Summary of Key Points from the Conference Call Industry Overview - The report focuses on the public fund industry in China, specifically analyzing the performance and trends of various fund types in the second quarter of 2025. Core Insights and Arguments Public Fund Performance - In Q2 2025, the number and scale of newly launched active equity funds significantly increased, with an average fundraising scale of 520 million yuan, focusing on dividend value and technology growth [1][2] - Despite a market rebound, the overall share of active equity funds decreased by 2.2% due to redemptions of older products, maintaining a scale of 3.33 trillion yuan [1][2] - Fixed income plus products surpassed the levels of the second half of 2023, reaching 2.16 trillion yuan, with a notable expansion in mixed bond FOFs [1][2] Fund Categories - Active equity funds showed strong performance, with a 3.1% increase in the equity fund index, outperforming broad-based indices [1][5] - The new issuance of FOF products continued at a high level, with a total new scale of 18.6 billion yuan, leading to a 10% increase in the overall market scale of FOFs to 166.2 billion yuan [1][4] Investment Trends - Active equity funds increased their stock positions slightly, with a notable rise in holdings of Hong Kong stocks, which now account for 17% of their portfolios [3][26] - The communication and financial sectors received increased allocations, while consumer and manufacturing sectors saw reductions [27] Performance Metrics - The median returns for active equity funds in Q2 were strong, with ordinary stock, mixed equity, and flexible allocation products achieving median returns of 2.0%, 2.1%, and 1.8% respectively, all outperforming major indices [19][20] - Fixed income plus funds achieved positive returns across all subcategories, with convertible bond funds leading in performance [22][23] Additional Important Insights - The competitive landscape for FOF products shows a slight decrease in the market share of the top ten managers, which now account for 60.8% of the market [4][8] - The concentration of holdings in active equity funds has decreased, indicating a more diversified investment approach, with the CR10 and CR20 ratios at 17.5% and 25.8% respectively [28] - Notable stock holdings include Ningde Times, which remains the most favored stock among funds, despite a slight reduction in holdings [29] Market Dynamics - The passive index product market reached a total scale of 5.79 trillion yuan by the end of Q2, with a 12.6% quarter-on-quarter growth [11] - The issuance of passive stock products hit a historical high, with 109 new products launched in Q2 2025 [9][10] Sector-Specific Performance - The innovative pharmaceutical sector led the market in Q2, with corresponding theme funds achieving a median return of 10.1% [21] - The report highlights the strong performance of small-cap growth and value products, with median returns of 3.4% and 3.2% respectively [20] This summary encapsulates the key findings and insights from the conference call regarding the public fund industry, highlighting performance metrics, investment trends, and sector-specific dynamics.

Group 1 - The core viewpoint of the article highlights the increasing popularity of the low-volatility dividend ETF (159547) as a defensive investment amid market fluctuations, with a net inflow of 3.13 million yuan on July 21 and a total of 38.79 million yuan over the past five days [1] - Investors are recognizing the defensive attributes of low-volatility dividend assets, which provide stable cash flow and dividend capabilities, making them a "safe haven" during periods of heightened market volatility [1] - Huatai Securities notes a shift in the market from valuation-driven to fundamental pricing, emphasizing the advantages of low-volatility dividend assets, including policy support for stable investor returns, improved cost-effectiveness compared to government bonds, and strong demand from insurance capital for high-dividend investments [1] Group 2 - The low-volatility dividend ETF (159547) closely tracks the CSI Low Volatility Dividend Index, which selects 50 securities with good liquidity, consistent dividends, high dividend yields, and low volatility, using a dividend yield-weighted approach [1] - The fund has the lowest management fee of 0.15% per year and a custody fee of 0.05% per year, maximizing benefits for investors [1]

