The domestic ETF market has expanded rapidly in recent years, with product offerings growing increasingly diverse and a rising number of retail investors entering the space through these instruments. Wind data shows that in the first half of this year, retail investors accounted for 31.22% of total ETF holdings, a significant jump from 21.63% at the end of 2025.

The accelerating entry of individual investors reflects broad recognition of the tool value of ETFs and serves as a microcosm of the ongoing upgrade in household wealth management practices. However, higher participation does not automatically translate into stronger allocation capabilities. A joint report titled "2026 ETF Client Investment Behavior Insights", published by CITIC Securities, Hithink RoyalFlush, Guotai Haitong Securities, and Invesco Great Wall Fund, reveals several thought-provoking findings across multiple survey datasets—most investors lack a tiered allocation strategy, over 60% have no standardized position-sizing rules and frequently make emotional decisions during unrealized gains or losses, and more than 40% have never used professional auxiliary tools such as valuation or capital-flow monitoring, leaving their entire decision-making process for product selection, timing, and risk control without quantitative support.

These behavioral biases may have limited impact during stable market conditions, but their costs become apparent once sector volatility intensifies. Recently, some cross-border ETFs have seen persistently high premiums, drawing repeated risk warnings from public fund managers, yet certain investors still chased rallies for short-term gains and suffered pullbacks, triggering a wave of complaints on social media about losing money in ETFs. This situation starkly reveals that many individual investors remain at the "buy product" stage, far from the "build allocation" level.

ETFs combine the advantages of low cost, high transparency, and strong risk control, with their core value lying in diversifying investment risk and anchoring long-term capital. They serve as high-quality instruments for household wealth management and for supporting the development of capital markets and the real economy, rather than vehicles for short-term speculation. Regulators have rolled out a series of policy measures in recent years aimed at the high-quality development of ETFs, including optimizing supporting mechanisms, expanding the product spectrum, fostering a healthy ecosystem, and guiding medium- and long-term capital into the market. These efforts are pushing ETFs from being merely "tradable" to genuinely "allocatable," cultivating fertile ground for index-based investing.

The policy dividend continues to unfold, and with the consecutive launch of innovative products such as active ETFs, retail investor participation is set to climb even further. Yet the real challenge has already shifted from "whether products exist" to "whether investors know how to allocate." Individual investors need to complete the transition from a "trading mindset" to an "allocation mindset." This means gaining a clear understanding of the product landscape and systematically grasping the risk-return characteristics and applicable scenarios of different ETF types; establishing an allocation framework that uses diversified multi-asset, multi-sector positioning to replace concentrated bets on a single product, thereby smoothing portfolio volatility; and strictly adhering to position discipline while implementing risk management, relying on objective indicators such as valuations and capital flows to support decisions rather than reacting emotionally to fragmented information.

Public fund managers should likewise shoulder greater responsibility—abandoning the "enclosure race" of indiscriminate issuance and trend-chasing, and instead focusing on optimizing product matrices, strengthening advisory services, and deepening investor education. They must enhance the allocatability of their products across dimensions including index construction, operational mechanisms, investment strategies, and fee design. When all market participants engage with ETFs through an allocation logic rather than a speculative mindset, the instrument can fully realize its resource-allocation function, providing lasting support for household wealth appreciation and the high-quality development of the capital market.