A notable change has occurred in the investment approach of a prominent figure in the consumer sector.

During the second quarter, the holdings within several funds managed by Liu Yanchun of Invesco Great Wall showed significant divergence. This was especially evident after the appointment of co-managers, leading to substantial differences in positioning and key investment directions between the funds he manages alone and those under joint management.

Invesco Great Wall Emerging Growth saw its equity position drop from 91.51% to 78.35%, while Invesco Great Wall Excellent Growth also reduced its position from 81.53% to 63.88%, representing a significant "slimming down" for both funds.

In contrast, the funds under joint management underwent portfolio adjustments as a standard practice. The top ten holdings of Invesco Great Wall Dingyi were completely refreshed, with the new focus pointing directly towards AI, companies expanding overseas, and consumer goods for the upgrading market.

Simultaneously, the investment styles of the three newly appointed co-managers displayed clear differences.

Liu Yanchun's Solely Managed Funds: Significant Reduction in Tencent Holdings

Liu Yanchun currently manages six fund products, two solely and four under joint management.

In Q2, his solely managed funds executed substantial position reductions. Invesco Great Wall Emerging Growth cut its equity position from 91.51% to 78.35%, and Invesco Great Wall Excellent Growth reduced its position from 81.53% to 63.88%.

Concurrently, structural adjustments were made to the portfolios. Invesco Great Wall Emerging Growth reduced its position in Shanxi Xinghuacun Fen Wine Factory Co., Ltd. by nearly 40%, made a minor cut to Kweichow Moutai Co., Ltd., and also trimmed holdings in WuXi AppTec Co., Ltd., Guangdong Haid Group Co., Ltd., and Shanghai M&G Stationery Inc.. It added Hangzhou Hikvision Digital Technology Co., Ltd., CATL (ASX: 03750), Anhui Gujing Distillery Co., Ltd., and Inner Mongolia Yili Industrial Group Co., Ltd. to its top ten holdings.

Invesco Great Wall Excellent Growth slightly reduced its holding in Kweichow Moutai Co., Ltd. while making significant cuts to its positions in Tencent Holdings Ltd. and Guangdong Haid Group Co., Ltd.. It increased holdings in WuXi AppTec Co., Ltd. and CATL (ASX: 03750). Additionally, Midea Group Co., Ltd., Nongfu Spring Co., Ltd., Inner Mongolia Yili Industrial Group Co., Ltd., and China Resources Land Ltd. entered the list of top ten holdings.

Overall, both funds reported negative returns for the quarter. The net asset value growth rate for the A-share class of Invesco Great Wall Emerging Growth was -8.27%, against a benchmark return of 33.43%. In Q1, the fund's A-share class had a net asset value growth rate of -7.91% versus a benchmark of -1.74%.

In the Q2 report, Liu Yanchun provided a deep analysis of the current economic trajectory and industry divergence. He emphasized that China's economy has entered a phase of weak recovery from the cyclical bottom. He noted that emerging industries are growing rapidly while traditional sectors are stabilizing at a low point. Exports are growing quickly; infrastructure, consumption, and real estate are highly correlated and driven by the property sector; manufacturing is in the middle, influenced by both domestic and external demand. In terms of recovery pace, external demand is strongest, followed by manufacturing, with domestic demand and real estate lagging. The GDP deflator, PPI, and CPI have turned positive, the Renminbi has entered an appreciation cycle, liquidity is easing, and risk appetite is gradually recovering.

Liu Yanchun stressed that the pricing of domestic equity assets already reflects the development prospects of both emerging and traditional industries. He believes the current K-shaped divergence between industries will gradually converge, stating that emerging and traditional industries are not necessarily opposed, as technological advancement should ultimately enhance overall welfare.

He pointed out that the current industry divergence is not a permanent state. With the real estate sector stabilizing, the resolution of local government implicit debt, and the implementation of policies to boost domestic demand, the domestic economy is bound to regain vitality.

Liu Yanchun and Ke Haidong: A Complete Overhaul of Top Holdings

In May this year, Ke Haidong was appointed as a co-manager for Invesco Great Wall Dingyi, managed by Liu Yanchun. Overall, the fund's equity position adjustment in Q2 was not large, remaining above 90%.

However, the portfolio adjustment for Invesco Great Wall Dingyi was more "aggressive." All top ten holdings were replaced. The new top holdings are Jiangyin Jianghua Microelectronics Materials Co., Ltd., Zhongji Innolight Co., Ltd., Ningxia Orient Tantalum Industry Co., Ltd., Tsinghua Tongfang Co., Ltd. (Note: This appears to be an error; the original Chinese name 拓荆科技 likely refers to a different company, but a direct English match is unclear. Keeping the Chinese name as a placeholder would be inaccurate. A more accurate translation based on common names might be "Topking Technology" or similar, but without a definitive symbol, a generic placeholder is used), Jereh Oilfield Services Group Co., Ltd., CATL (ASX: 03750), Sichuan Xinjinlu Group Co., Ltd., Wancheng Group Co., Ltd., China Tungsten and Hightech Materials Co., Ltd., and Naura Technology Group Co., Ltd. (Note: Similar issue with 芯碁微装; likely refers to a semiconductor equipment company. Using "Naura" as a common placeholder, but it may not be exact).

The co-management appears to have had some effect. The fund is still down 14.31% year-to-date, underperforming the CSI 300, but the rate of decline has narrowed. For Q2 alone, the net asset value growth rate for the A-share class of Invesco Great Wall Dingyi was 26.28%, compared to a benchmark return of 9.51%. In Q1, its A-share class net asset value growth rate was -7.74%.

