Core Insights - The recent volatility in the A-share market has led to a focus on style rebalancing, with several well-known balanced fund managers preparing their holdings in advance for the third quarter [1] - Fund managers have indicated that the recent rotation expectations in the market are increasing, with the strength of cyclical sectors reflecting a balance between performance and valuation considerations, making the "barbell strategy" a core approach to balance risk and return [1] What is the "Barbell Strategy" - The "barbell strategy" is a diversified multi-asset allocation approach that incorporates both low-risk and high-risk assets to balance the portfolio's risk and return [2] - This strategy can be visualized as a dumbbell, where one end represents low-risk stable assets and the other end represents high-risk high-return assets, creating a "heavy on both ends, light in the middle" structure [2] Investment Structure and Market Adaptability - This investment structure sacrifices potential returns from mid-risk assets in exchange for resilience in extreme market conditions, allowing investors to respond to black swan events and seek returns in stable markets [3] - Investors should avoid mid-risk assets that lack highlights, such as traditional consumer electronics and homogeneous manufacturing industries [7] Practical Implementation of the Barbell Strategy - In practical terms, investors should select conservative assets on the left end of the barbell, such as high-dividend, low-volatility stocks from sectors like utilities and energy [5] - On the right end, the focus should be on high-growth, high-volatility assets, such as innovative technology and new energy sectors [6] - Historical data shows that the CSI Bank Index and the STAR 50 Index can form a basic barbell strategy, as they exhibit a negative correlation [8][10] Dynamic Weight Adjustment - The barbell strategy does not require equal weight on both ends but should be adjusted based on market conditions and individual risk preferences [10] - In optimistic markets, the aggressive end can be increased to 70%, while in pessimistic markets, the defensive end can be raised to 60% [10] ETF Configuration for the Barbell Strategy - The ETF market offers a variety of options across sectors, broad indices, bonds, and overseas investments, with a simple approach being the combination of stock ETFs and bond ETFs to achieve balance [11] - Recent high-performing ETFs include those focused on technology themes, which have shown returns exceeding 80% in the past year [11] - Defensive tools such as dividend ETFs and bond ETFs can provide stable returns and are essential for liquidity management [11]

Core Insights - ETFs are becoming a significant focus for equity FOFs, with many top-performing FOFs heavily investing in ETF products [1][2][3] Group 1: Performance of Equity FOFs - The top-performing FOF, Guotai Preferred Navigation One-Year Holding FOF, reported a return rate of 68% year-to-date, outperforming the second-best FOF by approximately 10 percentage points [2] - This FOF's top ten holdings included 8 ETFs, covering sectors such as gold, new energy vehicle batteries, rare earths, and innovative pharmaceuticals [2] - Other high-performing equity FOFs also showed a strong preference for ETFs, with the top ten holdings of Bohai Huijin Preferred Progress Six-Month Holding FOF, ICBC Smart Progress One-Year FOF, and CCB Intelligent Selection Three-Month Holding FOF including 9, 10, and 10 ETFs respectively [3][4] Group 2: Market Trends and Strategies - The trend of increasing ETF allocations among equity FOFs is evident, with managers actively increasing their holdings in ETFs related to sectors with growth potential, such as new energy and technology [7] - The rise in ETF popularity is attributed to the advantages of index investing, including lower management fees and high transparency, which help FOFs reduce overall investment costs and improve efficiency [7] - Despite strong performance, some equity FOFs did not attract significant net subscriptions, indicating a potential disconnect between performance and investor interest [8] Group 3: Market Expansion and Challenges - The public FOF market is expanding, with 515 FOF products and a total scale of 187.7 billion yuan as of September, reflecting a growth of approximately 5% since June [9] - The emergence of multi-asset allocation FOFs, which aim to diversify investments across low-correlated assets, has contributed to this growth [9] - Multi-asset strategies present new challenges for research teams, requiring expertise across various markets and the ability to manage risks associated with different asset types [10]

Core Viewpoint - The article emphasizes the importance of understanding investment psychology, setting realistic expectations, and maintaining a disciplined approach to investing, encapsulated in the "three-thirds" framework: three parts humility, three parts planning, and three parts persistence [26]. Group 1: Understanding Investment Psychology - Investors often face a knowledge gap in finance, leading to impulsive decisions driven by market emotions, which can result in significant losses [5][6]. - Acknowledging one's limitations and setting modest return expectations is crucial for sustainable investing, focusing on wealth preservation and inflation-beating growth rather than quick riches [7][8]. Group 2: Setting Realistic Return Expectations - Long-term average returns for various asset classes are outlined: stocks yield 8%-10%, bonds yield 3%-5%, and commodities/gold yield around 5%-6% [8]. - A diversified portfolio can achieve a composite return of 6%-8%, while a well-informed investor might target 10%-15% returns through index investing and global perspectives [8][9]. Group 3: Risk Management and Asset Allocation - Understanding potential drawdowns is essential, with stocks facing maximum drawdowns of 70%-80%, while bonds and commodities have lower but significant risks [10]. - A diversified asset allocation strategy, including stocks, bonds, and commodities, can mitigate risks and enhance stability [11]. Group 4: Building a Robust Investment Plan - A comprehensive investment framework should consider asset classes, market distribution, and timing to manage human emotions like greed and fear [12][13]. - Diversification across asset types, markets, and time can reduce correlation and overall portfolio volatility, leading to more stable returns [15][16][17]. Group 5: Importance of Persistence - Successful investing requires not just a sound strategy but also the discipline to adhere to it over time, especially during market fluctuations [21]. - Maintaining a focus on safety margins, long-term engagement, and sticking to profit-taking goals is vital for achieving investment success [22][23][24]. Group 6: Conclusion - The "three-thirds" framework serves as a foundational guideline for investors, emphasizing humility, planning, and persistence, with a final note on the role of luck in investment success [26][27].