Group 1: Market Performance - The A-share Shanghai Composite Index returned to 3500 points on July 10, with bank stocks, seen as the "economic beta," continuing to rise, exemplified by Industrial and Commercial Bank of China's stock price closing at 8.08 (+2.93%) and a monthly increase of over 14% [1] - Major state-owned banks' H-shares have seen significant increases over the past six months, with gains ranging from 20% to 36%, and current dividend yields between 4.6% and 5.7% [2] - The KBW Bank Index tracking U.S. bank stocks rose by 9.56% in the first half of the year, while the European Stoxx 600 Bank Index increased by 29% [2] Group 2: Policy and Economic Environment - Recent policies focus on expanding domestic demand, stabilizing real estate, addressing "involution," strengthening technology, and stabilizing foreign investment [1] - The Central Economic Committee's meeting emphasized the need to regulate low-price disorderly competition among enterprises [1] - The Ministry of Finance's notification on July 11 reinforced the structural benefits for high-dividend stocks like bank shares [2] Group 3: Investment Trends - There is a growing preference among investors for low-volatility, high-dividend assets, as evidenced by the performance of the CSI 300 Low Volatility Dividend Index, which focuses on sectors like banking and telecommunications [2] - The shift towards long-term investment strategies is evident, with pension and insurance funds showing increased interest in bank stocks due to their high yields and low volatility [3] Group 4: Structural Transformation - China is undergoing a structural transformation aimed at high-quality development, focusing on expanding domestic demand and addressing "involution" through coordinated supply and demand efforts [6] - The current "involution" competition is primarily affecting emerging industries concentrated in private enterprises, with a need for effective regulation to prevent harmful competition [8]

Core Viewpoint - In the current volatile market environment, investors are increasingly focused on how to achieve stable asset appreciation, particularly in a context of declining interest rates and rising market uncertainty. The search for asset allocation strategies that provide stable cash flow and effectively mitigate market risks has become a common concern among various investors. The dividend low-volatility strategy, characterized by "high dividend yield and low volatility," is gaining attention as a potential solution to these challenges [1]. Interest Rate Environment - The global economy has largely entered a low or even negative interest rate era, with significant reductions in deposit rates by major banks in China. For instance, as of May 20, 2025, the interest rate for one-year fixed deposits fell below 1%, and the average interest rate for current deposits dropped to 0.05% [2]. This environment has compressed the yields of traditional fixed-income products, leading to a scarcity of stable assets, while dividend assets are becoming increasingly attractive due to their stable cash flow and higher dividend yields [2]. Policy Support - Regulatory bodies have intensified their focus on corporate dividend policies, with the introduction of measures linking dividend payouts to financing qualifications and shareholder behavior. For example, the "New National Nine Articles" issued in April 2024 aims to enhance shareholder return awareness among listed companies [3]. Additionally, new rules effective from January 1, 2025, will impose penalties on companies with low dividend payouts, further encouraging higher dividend distributions [3][4]. Fund Flow Dynamics - There is a notable shift in fund preferences towards dividend assets, driven by both policy support and changes in market dynamics. Long-term funds, such as insurance and pension funds, are increasingly allocating capital to high-dividend assets, with projections indicating an influx of approximately 600 billion to 800 billion yuan over the next three years [6]. This trend is expected to enhance the valuation of dividend assets and benefit related funds, such as the TaiKang Dividend Low-Volatility ETF [6]. Market Conditions - The current A-share market is characterized by volatility, influenced by international trade tensions and geopolitical risks. Despite maintaining stable growth, domestic economic indicators show signs of weakening, leading to a challenging investment environment. In this context, dividend low-volatility assets are positioned as a strategic choice for investors seeking stability and returns [19][20]. Investment Strategy - The dividend low-volatility strategy combines high dividend yield and low volatility characteristics, providing a robust investment framework. The CSI Dividend Low-Volatility Index selects stocks based on liquidity, consistent dividend payments, and low volatility, aiming to deliver stable returns while minimizing risk [14][15]. This strategy is particularly appealing in turbulent market conditions, as it has historically demonstrated strong defensive capabilities [19][20]. Conclusion - Overall, the combination of supportive policies, increasing fund inflows, and favorable market conditions positions dividend low-volatility assets as an attractive investment opportunity. These assets not only offer stable returns in a low-interest-rate environment but also serve as a defensive strategy in volatile markets, making them a preferred choice for investors seeking to navigate economic cycles effectively [20].

