China Equity Strategy: Closer look at sector and thematic ETFs and actively managed tech funds

Research evidence excerpt

China Equity Strategy: Closer look at sector and thematic ETFs and actively managed tech funds

Global Research

1 July 2026ab

China Equity Strategy Equity Strategy

ChinaCloser look at sector and thematic ETFs and

actively managed tech funds Lei Meng

Strategist

lei.meng@ubs.com

+86-21-3866 8939

New actively managed MF issuance may continue to recover gradually Yu Sheng

Although the CSI Partial Equity Funds Index has outperformed the CSI 300 Index by Strategist

32ppt since 24 September 2024 (Figure 1CSIPartialEquityFundsIndexhassignificantlyoutperformedtheCSI30since24September2024), the overall size of actively managed mutual S1460524080001

yu.sheng@ubs.comfunds (MFs) has not expanded proportionately. As of Q126, actively managed MFs held

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A-shares worth Rmb3.18trn, below the Q325 level of Rmb3.20trn (Figure 2Pasively/activelymanagedMFs'A-shareholdingsatquarter-end). In fact,

when the A-share market rallied in 2025, these MFs shrank by over 300bn units. In our James Wang

view, this is because many investors who experienced losses between H221 and 24 Strategist

james-zb.wang@ubs.comSeptember 2024 used the market recovery to reduce positions or redeem holdings as

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they approached breakeven. Meanwhile, new issuance of actively managed MF

products has remained sluggish in the past year (Figure 3MarginalrecoveryinMFs'newisuancesbutstilwelbelowthe2020-21peaks). Despite a 152% YoY jump in Tommy Tang, CFA

H126 to 231.7bn units, new issuance remains 74% below the peak in the same period Strategist

tommy.tang@ubs.com

in 2021. Historically, new issuance of actively managed MFs tends to lag performance

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improvements (Figure 4QuarterlyexcesreturnsoftheWindEquityHybridFundIndexversustheCSI30andchangesintheunitsofactivelymanagedequityfunds).