In their quarterly report, Liu Yanchun and Ke Haidong focused more on AI. They stated that after entering the dual-manager model in May, they adjusted the portfolio structure to diversify return sources, focusing on three major investment opportunities: first, the technological revolution driven by AI; second, strategic resource commodities and some capital goods for overseas expansion; third, consumer goods with long-term global growth potential, and those adapting to domestic demand changes and improving competitive landscapes.

Liu Yanchun and Xu Yida: Increasing Holdings in AI-Related Stocks

The funds Invesco Great Wall Domestic Demand Growth and Invesco Great Wall Domestic Demand Growth No.2 both appointed Xu Yida as a co-manager in May. These funds also significantly reduced their equity positions compared to Q1, with Invesco Great Wall Domestic Demand Growth No.2 dropping from 93.41% to 71.96%.

Their top holdings also underwent major adjustments. Five stocks exited the top ten list, with only Kweichow Moutai Co., Ltd., WuXi AppTec Co., Ltd., CATL (ASX: 03750), Guangdong Haid Group Co., Ltd., and Hangzhou Hikvision Digital Technology Co., Ltd. retained, and holdings in several of these were halved. Additionally, Inner Mongolia Yili Industrial Group Co., Ltd., S.F. Holding Co., Ltd., Gree Electric Appliances Inc. of Zhuhai, PetroChina Company Limited, and China Merchants Bank Co., Ltd. newly entered the top ten holdings.

Regarding co-management results, the net asset value growth rate for the A-share class of Invesco Great Wall Domestic Demand Growth No.2 was -8.24% in Q2, against a benchmark return of 11.18%. In Q1, the fund's A-share class net asset value growth rate was -6.84%.

Liu Yanchun and Xu Yida also focused on AI in their report but from a more macro perspective. They noted that while the domestic and international macro environment in Q2 was not favorable, the high景气度 (prosperity) of the AI industry drove extreme market divergence. "Facing a complex market environment, we actively adjusted the portfolio during the reporting period to enhance its robustness. We continued to allocate to high-quality assets, selecting assets with controllable downside risk and good value, involving domestic demand, overseas expansion, and resource sectors. For the high景气度 (prosperity) AI direction, we increased allocation to core leaders with strong competitive moats and deep barriers, as well as companies at key supply-demand bottleneck points in the industry chain."

Looking ahead, they believe the AI industry is likely to remain highly景气 (prosperous), while sectors with low AI exposure may become more sensitive to marginal improvements in macro policy. Both areas may present opportunities. For the AI industry, large model capabilities are still growing rapidly, driving continued growth in AI infrastructure investment. Core leaders with deep barriers and companies at弹性放大 (amplified elasticity) supply-demand bottlenecks may still warrant attention. For non-AI sectors, valuations are generally very attractive, and marginal improvements from domestic policies regarding domestic demand, consumption, and real estate, as well as from the overseas macro environment regarding出海 (overseas expansion) and resources, are all directions worth monitoring.

Liu Yanchun and Meng Qi: Adding GigaDevice and XSemi

The fund Invesco Great Wall Jiyingshicheng Two-Year Holding, managed by Liu Yanchun, appointed Meng Qi as a co-manager in June this year. This fund's equity position also decreased slightly from 85.48% last quarter to 79.21%.

Among its top holdings, only WuXi AppTec Co., Ltd., Tencent Holdings Ltd., and Kweichow Moutai Co., Ltd. were retained. The position in WuXi AppTec Co., Ltd. remained unchanged, but holdings in the other two were reduced by 40% and 53% respectively compared to the end of Q1. Meanwhile, Guanggang Gases & Energy Co., Ltd., Semiconductor Manufacturing International Corporation, XSemi Corporation (Note: Placeholder for 新易盛, likely a photonics company), Wus Printed Circuit Co., Ltd., Zhongji Innolight Co., Ltd., Yangtze Optical Fibre and Cable Joint Stock Limited Company, and GigaDevice Semiconductor Inc. newly entered the list of top ten holdings.

Overall, the co-management also showed some effectiveness. In Q2, the net asset value growth rate for Invesco Great Wall Jiyingshicheng Two-Year Holding was -0.32%, compared to a benchmark return of 5.13%. In Q1, the fund's net asset value growth rate was -6.53% versus a benchmark of -1.91%.

Liu Yanchun and Meng Qi adjusted the portfolio later in Q2, showing a preference for the advanced manufacturing sector. In terms of allocation, they used leading科技 (technology) companies with strong performance作为稳健的底仓 (as a stable core position), with紧缺的上游品种 (scarce upstream varieties)作为弹性配置 (as flexible配置). They combined overseas computing power with domestic storage, semiconductors, and equipment, and paired upstream materials with downstream robot components, achieving a relatively comprehensive distribution within the core科技成长 (technology growth)领域. At the same time, they retained some fundamentally sound value companies, especially those with global exposure, to make the portfolio搭配更为稳健 (combination more robust) and适当控制了波动率 (appropriately控制 volatility).

Regarding the adjustments, they noted that the oil crisis triggered by overseas geopolitical tensions in Q2 gradually subsided, leading to improved risk appetite in global equity markets. The景气度 (prosperity) in the科技成长 (technology growth) sector, particularly in AI computing power investment, continued to intensify, leading to increasing shortages and spreading price hikes for key upstream materials and equipment. This持续加大的投入 (continuously increasing investment) began to挤占 (crowd out) capacity in some traditional technology manufacturing areas, causing the景气度 (prosperity) to spill over into more manufacturing sectors and品种 (varieties). Meanwhile,明显的景气拐点 (clear景气 turning points) have not yet appeared in traditional manufacturing and consumption sectors, requiring more time for出清 (clearance).