Core Viewpoint - The performance of public FOFs (Fund of Funds) has significantly improved, with some achieving returns as high as 68% this year, surpassing many actively managed equity funds and changing the perception of FOFs as conservative investment products [1][2]. Group 1: Performance and Strategy - The top three performing FOFs this year are Guotai Youxuan Lihang (68%), E Fund Advantage Return (58.33%), and Guotai Industry Rotation (57.47%), all of which have outperformed the average return of actively managed equity funds [2][3]. - FOFs are increasingly focusing on narrow-based industry theme funds, such as ETFs related to gold, batteries, and innovative pharmaceuticals, to enhance their performance [3][4]. - The shift towards selecting funds rather than individual stocks has allowed FOFs to achieve high performance, indicating a new trend in the capital market and public fund industry [2][3]. Group 2: Future Investment Directions - Resource industry funds are becoming popular choices for FOFs, with managers identifying potential recovery opportunities in cyclical industries, particularly in the metal and financial real estate sectors [4][5]. - FOF managers are also looking to increase defensive positions by focusing on the most undervalued sectors within growth and cyclical industries, suggesting that bank, resource, and photovoltaic theme funds may become core investment targets [5][6]. - The current momentum in the global AI industry and improvements in the renewable energy sector are driving FOFs to adjust their allocations, increasing exposure to technology and resource theme funds while reducing financial asset allocations [5][6].

Core Insights - FOF products have shown remarkable performance in 2023, with top performers achieving returns of 68%, 58.33%, and 57.47%, significantly outperforming the market average and many well-known actively managed equity funds [1][3] - The success of FOFs highlights the value of selecting funds over direct stock picking, demonstrating their unique role in asset allocation and fund selection [1] Performance Highlights - The top three FOFs in terms of performance are Guotai Youxuan Lihang, E Fund Advantage Return, and Guotai Industry Rotation, with annual returns of 68%, 58.33%, and 57.47% respectively [1][3] - The impressive returns of these FOFs have surpassed many leading actively managed equity funds [1] Investment Strategy - Leading FOFs have focused on narrow-based index funds with distinct industry characteristics, such as gold ETFs, battery ETFs, and innovative drug ETFs [3] - Guotai Youxuan Lihang's third-quarter report indicates a concentrated investment in specific narrow-based index products, while E Fund Advantage Return has diversified into sectors like information technology, high-end manufacturing, resources, and biopharmaceuticals [3] Market Outlook - FOF fund managers express intentions to continue exploring narrow-based products in promising sectors such as manufacturing, consumption, and resources [3] - Guotai Youxuan Lihang's fund manager notes that while the overall upward potential of the stock market in Q4 may be limited, there are localized opportunities, with a significant divergence between growth and cyclical sectors [3]

Group 1 - A-share market has attracted significant capital attention, with over 95% of public FOF products achieving positive annual returns, marking the best performance in the last five years [1][2] - The recent strong performance of A-shares, with a weekly increase of 1.70%, has led to high success rates for public FOF investments, with all stock-type FOFs recording positive returns [2][3] - The best-performing FOF products this year include Guotai Preferred Navigation, Guotai Industry Rotation, and ICBC Smart Progress, with annual returns of 34.28%, 31.27%, and 28.92% respectively [2] Group 2 - The expectation of overseas interest rate cuts is boosting risk appetite among investors, contributing to the upward trend in A-shares [3][4] - The A-share market has shown strong performance across various sectors, with 22 out of 31 primary industries experiencing gains, particularly in the communication and electronics sectors [3] - The current market environment is characterized as a non-typical bull market under weak economic recovery, with low-risk returns and rising risk preferences, despite no significant improvement in corporate earnings [4]