Q1 Mutual Funds Huddle in Three Key Directions: AI, Price-Hike Chains, and New Energy; Zhongji Innolight and Eoptolink Secure Top Three Spots

Key Conclusions Fund quarterly reports, as a relatively timely and transparent indicator of industry chip distribution, have always attracted attention from various investors. However, in terms of the holding ratio metric, similar to the recently widely discussed concentration/crowding metrics, it also falls within the realm of discussing industry odds. As stated in "Times Have Changed: Concentration and Crowding Metrics Should Avoid Stereotyping," insufficient broad economic demand and explosive point-specific demand are commonalities among major global economies today. Reflected in the stock market, rising concentration and crowding may be an inevitable outcome. Therefore, since last year, public fund holding data has repeatedly broken past patterns (e.g., industries receiving the heaviest single-quarter additions tend to decline; a single industry exceeding 20% holding ratio is prone to peaking). We do not linearly extrapolate based on historical thresholds either, but the logic of rotation within sectors and marginal changes in the first quarter remains worth referencing. 1. Net Inflow via Fund Channels in Q1 Reached Approximately 500 Billion Yuan From the perspective of fund channels, resident investment entered the market at an accelerated pace in 2026 Q1, with net inflows of approximately 500 billion yuan in Q1. First, inflow items accelerated. Residents entering the market through funds did so via three channels: ① Non-broad-based ETFs: Q1 net inflows exceeded 260 billion yuan; ② Newly issued funds: Q1 scale of newly issued funds exceeded 180 billion yuan (including 70 billion yuan in index products and 110 billion yuan in active products); ③ Existing fixed-income-plus funds: Q1 net subscriptions for existing fixed-income-plus funds were approximately 80 billion yuan. Second, drag items slowed down. Net redemptions for existing active equity products dropped to 34.4 billion yuan, compared to 247 billion yuan in 2025 Q3 and 147.9 billion yuan in 2025 Q4. The redemption pressure on active products had previously been released. Private fund filing scales continued to accelerate, with March's new filing scale reaching a new high since "September 24th." 2. Times Have Changed; Historical Patterns of Fund Holdings Should No Longer Be Linearly Extrapolated Historically, it is difficult for any industry to maintain holdings above 20% for more than two quarters. Electronics has now sustained this for over three quarters. With changes in the A-share market capitalization structure, historical absolute values are hard to linearly extrapolate; relative overweight ratios compared to market cap are more meaningful. Currently, the fund allocation ratio for the electronics sector stands at 22% (exceeding 20% for three consecutive quarters), with an overweight margin of only 0.6 times, which is actually the lowest overweight level compared to history. From the table below, industries receiving the heaviest single-quarter additions by public funds tended to underperform in the following quarter. However, communications in June last year broke this pattern in Q3. Non-ferrous metals were the most added-to industry in 2025 Q4, with Q1 drawdowns concentrated mainly in March. Looking at 2026 Q1, the industry with the highest single-quarter addition returned to communications. 3. Who "Tops" the List of Heavily Held Stocks by Funds Reflects Changes in Economic Transformation and Era Dividends Who "tops" the list of heavily held stocks by funds also reflects the transition of era dividends. In 2026 Q1, Zhongji Innolight and Eoptolink remained in the top three holdings. Early dominance was led by finance and real estate (2006), followed by the rise of consumption (2011), initial emergence of technology (2013-2015), return to core asset white horse leaders (2017-2019), then high-end manufacturing taking the baton (2021), and currently focusing again on technology (2026 Q1). 4. Public Fund Addition Strategy in Q1: AI, Electrical New Energy, and Price Hikes Directions showing improved business expectations since the beginning of the year: AI industrial chain spreading out, oil and gas price-hike chains (including war-catalyzed varieties), new energy, etc. 5. Key Points to Note for Industries Other Than Technology ① Non-ferrous metals: Gold remains at high levels; lithium ore bottoms have lifted. ② Chemicals: Reached near ten-year highs. ③ New Energy: Added positions in an oscillating manner, but the magnitude was small, implying significant expectation gaps remain for the future. ④ High-end Equipment: Holdings in military and robotics have been largely digested; gradual attention can be paid to subsequent catalysts. ⑤ Export Chain: Global demand disturbances + exchange rate concerns have pushed holdings to neutral-low levels. If there is no judgment of US recession currently, or even if global economic expectations are revised upward, selective attention