billion shares, and flexible allocation funds decreased by about 6.9 billion shares.
Within the top holdings of active equity-focused funds, A-shares accounted for 86.1%, while Hong Kong stocks made up 13.9%, representing a quarter-on-quarter decline of 2.3 percentage points for the latter.
Geshang Fund researcher Guan Xiaomin noted a marginal shift in fund holdings toward small and mid-cap stocks: the proportion of CSI 500 holdings increased by 1.2 percentage points to 22.2%, while the CSI 1000 rose by 2.2 percentage points to 13.6%.
At the sector level, Guan highlighted that mutual funds heavily weighted electronics, power equipment, and communications in the first quarter.
Notably, funds primarily increased their positions in communications and power equipment. On one hand, optical modules, which are core beneficiaries of the AI computing power industry chain, saw significant buying. On the other hand, the dual drivers of new energy and AI power demand boosted the outlook for power equipment.
In contrast, mutual funds reduced their exposure to electronics and automobiles, mainly due to profit-taking pressure following substantial earlier gains.
Guan explained that this trend reflects how "AI power and AI hardware became the core themes for mutual funds in the first quarter, driven by the AI industry chain cycle."
Yang Delong, chief economist at Qianhai Kaiyuan, pointed out that the sectors favored by top-performing mutual funds in the first quarter displayed a typical barbell structure. One end consists of technological innovation—such as chips, semiconductors, artificial intelligence, computing power, algorithms, commercial aerospace, and humanoid robotics—representing key areas supported by the "16th Five-Year Plan" guidelines. The other end comprises HALO assets (heavy assets, low obsolescence)—including non-ferrous metals, chemicals, coal, oil and gas, power grid equipment, and new energy storage—which form the infrastructure of the AI era.
Star fund managers showed clear divergence in their first-quarter strategies: some significantly reduced their equity exposure, while others increased positions against the trend. Some shifted from AI computing to new energy lithium batteries, while others built full positions in Kweichow Moutai, betting on a consumer recovery.
Among those reducing exposure for risk aversion, Xie Zhiyu, a fund manager at Xingquan Global Funds, attracted attention. The equity allocations of the three funds he manages each dropped by over 8 percentage points. For instance, the allocation in his flagship product, Xingquan Herun, decreased from 92.52% to 83.73%, the lowest since 2016. Xie explained in the quarterly report that overseas conflicts in March led to a decline in risk appetite, but AI development and economic stabilization remain the main themes for the year.
Qiao Qian, another fund manager at Xingquan Global, also significantly reduced equity positions in two funds during the quarter. The allocation in Xingquan Xinshiye plummeted from 92.10% at the start of the year to 65.99%, a drop of 26 percentage points. Additionally, Chen Hao, a fund manager at E Fund Management, saw equity positions in his eight funds decrease by over 5 percentage points each. Funds managed by Zhou Weiwen of China Europe Fund and Zhao Bei of ICBC Credit Suisse also reduced equity exposure. Some funds under Ge Lan of China Europe Fund and Hu Xinwei of China Universal Asset Management also saw notable decreases in equity allocations.
Among those increasing positions against the trend, Mo Haibo, a fund manager at Wanjia Fund, raised allocations across all six of his funds. For example, Wanjia Emerging Blue Chip increased from 70% to 88%, and Wanjia Zhenxuan rose from 73% to 85%. Notably, his flagship product, Wanjia Quality Life, initiated positions by purchasing 138,700 shares of Kweichow Moutai and 4.3132 million shares of Muyuan Foodstuff.
He Shuai, a fund manager at JYSSLD Fund, also substantially increased positions in the first quarter, with allocations in his four funds rising by over 10 percentage points each. After focusing on baijiu and pharmaceuticals in the fourth quarter of last year, he shifted toward AI computing and semiconductors in the first quarter, citing the expected widespread integration of AI agents into workflows, which would drive computing power demand.
Furthermore, Liu Xu, a fund manager at Dacheng Fund, saw equity positions in two of his funds increase by over 10 percentage points. Li Yaozhu, a fund manager at GF Fund, also raised the equity allocation in one of his funds by more than 7 percentage points.
Divergence in adjustment directions was equally evident.
In the technology sector, Feng Mingyuan, a fund manager at Cinda-AXA Fund, significantly reduced holdings in AI computing and consumer electronics-related stocks, shifting toward new energy lithium batteries. For instance, in Cinda-AXA Zhiyuan Three-Year, only Huaqin Technology and Huahai Qingke remained from the top holdings at the end of the previous year. Huaqin Technology saw a reduction of 78.91%, while Goertek, GigaDevice, and InnoLight disappeared from the top ten. They were replaced by lithium battery material companies such as Shanghai Energy, Dynanonic, Putailai, and Hunan Yuneng.
Fu Pengbo and Zhu Lin, fund managers at Ruifeng Fund, maintained high equity exposure and increased allocations to PCBs, chips, and optical communications, focusing on sectors with strong growth prospects.
On the consumer side, Zhang Kun, a fund manager at E Fund Management, saw his assets under management decrease to approximately 41.7 billion yuan in the first quarter, but his holdings remained highly stable. The top three holdings in the three products he manages, including E Fund Blue Chip Select, continued to be Kweichow Moutai, Wuliangye, and Luzhou Laojiao, with Kweichow Moutai being held at the maximum allowable limit.
Chen Jinwei, a fund manager at Penghua Fund, primarily held consumer and pharmaceutical stocks but reduced exposure to chemicals in the first quarter. He elaborated extensively on his consumer outlook, stating, "We are at the starting point of a new cycle for 'established' consumption," expressing optimism toward service consumption, mass commodity consumption, and essential healthcare.
Guan Xiaomin summarized that top-performing funds in the first quarter of 2026 exhibited clear AI themes alongside intensified style divergence.
"Star fund managers displayed differences in their timing and style preferences regarding AI investments, including debates between坚守 computing power and shifting to applications, as well as between延续 growth and the return to value. These divergences stem from uncertainties about whether computing infrastructure is fully priced, expectations for application realization, the sustainability of growth styles, and the timing of value style resurgence," Guan analyzed.
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