China funds post 183% top return as AI, semiconductor themes dominate H1

China's actively managed equity funds returned as much as 183.7 percent in the first half, with 197 funds more than doubling, as a concentrated rally in AI and semiconductor stocks created the widest performance dispersion in the industry since 2015.

"The market is pricing in a structural shift in China's technology supply chain, and fund managers who positioned early in semiconductor equipment and AI infrastructure are capturing the full force of that re-rating," said Wu Hao, portfolio manager at Founder Fubon Fund Management, whose fund led all peers.

The top 20 actively managed funds all returned at least 149.2 percent, according to Wind Information data compiled through June 30. Founder Fubon Core Advantage led with a 183.7 percent gain, followed by Caitong Duocelue Fuxin at 172.9 percent and Dongfang Huixin at 167.3 percent. Index funds tracking semiconductor materials and equipment themes occupied all 20 slots in that category, with the Peng Hua STAR 50 Semiconductor Materials and Equipment ETF returning 171.4 percent.

The extreme concentration of returns raises questions about sustainability. The top 20 funds share near-identical exposure to AI chips, semiconductor fabrication equipment, and integrated circuit design houses — a narrow bet that has paid off handsomely but leaves little diversification if the sector's valuation premium contracts. The CSI Semiconductor Index trades at elevated multiples after its 12-month rally, and any shift in US-China technology restrictions could reverse the flows that powered these gains.

The outperformance extends beyond pure equity funds. Among ordinary stock funds, all 20 top performers exceeded 100 percent returns, with a threshold of 107.9 percent for entry into the top tier. Caitong Integrated Circuit Industry Fund, managed by Jin Zicai, returned 151.5 percent to rank second in that category.

Jin Zicai emerged as the period's most successful manager, placing six funds in the top 20 across all active equity categories, including Caitong Jingqi Zhenxuan One-Year Hold and Caitong Jiangxin Youxuan One-Year Hold. Yan Kai of Dongfang Fund and Zhang Haojia of Dongwu Fund each placed two funds in the top 20.

The thematic concentration was even starker in index products. The top 16 exchange-traded funds by first-half returns all track semiconductor materials and equipment sub-themes under the STAR 50 index. The top three — managed by Peng Hua, China Asset Management, and HuaTai-PineBridge — returned between 169.5 percent and 171.4 percent, separated by less than 2 percentage points.

Overseas-focused funds showed similar thematic bias but lower absolute returns. The HuaTai-PineBridge China-South Korea Semiconductor ETF led QDII products with a 130.8 percent gain, followed by the same fund's feeder fund at 128.9 percent. Tianhong Global High-End Manufacturing and E Fund Global Growth Select also exceeded 100 percent, though the median QDII fund remained negative for the period, reflecting sharp divergence between AI-exposed and non-AI overseas markets.

Bond funds with equity sensitivity also benefited. HuaXia Convertible Bond Enhanced returned 42.6 percent to lead the fixed-income category, while HuaShang Convertible Bond Fund returned 40.7 percent. Both are convertible bond strategies that captured upside from the equity rally while maintaining a bond floor.

The performance data shows a structural shift in China's asset management industry: fund flows are concentrating into thematic products at the expense of diversified strategies. The top 20 funds by first-half returns collectively manage assets that have grown by more than 300 percent since December, according to Wind data, as retail and institutional investors alike chase the AI-semiconductor narrative. Whether that concentration becomes a source of resilience or vulnerability will depend on the trajectory of US-China technology competition and the sustainability of China's domestic chip production ramp.

This article is for informational purposes only and does not constitute investment advice.