can be given subsequently. ⑥ Consumption: Structural additions in pharmaceuticals focused on CXO; consumer goods focus on alpha within mass consumption. Report Body I. Asset and Sector Allocation: Position Slightly Down, Shares Continue to Redeem In 2026 Q1, the positions of all three types of active equity funds declined slightly. Ordinary stock fund positions decreased by 0.1 percentage points from 2025 Q4 to 88.2%; Equity-mixed fund positions decreased by 1.0 percentage points to 85.7%; Flexible allocation fund positions decreased by 2.2 percentage points to 74.1%. Overall, active equity funds saw slight declines in holdings and shrinking market values, primarily due to a decrease in fund shares. Core active equity funds overall holding market value decreased by 1.5%. Specifically, ordinary stock funds decreased by 0.7%, equity-mixed funds by 1.6%, and flexible allocation funds by 1.7%. Fund shares declined, with overall shares decreasing by 1.8%. Ordinary stock fund shares decreased by 1.6%, equity-mixed fund shares by 1.8%, and flexible allocation fund shares by 2.0%. ETF shares declined, while active equity scale remained stable at 3.3 trillion yuan. As of 2026 Q1, active equity fund holding market value was 3.3 trillion yuan; insurance fund (2025 Q4 data) holding market value was 3.7 trillion yuan; foreign investor (2025 Q4 data) holding market value was 3.7 trillion yuan; stock-type ETF holding market value was 2.9 trillion yuan. At the sector level, in 2026 Q1, funds reduced holdings in CSI 300 and increased holdings in CSI 500. CSI 300 allocation ratio was 54.72% (overweight by 10.63%); CSI 500 allocation ratio was 22.08% (overweight by 4.48%). ChiNext and STAR Market allocation ratios increased. ChiNext allocation ratio was 25.32% (overweight by 5.54%); STAR Market allocation ratio was 16.62% (overweight by 6.90%). In 2026 Q1, funds reduced Hong Kong stock holdings, with their position dropping to around 14.0%. The holding market value of heavy Hong Kong stocks was 261.09 billion yuan, a decrease of 2.2 percentage points from 2025 Q4. Hang Seng Tech experienced significant reduction, with its position dropping from 6.7% in 2025 Q4 by 1.8 percentage points, reaching 3.9% in 2026 Q1. Hong Kong stocks in Q1 saw the largest increases in communications and petroleum & petrochemical positions, while media experienced significant reductions. Currently, heavily held Hong Kong stock targets by funds are concentrated in A-share related targets and innovative drugs, among other sectors. Excluding stock price factors, in 2026 Q1, public funds mainly increased allocations to Hong Kong stocks in communications, oil & gas, and real estate sectors, while reducing holdings in large-cap companies and electronics sectors. II. Industry Comparison: Concentrated Allocation Around Performance Trends (A) Industry Overview: Added Non-Ferrous Metals, Communications, and Non-Banking Finance; Reduced Electronics, Biomedicine, and Media Considering both A-shares and H-shares, electronics, power equipment, and communications have the highest absolute allocation ratios. After excluding the impact of industry index rises, the sectors most significantly added in Q1 were communications, basic chemicals, and biomedicine; the sectors most reduced were electronics, non-ferrous metals, and automobiles. Measuring position changes after excluding stock price fluctuations using the change in overweight ratio (fund allocation ratio minus free float market cap proportion), the most added sectors in Q1 were communications, basic chemicals, and biomedicine, while the most reduced were electronics, non-ferrous metals, and automobiles. From the perspective of secondary industries, communication equipment, semiconductors, refining and trading saw the most additions in Q1, while components, industrial metals, and consumer electronics saw significant reductions in Q1. Measuring by the historical percentile of the current overweight ratio, primary industries currently at high water levels above the 90th percentile include: communications, basic chemicals, steel, electronics, and petroleum & petrochemicals. Industries at historical low percentiles include food and beverages, computers, light industry manufacturing, public utilities, and social services, etc. The secondary industries whose positions are above the 90th percentile over the past 10 years are listed in the table below, where the vast majority still possess excess returns, indicating strong market momentum effects. Among them, in 2026 Q1, the industries with positions at the 100th percentile included communication equipment, chemical products, agrochemical products, other power supply equipment II, other electronics II, aerospace equipment II, and metallurgical steel raw materials. It can be seen that for industries where public funds are allocated at high percentiles, the excess stock price performance in the first quarter was mostly good. Secondary industries whose positions are below the 10th percentile over the past 10 years are listed in the table