Core Insights - Small-cap U.S. stocks are showing signs of a potential comeback after a prolonged period of underperformance, although it remains uncertain if this is the beginning of a sustained rally or a temporary rise [1] Performance Overview - The iShares Russell 2000 index has increased by 11% over the past three months as of September 25, 2025, compared to a 7.6% gain in the S&P 500. However, year-to-date performance shows the iShares Russell 2000 ETF (IWM) up 8.2%, lagging behind the SPDR S&P 500 ETF Trust (SPY) which is up 12.6% [2] - The early-year weakness in small-cap stocks was largely attributed to President Trump's announcement of higher tariffs in April, which adversely affected smaller companies [2] Economic Factors - The Federal Reserve's decision to cut interest rates by 25 basis points in September and the indication of two more cuts this year could benefit small-cap stocks, with an 87.7% probability of another 25-bp cut in October [3] - The U.S. economy experienced a robust growth rate of 3.8% in Q2 of 2025, driven by stronger consumer spending, marking an upward revision from a previous estimate of 3.3% [4] - The positive economic growth is favorable for small-cap stocks, which are closely tied to the domestic economy [5] Valuation Metrics - As of September 19, 2025, the Russell 2000 is trading at a P/E ratio of 34.65, significantly higher than the year-ago level of 25.12, indicating that small caps may be overvalued [6] - In comparison, the Nasdaq 100 is trading at a P/E ratio of 32.65, and the S&P 500 at 25.30, suggesting that small-cap stocks are not cheap relative to other indices [7] ETF Performance - Notable small-cap U.S. ETFs that have performed well in Q3 include: - Fidelity Enhanced Small Cap ETF (FESM) – up 15.5% - Invesco S&P SmallCap 600 Pure Value ETF (RZV) – up 14% - Vanguard Russell 2000 Value ETF (VTWV) – up 13.6% - First Trust Small Cap Core AlphaDEX ETF (FYX) – up 13.5% - Janus Henderson Small Cap Growth Alpha ETF (JSML) – up 13.4% - iShares Russell 2000 Growth ETF (IWO) – up 13% [8] Market Concerns - President Trump's announcement on September 25, 2025, regarding new tariffs on various imports starting October 1 may introduce volatility in small-cap stocks in the short term [9]

Group 1: Public Fund Fee Reform and ETF Market - The public fund fee reform is advancing comprehensively, with a focus on reducing costs for investors and promoting high-quality industry development [1] - The latest ETF market size has reached 5.5 trillion yuan, marking a historical high, with 115 ETFs exceeding 10 billion yuan in size [1] - The competition in the ETF market is shifting from product quantity and scale to asset allocation service capabilities, indicating a new phase of competition [1] Group 2: Satellite Internet and Tourism Market - China's satellite internet construction is accelerating, with expectations for the market size to reach hundreds of billions by 2030, prompting companies to compete in the industry chain [2] - The tourism market is experiencing a surge in demand for the upcoming Mid-Autumn and National Day holidays, with significant increases in cross-province and outbound travel bookings [2] Group 3: AI Competition and Infrastructure - The global AI competition is entering a new phase, transitioning from model competition to computing power competition, driven by significant investments in AI infrastructure [1] - Nvidia and OpenAI announced a joint investment plan of 100 billion USD to build a super AI data center, further igniting market expectations for AI computing power [1] Group 4: Corporate Developments - JD Health announced the resignation of its CEO Jin Enlin, with Cao Dong appointed as the new CEO effective September 29, 2025 [4] - Longpan Times has ceased production due to raw material supply issues, with expectations to resume operations in November [5] - Xinguang Optoelectronics announced that its chairman Kang Weimin has been placed under detention, but the company's operations remain unaffected [6] Group 5: Market Performance - The US stock market saw gains with the S&P 500 up 0.59%, while the Dow Jones and Nasdaq also rose, despite a weekly decline [9] - Oil prices reached a nearly two-month high, with a weekly increase of over 5%, while gold and silver prices also saw significant rises [10]

