Follow the public fund reallocation rhythm and position for 'Red May'

By Zhang Ju, Edited by Lin Wei Ping

Last week, the ChiNext Index hit an over ten-year high, while the Shanghai Composite Index briefly returned above 4,100 points. Driven by popular sectors such as optical communications and CPO, market enthusiasm for going long quickly rebounded. However, significant industry divergence persists, with sectors less associated with AI still awaiting a turning point. As the Labor Day holiday approaches, under the current slow bull market structure, the 'Red May' rally is worth anticipating. The core challenge for retail investors now is how to accurately position themselves in a diverging market.

Last week marked the conclusion of the Q1 reports from mainland China’s public funds. The portfolio adjustments and market insights from star fund managers undoubtedly serve as critical references for ordinary investors.Among these, changes in heavily weighted industries of public funds and the latest list of top ten heavily weighted stocks have become the focus of market attention.According to Tianxiang Investment Advisory data, the average stock position of active equity funds in the first quarter was about 80.27%, with a stock concentration of 56.67%, maintaining high overall positions.

From the perspective of allocation, technology and resource products remain the core layout directions for public funds, with active increases concentrated in the communications and petrochemical sectors. In terms of individual stocks, among the top ten heavily weighted stocks in the public funds' Q1 reports, InnoLight Technology remained firmly at the top, CATL surpassed Sunlord Electronics to rise to second place, and Wuxi Apptec was the only new face on the top ten list. On the increase list, Hengtong Optoelectronics replaced InnoLight Technology as the most increased holding by public funds, while strong performers such as Source Photonics, Yangtze Optical Fiber, and ZTT also ranked highly on the increase list (see detailed article in this issue's fund section).

Under the main configuration line of fully embracing AI, this quarter’s public fund adjustments showed a distinct characteristic of 'moving towards the light': not only are leading stocks in the technology industry chain favored, but potential stocks in niche fields are also being deeply explored.Take Yongding Co., Ltd., part of the second tier in optical communication, as an example; it has been heavily positioned by several powerhouse fund managers including Jin Zicai, Li Jin, and Zhang Mingxin.

Veteran star fund managers have also closely followed the trend, newly entering or continuing to heavily invest in AI-related targets. For instance, in the first quarter, Fu Pengbo newly invested heavily in InnoLight Technology, Zhu Shaowei newly entered Guangzhou Steel Gas, Xie Zhiyu newly added Han's Laser and other multiple AI concept stocks, while Ge Lan continued to heavily invest in 'Yi Zhongtian' through non-pharmaceutical funds.

In the technology sector, there is hope that a group of high-quality domestic companies with global competitiveness will emerge. Leading companies in the optical module, memory, energy storage, and gas turbine supply chains that can provide stable supply will continue to receive significant premiums, with supply-demand gaps expected to persist long-term.Xie Zhiyu’s words may represent the sentiments of these veterans’ AI deployments.

Jin Zicai’s summary was even more concise: 'AI computing power is the most certain main theme for 2026. Overseas demand is real, high prosperity continues, and A-share pricing remains undervalued. We are heavily invested in upstream optical communications, staying in a highly certain track, being friends with time.' Similarly, star fund manager Yang Ruishi also stated, 'In the darkness, we choose to move towards the light, heavily investing in those hardcore technologies that transcend cycles.' Additionally, fund managers like Lei Zhiyong, Yan Siqian, and Jin Ye have remained committed to areas they specialize in such as computing power, robotics, and resource stocks, practicing long-term investment to fulfill their responsibilities to holders.

It is worth noting that there are also 'unique presences' in the market who stick to other tracks.As of the Q1 report, Jinxin Smart China 2025 continues to focus on banking stocks as its core heavy-holdings, sticking firmly to the broader financial sector and becoming a unique standout amid collective market trends.

For ordinary investors, they can study Q1 reports from fund managers that align with their investment preferences before holidays or during the holiday period. By selecting high-quality cost-effective stocks from their holdings, they may gain an edge in the anticipated 'Red May' rally. Market opportunities always favor those who take action. Investors are advised to follow the direction taken by public funds while being proactive in positioning themselves and seizing opportunities, rather than standing idly by.

(This article has been published in the April 25 issue of Securities Market Weekly. The companies mentioned are for illustrative analysis only and should not be considered as buy or sell recommendations.)

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