As the market enters a critical window period marked by overlapping domestic and international policy meetings along with the release of A-share interim reports, expectations are facing adjustment and fluctuation. This is likely to increase short-term market volatility and lead to a periodic style rebalancing. In this environment, the demand for diversified allocation strategies continues to rise. Beyond the recently volatile tech and growth sectors, which other areas could be worth watching?
According to the latest research from institutions, the extreme divergence in the market has increased the need for balanced allocation, and the improving supply-demand dynamics in the cyclical sectors could present investment opportunities at their bottoming range. Based on historical portfolio disclosures from regular reports, the Yinhua Ruihe Flexible Allocation Hybrid Fund (A-class: 005544; C-class: 025476) has a deep focus on the cyclical theme and a stable long-term investment style. Its performance over the past one and three years ranks in the upper tier of its peers, potentially making it a suitable option for optimizing portfolio risk in the current environment.
Focusing on the Cyclical Theme, Ranking in the Top Quartile Over Three Years
According to the fund's second-quarter report, as of June 30, 2026, the net asset value (NAV) growth rate of Yinhua Ruihe Flexible Allocation Hybrid Fund A over the past year was 60.95%, significantly outperforming the benchmark's 13.76% return, generating an excess return of 47.19%. Over a longer timeframe, data from Galaxy Securities indicates its peer group ranking for the past one and three years is in the top 1/3 and top 1/4, respectively.
Year-to-date, amidst periodic market rotation and volatility, fund manager Zhang Teng has maintained a core focus on the cyclical theme, ensuring investment style consistency. According to the second-quarter report, the fund's top ten holdings cover sectors including basic chemicals, coal, non-ferrous metals, and petroleum & petrochemicals. Looking ahead, Zhang Teng has stated a focus on investment opportunities arising from policies aimed at "anti-involution" in industries. He plans to build a diversified portfolio across sectors like chemicals, steel, coal, and electric power, considering factors such as industry competitive landscape, collaboration difficulty, and stock price elasticity and positioning.
Recent institutional research suggests that improving supply-demand dynamics in the cyclical sectors could create bottom-fishing opportunities. In the chemical industry, stricter "dual-carbon" assessments are expected to limit the expansion of high-energy, low-efficiency capacity, improving the supply structure. The global ethylene industry chain is undergoing rapid restructuring, further highlighting the competitive advantages of China's low-cost olefin routes. In the coal sector, a bottoming reversal of supply and demand, combined with rising demand during the peak summer season, provides a foundation for a higher coal price center. With coal prices turning positive year-on-year, industry earnings are expected to enter a inflection phase. In the electric power sector, valuations for leading hydropower companies are at a cyclical low, and a combination of electricity price recovery and stable dividends supports a return to value for these high-dividend stocks. Additionally, improved expectations for nuclear power pricing, coupled with concentrated capacity releases, are seen as positive catalysts.
Building an "Anti-Fragile" Portfolio to Diversify and Hedge Risk
Regarding investment strategy, Zhang Teng adheres to a primarily "bottom-up" approach, supplemented by "top-down" analysis, aiming to construct an "anti-fragile" portfolio through diversified holdings and hedging allocation. In the fund's first-quarter report, he noted that given the numerous uncertainties in the underlying logic of various asset pricing, he favors a diversified and hedging approach to build an anti-fragile portfolio. In the second-quarter report, he further elaborated that to address high macro and geopolitical volatility, the fund has adopted a strategy of diversification and hedging. For example, it holds positions in coal and oil & gas sectors (which are positively correlated with oil prices) and large-scale refining and non-ferrous metal sectors (which are inversely correlated with oil prices), only making adjustments when stock prices present extreme value opportunities.
Some institutional viewpoints suggest that entering the third quarter, internal divergence within the tech sector has increased, micro-trading structures have become more complex, and market risk appetite has shown a marginal decline, creating a need for style rebalancing. However, from an index perspective, systemic risks are not yet apparent, the policy environment remains relatively supportive, and structural market movements are likely to remain the main theme. In this context, investors might consider pullback opportunities in high-quality sectors and appropriately balance their allocation according to their own risk tolerance.
Against this backdrop, the Yinhua Ruihe Flexible Allocation Hybrid Fund (A-class: 005544; C-class: 025476) aims to build an "anti-fragile" portfolio, focusing on the improvement of industry structure and earnings recovery opportunities in cyclical sub-sectors such as chemicals, steel, coal, and electric power. Within their risk tolerance, investors may consider this fund as a tool to optimize their investment structure during a volatile market.