Core Insights - The U.S. stock market faces concentration risk, with the top 10 stocks in the S&P 500 accounting for nearly 40% of its market capitalization, which is the highest concentration in history [2][3] - High concentration is expected to lead to lower S&P 500 returns over the next decade compared to a less concentrated market, according to Goldman Sachs [3] Group 1: Invesco S&P 500 Revenue ETF - The Invesco S&P 500 Revenue ETF tracks all 500 companies in the S&P 500, weighting them based on trailing-12-month revenues and imposing a 5% weight cap on individual stocks [5] - The ETF's top 10 positions include Walmart (3.8%), Amazon (3.5%), and Apple (2.4%) [5][6] - The ETF demonstrated resilience during market downturns, declining 18% in 2022 compared to a 25% decline in the S&P 500 [6] - Over the last decade, the Invesco S&P 500 Revenue ETF returned 245%, underperforming the traditional S&P 500's 310% gain [7] - The ETF has a relatively high expense ratio of 0.39%, above the average of 0.34% for U.S. exchange-traded funds [8] Group 2: Invesco S&P 500 Equal Weight Technology ETF - The Invesco S&P 500 Equal Weight Technology ETF includes all 68 companies in the S&P 500 technology sector, with equal weighting for each stock [9] - This ETF avoids concentration risk while providing exposure to the technology sector, which has been the best-performing sector over the last decade [10] - The Invesco ETF achieved a total return of 468% over the previous decade, significantly outperforming the S&P 500's 310% return [11] - The technology sector is expected to grow, with predictions that it will account for 75% of the U.S. market cap by 2030 [11] - The ETF has a relatively high expense ratio of 0.4%, meaning shareholders will pay $40 annually on every $10,000 invested [12]

Core Viewpoint - The Federal Reserve's recent interest rate cut is expected to benefit dividend-paying stocks, making certain ETFs attractive investment options in a low-rate environment [2][3]. Group 1: Federal Reserve Actions - The Federal Reserve cut its benchmark short-term interest rate by 25 basis points due to slowing economic growth, particularly in the job market [2]. - The current economic forecast suggests one to two more rate cuts may occur in 2025 [2]. Group 2: Investment Opportunities - The market reacted positively to the Fed's rate cut, with specific ETFs focused on dividend-paying stocks likely to perform well as fixed-income investments yield lower returns [3]. Group 3: Schwab U.S. Dividend Equity ETF - The Schwab U.S. Dividend Equity ETF (SCHD) tracks the Dow Jones U.S. Dividend 100 Index and has a low expense ratio of 0.06% [5]. - As of June 30, the ETF's portfolio had the highest sector weight in energy (19.2%) and consumer staples (18.8%), with significant holdings in healthcare (15.5%) and industrial (12.5%) [6]. - The ETF offers a yield of 3.8%, compared to the S&P 500's 1.2% [7]. Group 4: Utilities Select SPDR Fund - The Utilities Select SPDR Fund (XLU) tracks the Utilities Sector Index, comprising 31 utility companies from the S&P 500 [9]. - The fund has defensive characteristics due to the essential nature of utility services and may benefit from growth in electricity demand for data centers [10]. - The fund has a yield of 2.8% and a low expense ratio of 0.08% [11]. Group 5: Vanguard High Dividend Yield ETF - The Vanguard High Dividend Yield ETF (VYM) aims to track the FTSE High Dividend Yield Index and has a low expense ratio of 0.06% [12]. - The ETF holds 579 stocks, with over 59% in financial, industrial, technology, healthcare, and consumer discretionary sectors, and the financial sector alone accounts for 21.7% [12]. - The largest holdings include Broadcom (6.7%) and JPMorgan Chase (4.1%), with a yield of 2.5% [13].

