Global Fund Trends - In the first half of 2025, there was a significant turnover in the number of actively managed funds, with 3,958 new open-end funds launched, but only a net increase of 278 actively managed open-end funds. Conversely, ETFs saw a strong net growth of 1,051, with 1,264 new ETFs issued [4]. - Over $410 billion in net inflows were directed towards bond funds, which is double the amount flowing into equity funds. Meanwhile, allocation funds experienced a net outflow of approximately $20 billion [7]. Passive Investment Growth - The market share of passive investment products has steadily increased over the past decade, with the total size of global public funds growing by over 130%. As of June 30, 2025, the total management scale of passive products accounted for 43%, up from 23% ten years ago, while active products' share decreased from 77% to 57% [13]. Overseas Fund Allocation to China - There has been a noticeable recovery in the allocation ratio of overseas funds to Chinese stocks, which dropped from a peak of 11.07% in 2020 to a low of 4.79% in 2024. However, this ratio began to rise again in the second half of 2024, reaching 6.26% by the end of March 2025 [19]. - In the overseas Chinese-themed funds, passive products have surpassed active funds in scale, with passive Chinese-themed funds exceeding active funds by approximately $16 billion as of June 30, 2025 [21]. - Despite a period of net inflows from 2020 to 2022, overseas Chinese-themed funds experienced net outflows from 2023 to 2024, with total fund size decreasing from nearly $250 billion in 2021 to $175.2 billion by the end of 2024. In the first half of 2025, these funds saw a net outflow of about $2 billion, although their total size grew to $196.7 billion [23][24].

Core Insights - Active management funds have shown outstanding performance in a rapidly rotating structured market, leveraging flexibility, stock selection, and balanced allocation [1] - Hengyue Fund has achieved significant returns with six of its ten actively managed equity funds showing a net value growth rate exceeding 50% over the past year, placing them in the top 20 of their category [1] - Hengyue Advantage Selection Fund has recorded a remarkable 92% increase in net value over the past year, ranking in the top 5% of its peers [1] Performance Metrics - As of August 13, there are 335 equity hybrid funds with a growth rate exceeding 60% in the past year, with three funds from Hengyue Fund included [1] - Among 79 funds with a growth rate over 90%, one fund from Hengyue Fund is represented [1] - Many top-performing funds focus on niche themes such as the Beijing Stock Exchange, innovative pharmaceuticals, and AI, while Hengyue's products are primarily broad-based stock selections [1] Fund Strategy - Hengyue Fund emphasizes active management since its inception, utilizing the expertise of its research team to create a diverse product system [1] - The active equity funds under Hengyue Fund have distinct characteristics: Hengyue Advantage Selection and Hengyue Growth Selection focus on high elasticity growth, capturing investment opportunities in AI computing power and optical modules [1] - Hengyue Blue Chip Selection and Hengyue Core Selection are designed for stable growth, balancing investments in domestic alternatives and controllable supply chains, while strictly managing drawdowns [1] - Hengyue Research Selection targets traditional value sectors such as chemicals and infrastructure [1]

Group 1 - Public funds increased their holdings in the banking, telecommunications, and non-bank financial sectors by 1.6%, 1.6%, and 0.8% respectively in Q2 2025, while reducing their positions in food and beverage, automotive, and power equipment sectors by 2.1% and 0.9% [1] - The defense sector also saw increased interest from public funds due to heightened geopolitical uncertainties, ranking fourth in terms of increased holdings [1] - The holdings in the STAR Market by public funds rose by 0.4%, reaching a historical high of 14.8% [1] Group 2 - New fund issuance remained sluggish in Q2 2025, with a total of 59.9 billion units of actively managed equity and mixed funds issued, a year-on-year increase of 128%, but down 73% from the peak levels of 2020-2021 [4] - Active management funds have consistently outperformed the CSI 300 index since Q3, indicating potential for increased fund inflows as market performance improves [4] - Positive catalysts in high-holding sectors may lead to increased new fund issuance, providing additional liquidity and creating a positive feedback loop [4] Group 3 - Net inflows from southbound funds reached 273.9 billion RMB in Q2 2025, a year-on-year increase of 25%, with the financial sector seeing the largest inflow [5] - Public funds' holdings in Hong Kong stocks increased by 1.5%, reaching 18.8%, a rise of 6.6 percentage points from Q4 2024 [5] - The AH premium significantly decreased in the first half of 2025 due to liquidity differences between A-shares and H-shares, with expectations of maintaining mid-term low levels [5] Group 4 - The "national team" is estimated to have increased its holdings in A-share ETFs by over 200 billion RMB in Q2 2025, with 65% directed towards CSI 300 index ETFs [6] - The "national team's" actions reflect a commitment to stabilizing the capital market and providing downside protection for A-shares [6] - In extreme scenarios, the "national team" has the capacity to further increase holdings to stabilize the market [7]