Core Viewpoint - The performance of active equity funds has significantly outperformed passive index funds in 2023, but rebuilding investor trust will take time [4][5][8]. Group 1: Performance Comparison - As of the end of July, over 70% of active equity funds outperformed their benchmarks, a notable increase from less than 30% in the previous year [5]. - The average return of active equity funds this year is 14.05%, surpassing major indices like CSI 300 (3.58%) and CSI 500 (8.74%), with 92.33% of active funds achieving positive returns [7]. - In contrast, passive index funds have an average return of 10.94% this year, with 90.38% showing positive returns [7]. Group 2: Sector Performance - The innovative drug sector has emerged as a significant winner among active equity funds, with top-performing funds achieving returns exceeding 100% [8]. - Specific funds like Changcheng Medical Industry Selection and Zhongyin Hong Kong Stock Connect Medicine have led the pack with returns of 127.05% and others closely following [7]. Group 3: Redemption Pressure - Despite strong performance, active equity funds face increasing redemption pressure, with total assets decreasing by 366.62 billion and total shares down by 866.98 million in Q2 [9]. - Notably, funds with strong performance, such as Huatai-PineBridge Innovation Medicine, have seen significant inflows, indicating that individual fund performance can attract investor interest [9][11]. Group 4: Investor Behavior - The "anchoring effect" in behavioral finance suggests that past performance influences current investor decisions, leading many to hold onto funds that have not performed well in recent years [15]. - The growth of "fixed income plus" funds and multi-asset strategies reflects a shift in investor preference towards more stable products amid the challenges faced by active equity funds [15][16]. Group 5: Future Outlook - Historical trends indicate that active equity funds excel in identifying growth opportunities in emerging sectors, suggesting potential for future outperformance as market conditions evolve [18]. - The transition from a "star-driven" to a "return-driven" approach in the industry may pave the way for a resurgence in investor confidence in active equity funds [18].

Core Insights - The market has shown significant volatility, with some stocks experiencing dramatic increases while others have sharply declined, indicating a mixed sentiment among investors [1][3] Group 1: Stock Performance - Nanjing New Pharmaceutical has surged by 78%, driven by speculative interest in the innovative drug sector, despite lacking concrete agreements or performance backing [3] - A total of 50 stocks have dropped over 10%, with some like C Han Gao and Aimu shares plummeting by 20%, highlighting a trend of "three no stocks" (no performance, no liquidity, no major investors) [3] Group 2: Market Dynamics - The recent meeting by the Medical Insurance Bureau has positively influenced the innovative drug sector, with significant deals like the $2 billion GLP-1 drug sale by Shiyao Group boosting industry expectations [3] - The trading volume has decreased from 1.9 trillion to 1.6 trillion, indicating a shift in investor focus towards more stable and high-certainty stocks, while speculative and low-performance stocks are being abandoned [3] Group 3: Investment Strategies - Investors are advised to focus on stocks with strong policy backing, performance improvements, and state-owned enterprise support, as these are more likely to sustain growth [4] - Emphasis is placed on the importance of liquidity, with stocks lacking sufficient trading volume being considered traps, regardless of their low price [4] - The upcoming mid-year reports are expected to reveal both risks and opportunities, suggesting a need for careful analysis in the current market environment [4]

Group 1 - The core viewpoint of the article highlights a shift in investment strategies among public funds, moving from defensive to offensive positions as they navigate the A-share market around the 3500-point mark [1][6] - Over half of the 32 disclosed active equity funds increased their stock positions in Q2, with 21 funds maintaining over 90% stock allocation [2][4] - Notable funds like Zhongou Digital Economy saw their scale surge from 0.117 billion to 1.527 billion, marking a 12-fold increase due to positive performance [4] Group 2 - The innovation drug sector has become a favored area for many funds, with Longcheng Pharmaceutical Industry Select A increasing its stock allocation by 14.4 percentage points to 90.72% in Q2 [2][3] - The average return of the top ten holdings in Longcheng Pharmaceutical Industry Select was 173.76% year-to-date, leading to a fund return of 102.52% [3] - The banking sector saw a 17.24% average increase among 42 bank stocks since Q2, although some funds began to reduce their holdings in this sector due to high valuations [6][7] Group 3 - The article notes a trend of rapid sector rotation in the market, with themes like humanoid robots, innovative drugs, and new consumption experiencing quick shifts in performance [6] - Fund managers indicated that the redirection towards market-oriented dividend stocks was due to the declining attractiveness of traditional dividend stocks, particularly in the banking sector [7] - The innovation drug sector is expected to continue thriving in Q3, driven by supportive policies and clinical data releases, with a focus on overseas authorization and domestic sales growth [8]

Core Viewpoint - The shift in market financing from A-share ETFs to Hong Kong ETFs highlights a significant investment opportunity in the Hong Kong innovative drug sector, driven by strong performance and increasing interest from smart capital [2][6]. Group 1: Market Trends - The Hong Kong innovative drug ETF has become the leading choice for financing buy-ins, significantly outpacing A-share ETFs in terms of financing amounts [2]. - The Hang Seng Healthcare Index has seen a remarkable increase of over 57% this year, indicating a robust market for healthcare ETFs [4]. - The trend of financing net buy-ins moving from A-share ETFs to Hong Kong ETFs reflects a growing confidence in the Hong Kong innovative drug sector, which has experienced a long period of decline followed by a recent rebound [6]. Group 2: Performance Metrics - Multiple public funds have reported annual returns exceeding 50% to 60% for their healthcare and innovative drug ETFs [4]. - The Guangfa CSI Hong Kong Innovative Drug ETF, managed by Liu Jie, has achieved a year-to-date return of 62%, outperforming the Hang Seng Healthcare Index [4][8]. - Notably, the ETF's top holdings, such as China National Pharmaceutical Group and Zai Lab, have experienced significant price increases, contributing to the fund's strong performance [5]. Group 3: Investment Strategies - Prominent fund managers are increasingly opting for public ETFs over actively managed funds to gain exposure to the innovative drug sector, reflecting the challenges of stock selection in a rapidly evolving market [7]. - The entry of smart capital into the Hong Kong innovative drug ETF market is exemplified by the participation of well-known fund managers, such as Zhang Xiaoren, who has achieved a 34% return in just three months [8]. - The integration of AI technology in drug development and the increasing global competitiveness of Chinese pharmaceutical companies are expected to drive future growth in the innovative drug sector [10][11].