Core Insights - The JPMorgan Diversified Return Emerging Markets Equity ETF (JPEM) is a smart beta ETF launched on January 7, 2015, providing broad exposure to the emerging markets category [1] - JPEM is managed by J.P. Morgan and aims to match the performance of the FTSE Emerging Diversified Factor Index [5][6] Fund Characteristics - JPEM has accumulated over $349.73 million in assets, categorizing it as an average-sized ETF in the Broad Emerging Market ETFs space [5] - The fund has an annual operating expense ratio of 0.44%, which is competitive within its peer group, and a 12-month trailing dividend yield of 4.81% [7] Performance Metrics - As of September 26, 2025, JPEM has returned approximately 15.84% year-to-date and 9.96% over the past year, with a trading range between $48.41 and $59.87 in the last 52 weeks [10] - The fund has a beta of 0.52 and a standard deviation of 12.41% over the trailing three-year period, indicating a medium risk profile [11] Holdings and Sector Exposure - JPEM's top holdings include China Construction Bank (1.5% of total assets), Taiwan Semiconductor, and Infosys Ltd, with the top 10 holdings accounting for about 10.13% of total assets [8][9] Alternatives - Other ETFs in the emerging markets space include Vanguard FTSE Emerging Markets ETF (VWO) and iShares Core MSCI Emerging Markets ETF (IEMG), with VWO having $100.55 billion in assets and IEMG at $109.23 billion, both offering lower expense ratios [13]

Group 1 - Contemporary market dynamics show larger companies, like CATL, outperforming smaller stocks, indicating a potential market distortion [1] - CATL's market capitalization reached 1.8 trillion, with a weight of 17.7% in the ChiNext Index, significantly influencing its performance [1][2] - The performance of small-cap stocks is lagging, as evidenced by the 0.21% decline in the CSI 2000 index over the past 20 days [1] Group 2 - The rapid growth of domestic ETF assets is notable, with the scale surpassing 1 trillion in October 2020, 2 trillion in August 2023, and projected to reach 3 trillion by September 2024 [4] - The trend indicates that investors should prioritize index-weighted stocks over non-component stocks when conditions are similar [4] - A significant copper mine accident is expected to reduce copper production by 35% in 2026, impacting global copper stocks positively [5] Group 3 - The domestic automotive industry is expanding internationally, indicating broader market opportunities [6] - Companies like JD.com and Xiaomi are heavily investing in AI and chip development, with Xiaomi committing at least 500 billion over the next decade for self-developed chips [7][10] - The market shows a strong interest in AI narratives, as seen with Alibaba's stock surge following an AI-focused meeting announcement [9]

Summary of Conference Call Records Company and Industry Focus - The focus is on the **China A500 Index ETF** and the broader **investment landscape in China**, particularly in the technology and advanced manufacturing sectors [1][2][4]. Key Points and Arguments 1. **China A500 Index ETF Characteristics**: - The ETF emphasizes industry balance and includes leading companies in emerging economic sectors, reflecting China's economic transformation [1][2]. - It features a quarterly mandatory dividend mechanism, providing predictable cash flow for investors [2]. 2. **Market Dynamics**: - Current market uptrend is driven by the elimination of uncertainties, leading to a reallocation of social assets [1][6]. - The technology and advanced manufacturing sectors remain robust, with institutional funds shifting from bonds to equity funds [1][7]. 3. **Impact of U.S. Federal Reserve's Rate Cuts**: - The Fed's entry into a rate-cutting cycle may weaken the dollar and reduce recession risks in the U.S., benefiting global manufacturing recovery and export demand [1][8]. - Anticipation of potential policy adjustments in China by 2026, influenced by upcoming political meetings [1][8]. 4. **Investment Strategy of Taikang Fund**: - Taikang Fund aims to be a service-driven ETF provider, offering low-cost, tool-based products and a diversified ETF product line [1][4]. - The Taikang Research Selected Fund focuses on sectors with upward trends and moderate valuations, primarily in technology and cyclical sectors like precious metals and copper [3][10]. 5. **Sector and Stock Selection Methodology**: - A top-down approach is used to assess market style and select industries based on their economic outlook and valuation metrics [5][11]. - The fund manager emphasizes long-term holding over short-term trading, focusing on significant industry trends and macroeconomic factors [12]. 6. **Current Market Style and Institutional Role**: - The market is characterized by ample liquidity but lacks macro momentum, with a preference for growth stocks over value stocks [9]. - Institutional investors dominate the market, leading to a bias towards large-cap growth stocks, although small-cap stocks may present opportunities if fundamental trends materialize [9]. 7. **Focus on Technology and Resource Stocks**: - The current technology market is supported by fundamentals, with a focus on sectors like AI, semiconductor localization, and robotics [10][13]. - Resource stocks, particularly precious metals like gold, are also highlighted due to their potential as safe-haven assets amid geopolitical changes [13][14]. 8. **Outlook on U.S. Economic Conditions**: - The U.S. economy is showing signs of weakness, with inflation pressures persisting, which may lead to a favorable environment for gold prices [14][15]. - Industrial metals like copper may strengthen if the Fed's preventive rate cuts lead to a soft landing for the U.S. economy [15]. Other Important Insights - The Taikang Research Selected Fund is strategically positioned to capture opportunities in technology, advanced manufacturing, and resource sectors, balancing diversification with focused investment [16]. - The fund manager's experience and the robust research platform of Taikang Fund enhance the decision-making process for investment strategies [11].

