The first half of 2025 saw global equity markets demonstrate notable resilience. Despite external volatility, China’s major A-share indices, along with the Hang Seng and Hang Seng Tech indexes, all closed the period in positive territory. According to data from Tonghuashun iFinD, over 6,800 actively managed equity funds achieved positive returns by June 30, accounting for more than 80% of all such funds with complete half-year performance records.
A defining feature of this period was the rotation of capital between high-conviction thematic investments. Among these, biotech innovation, the Beijing Stock Exchange (BSE), and new consumption themes stood out, claiming all top 20 spots in the mid-year performance rankings for actively managed equity funds.
Biotech Innovation Takes the Crown
Funds focused on innovative pharmaceuticals and biotech emerged as the clear winners. The winner, China Universal Hong Kong Advantage Selected Mixed Fund (QDII) A, posted an impressive return of 85.64%. Dominating the leaderboard, 14 of the top 20 best-performing funds had significant exposure to this high-growth sector.
The Rise of the Beijing Stock Exchange
The CITIC Securities BSE Select Two-Year Closed Mixed Fund A secured the second position with an 82.45% return. Funds from China Asset Management and Wanjia Fund that target BSE-listed companies also broke into the top 20, highlighting the exchange's growing attractiveness to investors.
New Consumption’s Selective Surge
Three funds focusing on the new consumption theme, managed by GF Fund, Shenwan Lingxin Fund, and Hengyue Fund, also made the elite list. Their success, however, was highly dependent on picking a few specific winning stocks.
In a stark contrast, technology-themed funds, which started the year with immense momentum, found themselves at the bottom of the performance chart by mid-year. However, a strong rally in June suggests a potential turnaround may be underway for the second half of the year.
From Accumulation to Breakout: The Biotech and BSE Story
The strong performance of biotech and BSE-focused funds wasn’t instantaneous; it was a story of steady accumulation followed by a powerful breakout.
At the end of Q1, funds concentrated on humanoid robots and advanced manufacturing led the pack. Yet, several top-20 funds were already betting on the BSE and biotech. For example, the CITIC Securities BSE fund was ranked 7th after Q1, and the E Fund Selected Value Mix, heavily invested in biotech, had a strong quarter. Its returns nearly doubled by the end of H1, landing it in 10th place overall.
The real momentum shift began in April. As the fervor around pure-play tech stocks cooled, capital flowed into biotech and the BSE. The biotech sector, in particular, benefited from a powerful trifecta: supportive government policies, significant capital inflows, and robust industry fundamentals. The Hong Kong market, home to many mature biotech firms nearing value inflection points, offered a particularly fertile ground for growth.
The champion fund’s strategy exemplifies this approach. Its top ten holdings were exclusively Hong Kong-listed biotech stocks, allowing it to significantly outperform its peers.
Manager Chen Tang of E Fund Selected Value Mix noted a converging trend between A-share and Hong Kong-listed biotech companies. "Innovative drug assets are globally priced. With low barriers to capital flow in primary markets and converging project valuation logic, coupled with improving liquidity in Hong Kong, the risk-return profiles of the biotech sectors in both markets are becoming more aligned, and the valuation gap is narrowing," he explained.
Outlook for the BSE remains optimistic. China Galaxy Securities points to the recent launch of the BSE Specialized and Sophisticated "Little Giant" Index, steady progress in new listings, and more M&A activity as key drivers. These factors are expected to sustain high market activity and attention. Furthermore, institutional holdings of BSE stocks saw a significant quarter-on-quarter increase in Q1 2025, suggesting the potential for tens of billions in additional fund inflows, particularly into liquid "little giant" enterprises.
The New Consumption Theme: A Stock-Picker’s Game
For funds in the new consumption arena, success was not about the broad theme but about identifying specific, high-flying winners.
The three top-20 funds in this category all held significant positions in two standout performers: Pop Mart (09992.HK) and Lao Feng Xiang Gold (06181.HK), which soared 198.6% and 321.53%, respectively, in H1.
