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Market rebound lifts billion-dollar funds, but some thematic funds remain mired in losses.

TraderKnows
TraderKnows
11-14

Despite the market rebound aiding billion-dollar fund recovery, thematic funds struggle to rebalance and reverse losses due to their scale and limited scope.

As the stock market continues to rebound, several billion-dollar funds that have garnered attention are seeing a strong recovery. Recently, 15 funds with assets exceeding 10 billion dollars by the end of the third quarter reported gains of over 25% during their rebound, with the Huashang New Trends Optimal Fund reaching a new net asset value high. According to data, this fund achieved a net asset growth rate of 26.83% from September 24 to November 12, with fund manager Zhou Haidong realizing a cumulative return of 37.32% through a flexible allocation strategy during the past three years of market fluctuations.

The GF Multifactor Fund also performed remarkably well recently, with a net growth rate of 43.39% from September 24 to November 12, turning its past three-year losses into earnings, achieving a cumulative return of 1.35%. Additionally, the net asset values of the Galaxy Innovation Growth Fund and the Noan Growth Mixed Fund increased by over 70%. Despite their strong rebound, their losses over the past three years remain above 20%.

However, some billion-dollar funds, while performing well during this rebound, still show significant cumulative losses over the past three years due to major losses during the previous bear market. The data shows that as of November 12, seven billion-dollar funds have incurred losses exceeding 30% over the past three years. For instance, the CCB Frontier Medical Fund and the HTF Consumer Industry Fund rebounded by more than 19% respectively, but their losses over the past three years were as high as 34% and 32%.

Industry analysts have pointed out that managing funds on the billion-dollar scale is extremely challenging, especially when market conditions change. If fund managers cannot adjust positions timely, they will struggle to achieve ideal returns. In recent years, some thematic funds were established at peak times, and coupled with investment scope limitations, managers find it difficult to adjust strategies flexibly. Particularly, with large-scale operations, rebalancing involves vast cash flows, which may significantly impact market prices and increase operational difficulties.

Additionally, thematic funds have a rather singular investment scope, and the larger the scale, the more it could disadvantage fund managers in their operations. A senior public fund insider from Shanghai pointed out that thematic funds face difficulty in flexible allocation due to their need to adhere to a specific style. As the scale expands, the rebalancing difficulty for fund managers also increases, with some funds thus facing greater pressure from losses during market corrections. These thematic fund managers often face pressure from impacting stock prices during asset allocation, making active management's achievement of excess returns more challenging.

Looking ahead, industry insiders believe that the steady development of funds depends on the long-term vision and ability of fund managers to flexibly respond to market changes. For large-scale thematic funds, further strategy optimization may be necessary to avoid high volatility and rebalancing difficulties associated with concentrating large-scale funds into a single track.

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The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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