In the second quarter of 2024, let's take a look at the performance and actions of actively managed equity funds in the market and find that there have been quite a few changes in their investment strategies. These changes are mainly reflected in the scale of holdings, the right to speak, and the choice of industry sectors, especially in the attitude towards large-cap and mid-cap stocks, which have changed quite a bit.

The scale of holdings and the right to speak have shrunk. In this second quarter, the scale of holdings and the right to speak of actively managed equity funds have declined a bit. The scale of holdings fell by 7.95%, and the right to speak also decreased by 0.20 percentage points. This indicates that their influence in the market has weakened somewhat. Compared with public funds, although the decline in the scale of holdings is not much, the reduction in the right to speak is quite obvious, and it seems that the performance of these funds is a bit weak.

The industry sectors have shifted gears. Looking at the industry sector allocation of these funds, the proportion of the electronics and communications sectors has increased, which is obviously an attempt to find opportunities in growth industries. The defensive sector such as public utilities has also increased its investment, but the overall buying strength is not as strong as before, probably because the market has different views on the risks and returns of different sectors.

Large-cap and mid-cap stocks have changed their preferences. Interestingly, these funds have reduced their interest in large-cap stocks and have started to pay attention to mid-cap stocks. It seems that fund managers are now more optimistic about mid-cap stocks with relatively low valuations and large growth space. This adjustment of investment strategy is probably because they have seen through the market environment and macroeconomic situation and feel that the valuation of large-cap stocks is about right.

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The investment sectors have also changed direction. In terms of investment sectors, these funds have begun to increase their investment in growth sectors, especially TMT (Technology, Media, and Telecommunications), while reducing their investment in traditional consumer sectors. This is probably because they predict market trends and believe that the technology and media industries will have a brighter future in the future, while traditional consumer industries may face some challenges.

A revelation for investors. For us investors, these operations of actively managed equity funds have actually given us a lot of clues, allowing us to better grasp market dynamics. In the context of such a complex global economy, we must adjust our investment portfolios by observing the investment trends of funds. Especially in the selection of industry sectors and stock market value, we must be more cautious. At the same time, we also need to pay attention to market risks, especially in the investment of the consumer sector, and re-evaluate, not to be complacent.

Electronics, communications, and home appliances, these industries have recently grabbed all the attention. They have shown super potential in terms of technological innovation and market demand, so friends in the investment community regard them as more important than anything else.

You see, these industries have the most net inflows of funds, and the pricing power and over-allocation ratio of funds have also been rising continuously. This indicates that the market is very confident about their ability to make a lot of money in the future, and these industries also play a key role in the global technological development trend. Especially in fields such as semiconductors, 5G communications, and smart home appliances, the more advanced the technology, the higher the consumer requirements, and these industries are expected to continue to maintain a strong market performance.

Let's talk about those industries that were previously considered to have strong defensive capabilities, such as food and beverages, medicine, and power equipment, which have experienced a large outflow of funds this quarter. The pricing power and over-allocation ratio of funds have also declined significantly. This may be because funds are worried that the performance growth of some companies in these industries will slow down, or it is a response to the rise in macroeconomic recovery and market risk preference. At the same time, the allocation of defensive sectors in the Hong Kong stock market by public funds has increased, probably because they think the dividend value of Hong Kong stocks in these sectors is relatively high.

At the individual stock level, actively managed equity funds have a strong over-allocation of stocks related to electronics and communications, such as Luxshare Precision, New Easy Power, Zhongji XuChuang, BYD, Hu Die Shares, GigaDevice, Midea Group, Haier Smart Home, and Lanchuang Technology. These companies have strong competitiveness and excellent technology in their respective fields, so they have become popular choices for funds.The electronics industry, as a beneficiary of the semiconductor supercycle and the artificial intelligence technological revolution, has seen its overweight ratio rise to a historical high. This indicates that funds have a high expectation for the continued strength of the electronics industry. Although the investment logic for other industries such as power equipment, pharmaceuticals, and food and beverage has not improved much, the electronics industry may continue to be popular.