Group 1 - The current market environment is characterized by increased volatility and a downward trend in interest rates, making the dividend low-volatility strategy attractive due to its dual advantages of high dividends and low volatility [1][2] - The recent adjustments in deposit rates by major banks, with the one-year fixed deposit rate dropping below 1%, have diminished the appeal of traditional deposit products, leading to a growing interest in dividend low-volatility indices [1][2] - The introduction of policies aimed at enhancing shareholder returns and improving the dividend system has led to a shift in long-term capital towards dividend low-volatility assets, positioning them as a core strategic allocation [1][3] Group 2 - The A-share market is currently in a state of fluctuation, supported by policies but lacking strong catalysts for upward movement, with dividend low-volatility assets serving as a defensive anchor [2][3] - The "dividend season" from May to July is expected to further boost the attractiveness of dividend indices as bond market yields decline and dividend yields rise [2][3] - The average dividend payout ratio for A-share companies has improved to 37.7% in 2024, the highest level since 2010, indicating a positive trend in dividend willingness and capability among listed companies [3] Group 3 - The new policies linking corporate dividends to financing qualifications and imposing risk warnings on low-dividend companies are expected to enhance the awareness of shareholder returns among listed companies [3][4] - Long-term funds, including insurance and social security funds, are increasingly favoring high-dividend assets, with an estimated 570 billion yuan in incremental funds expected from insurance capital in 2025 [3][4] - The dividend low-volatility index combines high dividend and low volatility factors, creating a stable investment portfolio that captures high-dividend companies while filtering out high-volatility stocks [4][5] Group 4 - The low-volatility dividend index shows significant sector weightings, with nearly 50% in the banking sector, which aligns well with the characteristics of high dividend and low volatility [5][7] - The new public fund regulations are reshaping asset allocation logic, with a notable underweight in the banking, transportation, and construction sectors compared to the index benchmarks, creating a structural mismatch [7][9] - If public funds increase their allocation to the three major sectors to historical median levels, it could lead to an estimated 300 billion yuan in additional liquidity for the low-volatility dividend index [9]

Core Viewpoint - The A-share market is experiencing a rotational trend despite favorable policies, leading to a focus on stable income and risk-resistant asset allocation. Historical data indicates that low-volatility dividend assets have a high success rate in such market conditions, particularly in early May [2]. Group 1: Market Performance - The performance of Hong Kong dividend stocks has significantly outperformed A-share dividend stocks. The Hang Seng Hong Kong Stock Connect High Dividend Low Volatility Index has shown a higher rebound since April 8, with greater elasticity compared to major A-share indices [3]. - From April 8 to May 8, the Hang Seng Hong Kong Stock Connect High Dividend Low Volatility Index increased by 10.27%, while the CSI Dividend Index rose by 5.32%, and the Shanghai and Shenzhen 300 Index increased by 7.34% [4]. Group 2: Investment Advantages - Hong Kong stocks offer a valuation discount, with the price-to-earnings ratio often being over 30% lower than that of the same companies in the A-share market, allowing investors to acquire the same dividends at a lower price [2]. - The dividend yield of certain Hong Kong high-dividend indices has reached historical highs, surpassing similar A-share dividend indices. As of May 7, the yield for the Hang Seng Hong Kong Stock Connect High Dividend Low Volatility Index was 8.74%, compared to 6.85% for the A-share dividend index and 6.53% for the CSI Dividend Index [2]. - The trading mechanism in Hong Kong allows for T+0 trading, enabling investors to capture short-term volatility opportunities and improve capital efficiency [2]. Group 3: Cost Efficiency - The Hong Kong dividend low-volatility ETF (520550) has a fee rate of 0.15% plus a custody fee of 0.05%, which is significantly lower than similar products, providing a clear long-term cost advantage [5]. - This ETF employs a monthly dividend assessment mechanism, ensuring a continuous cash flow, which is particularly valuable in a low-interest-rate environment [5].