Core Viewpoint - The article discusses the performance of active equity funds compared to index products, highlighting the significant excess returns achieved by active funds in 2025, while also addressing concerns about their ability to maintain this performance amid market fluctuations and new regulatory guidelines [2][5][9]. Temporal Dimension: Predicting Active Equity Excess Returns - Three main logical lines are identified to predict active equity excess returns, leading to the development of six predictive indicators: 1. **Investment Theme and Institutional Pricing Power**: Indicators such as tracking error differentiation (TE-S) and active equity holding concentration (HHI) show long-term predictive capabilities [3][16]. 2. **Active Risk Amplification Reflects Stronger Confidence**: The month-on-month change in tracking error (TE-MDQ) serves as a short-term predictor, indicating that increased tracking error often correlates with fund managers' confidence in market conditions [3][17]. 3. **Market Trading Sentiment**: Indicators like market movement (MMT) and trading volume (AMT) have long-term predictive effects, while implied volatility (VIX) is effective in the short term [3][18]. - A short-term timing model using TE-MDQ, MMT, and VIX predicts that active equity will outperform the index by 2.33% in Q4 2025, with a historical accuracy of 69% [3][26]. - A long-term timing model using AMT and TE-S predicts that active equity will underperform the index by 6.49% from Q4 2025 to Q3 2026, also with a 69% historical accuracy [3][29]. Cross-Sectional Dimension: Selecting Active Equity Funds - Two effective selection factors for predicting future performance of active equity funds are identified: long-term information ratio (INFO_LONG) and tracking error change level (TRACK_D) [4][34]. - An optimal active equity fund portfolio, adjusted quarterly, shows an annualized return of 11.1% from Q1 2016 to Q3 2025, outperforming the benchmark by 3.6% [4][43]. - The portfolio has a maximum drawdown of -35.4%, better than the benchmark's -45.4%, with an annual turnover rate of approximately 2.2 times and an 80% annual win rate [4][44].

Core Insights - The active equity funds in the public offering sector have shown remarkable performance in 2025, with nearly 60 funds achieving "doubling" returns and the first fund since 2008 reaching over 200% returns [1][15] - If the leading fund maintains a cumulative return exceeding 7.84% in the remaining trading days of 2025, it will set a record for the highest annual return in public fund history [1][18] - The resurgence of active management capabilities is attributed to both market structural changes and advancements in research capabilities within public funds [1][9] Performance Highlights - As of December 12, 2025, the top-performing fund, Yongying Technology Smart Selection A, achieved a return of 218.40%, significantly outperforming the second-place fund by over 50 percentage points [4][18] - The number of funds with returns exceeding 100% reached 57, with 19 of those exceeding 120% [8][21] - Historical comparisons show that the highest number of "doubling" funds occurred in 2007, with 129 funds, while the current year has seen a resurgence in high-performing funds [21] Market Trends - The performance of active equity funds has been particularly strong in 2025, with a notable concentration in technology, high-end manufacturing, and innovative pharmaceutical sectors [9][22] - The market has shifted towards structural trends, with significant returns linked to concentrated holdings in popular stocks [9][24] - The current market environment is characterized by a longer duration and larger scale of structural trends compared to previous years [25] Industry Dynamics - The active management capabilities of public funds are being reaffirmed, with a shift away from short-term behaviors towards a focus on investor interests and research-driven strategies [13][26] - The talent pool within public funds has improved, ensuring stable output and continuity in research capabilities [11][25] - The industry is experiencing a cultural shift towards prioritizing long-term investment strategies over short-term gains, which has alleviated some pressures on fund managers [13][26]