Active Equity Funds Hit Record 60% in Electronics and Communications in Q2 2026, Only 8 Remain Doubled After
In the second quarter of 2026, active equity funds' combined holdings in electronics and communications reached a record 60% of portfolios, with Zhongji Innolight the top holding at RMB 260.5 billion. The concentration drove 144 funds to double their net asset value. However, a technology sector correction in July pushed the average drawdown of the top 30 heavy holdings above 13%, and only eight funds retained year-to-date returns of over 100% as of July 26.
In the second quarter of 2026, active equity funds showed a highly concentrated portfolio. Data showed that the combined weighting of the electronics and communications sectors reached 60%, with increased allocations to upstream network communications hardware, chip storage, and AI edge hardware. Among the top ten heavy holdings, nine were from the electronics and communications sectors, with Zhongji Innolight leading at RMB 260.5 billion in market value of holdings. Inflow of incremental funds helped 144 active equity funds double their net asset value in the second quarter.
Since July, the technology sector has undergone a periodic correction. The average drawdown of the top 30 stocks heavily held by public funds exceeded 13%, with GigaDevice falling more than 46% during the month. Funds that had doubled their net value in the first half saw an average decline of 26.9% in July; Dongwu Value Growth A recorded a drop of over 44%, reducing its year-to-date return to less than 43.5%. As of July 26, only eight active equity funds retained year-to-date returns of over 100%.
Some funds had proactively reduced their equity exposure in the second quarter. E Fund Industry Opportunity A lowered its stock position from 92.14% to 79.87%; its fund manager stated in the quarterly report that it had gradually reduced some holdings. The product experienced a drawdown of 8.44% in July, but its year-to-date return still stood at 112.27%. E Fund Blue Chip Select, after appointing an additional fund manager, reduced its equity exposure by more than 17 percentage points. For the first time, its top ten holdings included electronics stocks such as SMIC and Dongshan Precision, while holdings in Luzhou Laojiao and Wuliangye were cut by more than 50%. Invesco Great Wall Dingyi also adjusted its portfolio after adding a new manager, with Jiangfeng Electronics, Tuojing Technology, and Zhongji Innolight entering its top ten holdings.