Core Insights - The trend of index-based allocation in public FOFs (funds of funds) is becoming increasingly evident, with many FOFs heavily investing in ETFs [1][3] - The demand for diversified FOF products and ETF-FOF innovations is rising, reflecting a shift in investment strategies [4][5] - The growing complexity and variety of index funds require enhanced asset allocation capabilities from fund managers [6][7] Group 1: FOF Investment Trends - As of October 25, 2023, many FOFs have a significant portion of their top holdings in ETFs, with some FOFs having up to 9 out of 10 top holdings as ETFs [1][2] - Notable examples include the Jianxin FOF and Wanjiayou FOF, which have multiple ETFs among their top holdings, indicating a strong preference for index funds [2][3] - A report from Huatai Securities predicts that by the end of 2024, 90.73% of public FOFs will have allocated to ETFs [3] Group 2: New Product Innovations - The market is seeing the introduction of new FOF products, such as multi-asset allocation FOFs and ETF-FOFs, to meet investor demand [4][5] - As of October 25, 2023, there are 7 multi-asset allocation FOFs established in 2025, which include provisions for index funds [4] - The ETF-FOF products are designed to allocate over 80% of their non-cash underlying assets to ETFs, reflecting a strategic response to market demand [5] Group 3: Challenges and Requirements - The rise of index-based allocation increases the complexity of asset management, necessitating higher asset allocation skills from fund managers [6][7] - Fund managers are expected to develop capabilities in multi-asset allocation and to identify arbitrage opportunities, which are essential for achieving excess returns [6][7] - Challenges include market volatility affecting asset rotation strategies and potential liquidity issues with certain ETFs, which could lead to homogenization of ETF-FOF products [7]

Core Insights - The trend of index-based allocation in public FOFs (funds of funds) is becoming increasingly evident, with many FOFs heavily investing in ETFs [1][3] - The demand for diversified FOF products and ETF-FOF innovations is rising, reflecting a shift in investment strategies [4][5] - The growth of index funds is enhancing the asset allocation efficiency of FOFs, but it also raises the bar for fund managers' capabilities [6][7] Group 1: FOF Investment Trends - As of October 25, 2023, 90.73% of public FOFs are reported to have allocated to ETFs, indicating a significant shift from actively managed funds to index-based strategies [3] - Notably, among the 37 FOFs that disclosed their Q3 reports, 11 had ETFs as their largest holding, with some ETFs constituting over 10% of the fund's net asset value [3][4] - The increasing preference for ETFs is evident, with several FOFs reporting a majority of their top holdings as ETFs, covering various categories such as broad-based, thematic, and commodity ETFs [2][3] Group 2: Product Innovation and Market Demand - The market has seen the introduction of new FOF products, including multi-asset and ETF-FOF variants, to meet the growing demand for diversified investment options [4][5] - As of October 25, 2023, there are seven multi-asset FOFs established in 2025, all of which include index funds in their investment scope [4] - The ETF-FOF products are designed to allocate over 80% of their non-cash underlying assets to ETFs, reflecting a strategic response to the increasing demand for passive investment vehicles [5] Group 3: Challenges and Managerial Requirements - The proliferation of index funds necessitates enhanced asset allocation skills from fund managers, as they must navigate a more complex array of investment options [6][7] - Fund managers face challenges in asset rotation due to market volatility and the potential for ETF homogeneity, which may dilute competitive advantages [7] - The ability to generate excess returns through innovative strategies, such as arbitrage opportunities and participation in IPOs, is becoming crucial for FOF managers [6][7]