The first eight months of this year have seen the A-share market stage an extreme structural rally centered on the AI (artificial intelligence) industry chain. According to Wind data, as of August 31, the performance gap between the best and worst performing actively managed equity funds has surpassed 170 percentage points.
On one side, funds heavily positioned in hard-tech sectors like semiconductors have achieved returns exceeding 100% year-to-date, thanks to precise industry allocation and timely position adjustments. On the other side, funds sticking to traditional sectors such as consumer goods and pharmaceuticals have seen their net values sink, with some products recording losses of more than 30% after missing out on the tech rally. Additionally, some funds heavily invested in tech stocks have also experienced significant losses this year. This "ice and fire" market phenomenon has left investors facing a tough choice: chase tech stocks and risk being caught at highs, or stick with traditional sectors and potentially miss out entirely.
Front and back performance gap tops 170%
"It's been tough this year because I didn't buy tech stocks, so my returns are only in the teens," one investment professional said. This situation is also reflected in investor Xiao Luo, who holds pharmaceutical and consumer-themed funds. Neither of these fund types has staged a significant rally, and the consumer-focused fund in particular has remained in loss territory for an extended period. The A-share market has shown an extreme divergence pattern this year. In the second quarter, tech stocks experienced a sharp rally, with some funds seeing returns exceed 100% in just three months. Meanwhile, many other funds lost over 30% during the same period, creating a stark performance gap.
However, investing in tech-themed funds has not been a guaranteed path to profits, and the difficulty of investing has increased significantly. In the third quarter, tech stocks underwent a rapid correction in July, and the overall market experienced volatility and adjustment, leading to substantial drawdowns in many equity fund net values. August saw a phased recovery in tech sub-sectors, with some tech-themed funds seeing their net values rebound, but the overall market's sector divergence has not eased. Wind data shows that as of August 30, the year-to-date performance gap between the best and worst performing actively managed equity funds exceeded 170 percentage points, with the highest return at 130.85% and the lowest at -43.74%. Among them, six hybrid funds and one stock fund recorded returns exceeding 100% in the first eight months, while 36 hybrid funds and four stock funds suffered losses of over 30% (counting only the primary funds).
Among the underperforming funds, some are consumer or pharmaceutical-themed funds. However, some funds heavily weighted in tech stocks also experienced significant losses. For example, Peng Hua Manufacturing Upgrade lost over 40% in the first eight months. Its semi-annual report shows it focused on manufacturing, new energy, AI, brain-computer interfaces, commercial aerospace, robotics, and new technologies. Indices for new energy, commercial aerospace, and robotics all posted negative returns in the first eight months, significantly underperforming the semiconductor equipment index, which doubled, and the optical communications index, which surged. Similarly, Tong Tai Hui Ze also lost over 40% in the first eight months, with its portfolio heavily concentrated in the AI computing infrastructure supply chain at the end of the first half. Conversely, funds that achieved doubled returns in the first eight months were mostly those heavily invested in hard-core tech areas like semiconductors, with a focus on strong sub-sectors such as optical modules, and some funds took profits in time at the end of the second quarter, reducing positions and precisely avoiding the subsequent pullback risk.
Tech sector may remain range-bound in the near term
The tech sector demonstrated a strong "suction effect" in the first half of the year, with hard-tech-heavy funds fully benefiting from the industry's prosperity. In contrast, funds positioned in traditional manufacturing and consumer sectors saw notable net value declines due to market style shifts. After two rounds of market volatility in July and August, the previous fervor in tech stocks has gradually returned to rationality. At the current juncture, the probability of the tech sector replicating the second quarter's surge is low, and the market faces new choices. Has the long-term trend of the AI industry been fully recognized? With the widening divergence between tech and traditional sectors, how should investors seize opportunities ahead?
Dan Shui Quan Investment recently noted that from a pricing perspective, an upward move in the AI sector would mean returning to the pricing level of June's peak market sentiment, while a downward move would mean erasing the expectations brought by the systematic improvement of overseas frontier model capabilities since April. They believe that current pricing for either direction lacks sufficient basis, and the sector is likely to remain range-bound. From an industry perspective, AI penetration across various verticals is accelerating, and applications like robotics and autonomous driving have the potential to grow into decade-long major industries—an irreversible long-term trend.
Many fund managers are still positioning around the AI industry. Li Wenbin, fund manager at Yong Ying Fund, stated that the domestic economy is expected to continue stabilizing and improving, and the tech sector will continue to drive a new round of industrial revolution centered on AI. "Therefore, we will continue investing around AI, with domestic chips, the PCB supply chain, and memory storage remaining key focus areas." Ren Jie, another fund manager at Yong Ying Fund, added, "After the significant global market decline in July, the high expectations and crowded positioning in computing power have been digested; memory prices have shown signs of slowing, and with long-term contract prices locked in, there is no unlimited upside, easing the pressure on capital expenditure. Some stocks have already fallen to attractive valuation levels." They believe that given global AI models are still in a phase of continuous capability improvement and expanding application scenarios, the industry's development has strong sustainability and certainty.
Foreign institutions remain bullish on A-share long-term investment opportunities. Neuberger Berman believes that the current allocation logic of foreign capital is shifting from "theme-driven broad rallies" to "fundamental-driven stock picking." In the short term, the AI industry has entered a narrative vacuum period, with limited upward elasticity, so a swing trading mindset may be more appropriate. For non-tech sectors, Neuberger Berman indicates that rotation is ongoing, with a focus on pharmaceutical innovation chains, precious metals, chemicals, agriculture, and high-quality low-volatility dividend assets. They are also tracking industrial progress and earnings recovery opportunities in areas like robotics, commercial aerospace, and software. Over a longer horizon, the firm continues to be optimistic about the A-share market's long-term trend, believing that the AI industry trend remains intact and policy support is also strengthening.