However, the sustainability of this trend is now in question. In May, an early investor in Pop Mart fully divested its pre-IPO stake. June saw a significant correction in Hong Kong's new consumption stocks, which even dragged down A-share IP concept stocks. Other popular names like Brook (00325.HK) failed to recover strongly from the sell-off, closing the month down.
Tianhong Fund analysts attributed the initial surge in stocks like Pop Mart to a perfect storm: weak traditional consumer earnings pushing capital toward new directions, attractive valuations and outperforming earnings, and a powerful feedback loop of retail and institutional momentum trading.
They now caution that valuations are no longer cheap, warning of a potential trend reversal. They advise investors to focus on companies with verifiable, high-frequency performance data rather than those riding a wave of speculative hype.
Tech’s Tough Half and a Promising Rebound
The launch of models like DeepSeek earlier in the year ignited a fire under AI and tech-related funds. However, after entering a correction phase in March, the sector's光环 (halo) faded dramatically. Funds that failed to rotate out of tech were left languishing at the bottom of the performance tables.
The worst performer was Qianhai Kaiyuan Artificial Intelligence Theme Mixed Fund A, which fell 20.57%. This fund, focused on AI, was heavily invested in electronics, communications, and machinery—sectors tied to device-side AI. Its top holdings included a who's who of Chinese semiconductor and tech hardware firms.
Other prominent managers, like Jin Zicai, who had stellar results in 2024, saw all six of their products post negative returns for H1 2025, landing them in the bottom ten.
Yet, a crucial shift occurred in June. Tech staged a remarkable comeback, with several tech-heavy funds leading the monthly performance charts. Yongying Technology Intelligent Selection Mixed Fund A led the pack with a staggering 37.21% gain in June alone, followed by three other funds that gained over 30%, all concentrated in electronics, communications, and machinery.
This resurgence hints at a changing tide. 👉 Discover advanced investment analysis tools to track these sector rotations in real-time.
CITIC Securities, in its H2 2025 investment outlook, suggests this may be the beginning of a broader recovery. The report states that continuous advancements in large AI models and exploration by Chinese tech firms in ecosystem and application development are moving AI from a point technology to a widespread productivity tool. AI is already reshaping industries like advertising, gaming, enterprise software, and smart vehicles. With anticipated releases like DeepSeek R2 and GPT-5 in the second half of the year, the broker believes the process of value re-rating for China's tech industry is far from over.
Frequently Asked Questions
What were the top-performing fund sectors in the first half of 2025?
The top performers were overwhelmingly funds focused on innovative biotech and pharmaceuticals, followed by funds investing in companies listed on the Beijing Stock Exchange (BSE). A select few funds concentrated on the "new consumption" theme also performed exceptionally well.
Why did technology funds perform poorly overall in H1?
After a very strong start to the year, the technology sector entered a significant correction phase beginning in March. Funds that remained heavily invested in AI, semiconductors, and hardware without adjusting their portfolios saw substantial drawdowns, leading to poor half-year results.
Is the tech sector recovery in June a sign of things to come?
The strong performance of tech-focused funds in June is a positive signal. It suggests that after a period of consolidation, investor confidence may be returning, potentially setting the stage for a stronger second half, especially with major new AI product launches expected.
What is driving the growth of the Beijing Stock Exchange?
Growth is fueled by policy support, the introduction of new market indices (like the Specialized and Sophisticated "Little Giant" Index), increasing new listings, and rising institutional investment, which is improving market liquidity and visibility.
Should investors be cautious about the "new consumption" theme?
Yes. While some stocks saw incredible gains, the theme has shown volatility, and valuations have become stretched. analysts advise focusing on companies with strong, measurable fundamentals rather than speculative concepts.
How can investors track these sector trends?
Staying informed requires monitoring key economic data, policy announcements, and fund quarterly reports. Using a variety of analytical resources is crucial for identifying emerging opportunities and risks. 👉 Explore more market strategies and insights to enhance your research.