Group 1: Machinery Industry - In August 2025, the production of metal cutting machine tools in China reached approximately 71,000 units, a year-on-year increase of 16.4%, while the cumulative production from January to August was about 564,000 units, up 14.6% year-on-year, indicating a recovery in downstream manufacturing demand [2] - The production of industrial robots in August 2025 was about 64,000 units, a year-on-year increase of 14.4%, with a cumulative production of approximately 521,000 units from January to August, reflecting a year-on-year growth of 29.9% [2] - Manufacturing fixed asset investment in China grew by 5.1% year-on-year from January to August 2025, and cumulative export value increased by 5.9% year-on-year, supporting the stabilization of manufacturing demand [2] Group 2: Lithium Battery Equipment - In August 2025, the sales of new energy vehicles in China reached approximately 1.395 million units, a year-on-year increase of 26.8%, with total sales from January to August amounting to about 9.62 million units, up 36.7% year-on-year [3] - The installed capacity of power batteries in August 2025 was approximately 62.5 GWh, a year-on-year increase of 32.4%, while the total production of power batteries reached 139.6 GWh, up 37.3% year-on-year [3] - Cumulative installed capacity of power batteries from January to August 2025 grew by 43.1% to 417.9 GWh, and total production increased by 54.3% to 970.7 GWh, indicating a robust growth trajectory for the new energy vehicle sector [3] Group 3: Investment Recommendations - The manufacturing PMI in China rose by 0.1 percentage points to 49.4% in August 2025, with key sub-indices such as production and new orders showing improvement, suggesting a recovery in manufacturing supply and demand [4] - The report maintains a "buy" rating for the machinery industry, highlighting opportunities in the general automation sector and lithium battery equipment sector due to the expected recovery in manufacturing demand [5] - Recommended companies include Haomai Technology in the general automation sector and Xianlead Intelligent and Hangke Technology in the lithium battery equipment sector [5]

Group 1 - Gen Z has the potential to benefit from long-term investments, as they have more time to navigate market uncertainties [1][2] - Individual risk tolerance is crucial for Gen Z when considering investment options [2] - Index funds, such as the Vanguard S&P 500 ETF (VOO), are recommended for Gen Z investors seeking lower-risk exposure to the stock market [3][4] Group 2 - Artificial intelligence (AI) is expected to be a significant technological advancement in the coming decade, with companies already generating profits from AI [5] - Established chipmakers like Nvidia and Broadcom are leading the AI boom, though they carry risks [6] - Companies in adjacent industries, such as crypto miners and nuclear energy firms, are also benefiting from the AI trend, but require more research due to higher risks [7] Group 3 - Dividend stocks can be categorized into income stocks and growth stocks, with income stocks being more suitable for middle-aged or near-retirement investors [8]

Core Insights - The Fidelity MSCI Health Care Index ETF (NYSEARCA: FHLC) offers passive market cap-weighted exposure to over 300 U.S. Health Care stocks with a low expense ratio of 0.08% [1] - The ETF has achieved a total return of 119% over the last decade through August [1] Group 1 - The ETF provides a diversified investment option within the U.S. Health Care sector [1] - The Sunday Investor is focused on U.S. Equity ETFs and maintains a comprehensive database tracking nearly 1,000 funds [1] - The Sunday Investor is preparing to become a licensed options and derivatives trading advisor [1]