Investment Rating - The report does not explicitly provide an investment rating for the industry or specific funds [1]. Core Insights - The report constructs a time series curve of excess returns for stocks purchased by active equity funds, revealing the cycles and magnitudes of excess returns generated by fund investment signals, which aids investors in understanding how fund managers create returns [1][3]. - The study finds that active fund managers can identify stocks that outperform their style indices, with an average peak excess return of 1.1% occurring 11 months after purchase, primarily realized within the first 6 months [3][15]. - Small-cap funds exhibit the highest performance, achieving a peak excess return of 1.6% that persists for 22 months, while mid-cap and large-cap funds see their excess returns peak and decline within 9 to 12 months [3][15]. - Growth and value funds demonstrate different patterns, with growth funds achieving short-term excess returns that quickly reverse, while value funds accumulate excess returns more slowly, reaching 3.2% after 36 months [3][16]. - High turnover funds show strong short-term excess returns that diminish rapidly, indicating a positive correlation between turnover and stock selection ability, but with shorter signal cycles [3][17]. Summary by Sections Research Methodology - The report defines and constructs excess return curves based on stocks held by funds, tracking cumulative excess returns relative to a benchmark over a 36-month period [2][21]. - It identifies stock purchases based on specific criteria and analyzes the timing and characteristics of excess returns through various classifications [2][21]. Key Findings - Active fund managers generally possess stock selection skills, with a significant majority able to identify stocks that subsequently outperform their benchmarks [3][15]. - The average excess return for newly purchased stocks peaks at 1.1% within 11 months, with most returns realized in the first 6 months [3][15]. - Small-cap funds outperform larger funds, with excess returns that last longer, indicating better identification of mispriced opportunities [3][15]. - Growth funds show a quick reversal of returns, while value funds benefit from longer-term investment signals [3][16]. Fund Characteristics and Performance - The report analyzes excess return curves across different fund styles and characteristics, revealing that small-cap funds consistently outperform mid-cap and large-cap funds [3][49]. - Growth funds initially outperform value funds but see a decline in excess returns over time, while value funds accumulate returns more steadily [3][49]. - The analysis indicates that fund managers may not fully capture the potential value of their investment signals due to execution losses and holding periods that do not align with optimal excess return cycles [3][20].

Core Viewpoint - The active equity funds are experiencing a significant performance surge in 2025, with many funds achieving over 100% returns in the past three years, highlighting the importance of stock selection by fund managers [1][4][12]. Group 1: Three-Year Performance - As of December 31, 2025, over 135 active equity funds achieved returns exceeding 100% over the three-year period from January 1, 2023, to December 31, 2025 [4]. - Among these, 9 funds surpassed 200% returns, with top performers including Dongwu New Trend Value Line (267.92%), Huaxia North Exchange Innovation Small and Medium Enterprises Selection (260.42%), and Dongwu Mobile Internet A (256.05%) [5]. - The majority of high-performing funds are concentrated in the technology sector, benefiting from the tech market trends in 2025 [7][8]. Group 2: Five-Year Performance - For the five-year period from January 1, 2021, to December 31, 2025, 54 flexible allocation mixed funds, 22 equity mixed funds, and 18 actively managed stock funds achieved returns over 100% [12]. - The top five funds in this category include Jinyuan Shun'an Yuanqi Flexible Allocation (259.53%), Dongwu Mobile Internet A (256.09%), and Dongwu New Trend Value Line (251.22%) [13]. - The five-year performance emphasizes the fund managers' stock selection capabilities, with a more diversified investment approach leading to better long-term results [14]. Group 3: Ten-Year Performance - Over the ten-year period from January 1, 2016, to December 31, 2025, the top ten active equity funds achieved returns ranging from 364.83% to 571.91%, with Huashang Advantage Industry A leading at 571.91% [18][17]. - A total of over 440 active equity funds recorded returns exceeding 100% in the ten-year span, with approximately 5% achieving over 300% [21]. - The performance of these funds reflects a mix of concentrated investments in technology and diversified holdings across various sectors [21].