The technology sector is experiencing a market boom, leading to a significant divergence in the performance of various funds. Some funds heavily invested in the semiconductor sector have achieved monthly returns exceeding 40%, while many others have only seen modest gains or even incurred losses. The question remains: can the current red-hot tech rally continue?
Over the past month, the market has remained volatile, with the technology and growth sectors standing out as the primary investment themes. Wind data shows that as of May 27th, two funds have seen their net asset values rise by over 40% in the past month, with their top holdings at the end of the first quarter concentrated in the semiconductor memory sector. Most of the top-performing funds also have significant exposure to the semiconductor and chip industries.
However, even within the technology investment space, the disparity in returns is stark. Some products have surged more than 30% in a single month, while many have gained less than 20%, and some funds have even experienced declines in their net asset values over the same period.
Analysts point out that the market has entered a short-term consolidation phase, continuing a structural trend overall. The technology sector still presents investment opportunities, but it is advisable to diversify across various sub-sectors when allocating investments to balance risk.
The performance of technology-focused funds is diverging. The investment fervor in the tech sector remains high. Looking at the performance of the Shenwan primary industry indices, the electronics sector has been the best performer over the past month, with a gain of 24.89%, followed by the communications sector index, which rose 20.13%. The strong tech rally has driven a broad upswing in technology-themed funds, particularly those heavily invested in high-growth sub-sectors such as CPO (co-packaged optics), PCB (printed circuit boards), and chip storage, which have generally delivered substantial returns.
Wind data indicates that, considering only primary share classes, two funds have seen their net asset values increase by over 40% in the past month as of May 27th: Founder Sealand Core Advantage A rose 45.86%, and Orient Huixin A gained 41.77%. First-quarter reports show that both funds held significant positions in semiconductor memory-related companies. Additionally, more than 30 other funds saw their net asset values rise by over 30% during the same period, with these funds generally heavily invested in semiconductor industry-related firms.
Nevertheless, even among funds focused on the technology sector, the gap in returns remains pronounced, primarily due to differences in sub-sector allocations and individual stock selections. For example, Huashang Balanced Growth and Huashang Zhiyuan Return, which have performed strongly this year, both saw net asset value increases of over 15% in the past month. While their overall returns have been steady, they appear relatively modest compared to top-performing funds with gains exceeding 30% or even 40%. Their first-quarter top holdings were mainly concentrated in the optical module sector.
Some technology-themed funds have underperformed during the same period, even experiencing net asset value losses. For instance, GF Vision Select A, which had significant exposure to optical fibers and cables, storage, and Token price appreciation-related industries in the first quarter, saw a net asset value decline of 2.25% over the past month. Although this fund has delivered an impressive performance year-to-date, with gains approaching 90% and ranking among the top ten actively managed equity funds, its short-term trend has notably diverged from the broader tech rally.
China Life-Pinebridge Digital Economy A, which held substantial positions in leading optical module stocks in the first quarter, has gained over 84% year-to-date, delivering solid overall returns. However, its performance over the past month has been relatively weak, with a net asset value increase of only 4.4%.
Commenting on the short-term performance divergence among funds heavily invested in tech stocks, an industry insider noted that some funds previously had highly concentrated technology holdings. Following significant short-term net asset value increases and a surge in fund subscriptions, their assets under management expanded rapidly. For risk control purposes, these funds subsequently diversified their holdings, moving away from highly concentrated allocations. Compared to smaller funds with concentrated positions, their responsiveness to market trends has diminished. At the same time, the current structural rally within the tech sector is pronounced. If a fund's allocations deviate from market hotspots, it becomes challenging to achieve strong returns.
How to navigate the extreme market conditions? In late April this year, mutual fund first-quarter reports were released in concentration. Equity fund managers heavily invested in semiconductors and other tech sectors generally expressed optimism about the long-term development of China's domestic semiconductor industry, believing that the current tech stock rally is still in its early stages. Fang Jian, manager of the Yinhua Integrated Circuit Fund, stated directly in the first-quarter report that the rally in Chinese tech stocks has just begun, with semiconductors being the backbone of the tech sector. He emphasized that localization remains one of the most certain investment opportunities in China's semiconductor field.
Since entering May, the "frenzied" rise of tech stocks within a month has raised concerns among many investors, who are beginning to watch for signs of a bubble burst. Concurrently, significant divergence has emerged among individual stocks within the sector: leading stocks continue to top the gainers' list, while follower stocks have performed modestly, heightening market caution.
However, it is understood that despite heightened short-term risk awareness, institutional investors have not shied away from the tech sector. Instead, they continue to seek opportunities within it. Meanwhile, traditional sectors that have undergone continuous adjustments are showing signs of a rebound.
Zhai Sen, a fund manager at Ping An Fund, clearly stated that the key investment opportunities in the current AI industry are concentrated in four areas: optical interconnect, domestic computing power, energy and power, and upstream supply constraints. Each of these sub-sectors possesses clear growth logic and relatively high earnings certainty.
Addressing market concerns about "crowded trades" in computing power and optical modules, Zhai Sen believes that high crowding is an objective reality, but it is not the core factor determining the trend. The fact that the AI sector is charting an independent course, even forming a divergence from the broader market, is fundamentally due to the absolute advantage of the AI industry's prosperity and its leading position in fundamentals.
Regarding specific investment allocation, Guotai Asset Management suggests that given the current extreme market trading structure, while maintaining an offensive stance, it may be prudent to proactively reduce volatility through structural adjustments, diversify industry allocations, and focus on AI hardware, new energy, industrial metals, chemicals, and insurance.
Great Wall Fund believes that the market may transition from a rapid rebound to a phase of consolidation and digestion in the short term. It advises against excessive pessimism towards the index but emphasizes that the importance of structural selection has significantly increased. The institution also notes that the investment breadth is expanding: new economy sectors are valued for high growth; manufacturing focuses on global leaders; and traditional sectors are expected to see a recovery. Specific areas to watch include emerging technology directions like integrated circuits, advantageous manufacturing sectors like power equipment and new energy, cyclical products such as building materials and chemicals, and traditional sectors like consumer goods that are poised for a rebound.