below. Among them, software development, computer equipment, beverage and dairy products, traditional Chinese medicine II, home furnishings, and film/theater chains are at historical lowest percentiles. As of the end of the first quarter of 2026, funds overweighted 7 primary industries relative to their free float market cap proportions, with communications having the largest overweight margin. In 2026 Q1, most industries were underweight relative to their free float market cap proportions. Industries with the largest underweight margins in 2026 Q1 included public utilities, non-banking finance, computers, and construction decoration, etc. (B) TMT Industrial Chain: From Concentration to Differentiation AI Industrial Chain: Overseas computing power chain extends upstream to optical communication, optical modules remain at high levels, PCBs and servers continue to see reductions. On the overseas AI chain, funds still allocate around North American Capex expansion, but have spread from simple huddling together for warmth to more segmented links such as fiber optic cables, optical chips, and AIDC power supply and distribution. Additionally, second-tier overseas AI chains like PCB/CCL have moved from core heavy holdings into high-level oscillation, with clear high-level reductions appearing in 2026 Q1; And supporting links such as server ODM, liquid cooling, and power supplies have also entered a phase of position oscillation. Regarding domestic computing power, added segments are mainly concentrated in IDC, while AI chips show differentiation; CSP and advanced process nodes continue to see reductions. For directions with fewer participants, namely software and application ends, waiting for expectation changes in the AI application end. Computer main segment positions have stabilized at low levels. In the media sector, games saw high-level reductions, while Hong Kong internet companies mostly saw reductions. (C) Price-Hike Chains: PPI Turns Positive Month-on-Month, Superimposed with War Catalysts Non-ferrous metals, after being the most added sector in 2025 Q4, saw differentiation in 2026 Q1. Gold benefiting from safe-haven attributes and lithium minerals with structural recovery in new energy continued to receive institutional additions, while industrial metals and small metals affected by disruptions in global economic recovery expectations saw positions fall from high levels. Price-hike links in the PPI chain: "Supply Constraints + Price Hikes" remain the main allocation clue for institutions. Energy: Geopolitical conflicts have intensified expectations of high energy prices, leading to significant institutional additions to the oil and gas chain (coal, refining). Midstream Materials: Structurally price-hiking segments received additions; chemicals reached ten-year highs, typical industries including agrochemical products (fertilizers), glass and fiberglass (electronic cloth). (D) New Energy Industrial Chain: Improvement Amid Oscillations Mainly contributed by the new energy vehicle chain; wind power and photovoltaic chains continued to see reductions. Continued additions along the industrial chain: Lithium battery materials, midstream batteries, and energy storage. (E) Pharmaceuticals: Innovative Drugs Continue to Decline, CXO Continues to Rise Slightly (F) High-End Equipment: Military Bottoms Stabilize, Robotics Still Digesting Military: Position recovery was mainly contributed by marine equipment (ships); military electronics, ground weapons, and other sub-sectors still saw reductions. Robotics Industrial Chain: Allocations dropped to low levels seen in 2024. (G) Domestic Demand Sectors: Allocation Around Structural Alpha Links CPI chain beta remains weak, but institutions actively seek alpha links for allocation. Traditional consumption sectors like white appliances and liquor are still testing bottoms in terms of allocation ratios, but structurally prosperous links such as food processing, condiments, and fermentation products have seen continuous institutional additions. (H) Export Chain: Expectations Not Yet Stabilized, Waiting for Observation Post-War Heavyweight export chain sectors such as construction machinery, motorcycles, and white appliances all saw significant reductions, while small additions were made to prosperity beneficiaries like inverters and energy storage. III. Individual Stock Allocation: Holding Concentration Has Decreased In 2026 Q1, the top 10 holdings in heavily held funds accounted for approximately 20.16%, with holding concentration slightly declining compared to the previous quarter. WuXi AppTec entered the top ten, while Cambricon-U exited the top ten. Excluding the impact of stock price fluctuations, the individual stocks most added to by active equity public funds in 2026 Q1 were Hengtong Optic-Electric, Zhongtian Technology, and Yangtze Optical Fibre and Cable, among others; The individual stocks most reduced in 2026 Q1 were Tencent Holdings, Zijin Mining, and Cambricon, among others. 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