With the recent release of the quarterly reports by public funds, the latest scale of stock exchange-traded funds, or ETFs, has come to lightIn the first quarter of this year, broad-based ETFs, particularly those tracking the CSI 300 index, have attracted substantial capital, with three reaching a scale of over 100 billion yuan, signaling a growing interest from investors.

Among other types of broad-based ETFs, those following the SSE 50, STAR 50, and ChiNext indices have also shown significant growth in share volumeNotably, multiple dividend-focused ETFs have outperformed several sector-themed ETFs in terms of share growth, indicating a strategic shift among investors towards choosing products that promise reliable returns amidst market uncertainty.

The dominance of broad-based ETFs can largely be attributed to the turbulent market experienced earlier in the yearAs stocks fluctuated significantly, investors gravitated towards large-cap blue-chip stocks that offered better perceived value compared to growth stocks, which seemed overpriced in relative terms

Reports from central financial institutions, including Central Huijin Investment Ltd., reveal a substantial increase in their investments in broad-based ETFs during this quarter, reinforcing the notion that the market style is currently skewed towards large-cap equities.

The CSI 300 ETF has emerged as the most sought-after investment product in the marketAs per the latest fund reports, ETFs managed by Huatai-PB, E Fund, and Harvest have all exceeded the 100 billion yuan markMoreover, the SSE 50 ETF managed by Huaxia has come close to this threshold, with all four ETFs experiencing significant share volume growth of over 10 billion yuan in the first quarter alone.

Both the CSI 300 and SSE 50 indices are representative of large-cap stocks in the marketThroughout the initial tumult of the year, investment capital first flowed into these blue-chip stocks, subsequently extending to smaller-cap stocks as market confidence began to stabilize

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In fact, ETFs that follow the CSI 1000 and CSI 500 indices reported an impressive share volume increase of over 2 billion yuan each in the first quarterWhen it comes to growth-oriented stocks, ETFs like the STAR 50 and ChiNext also saw considerable share volume growth, ranking just below the SSE 50 ETF.

Interestingly, dividend-themed ETFs were notable as well, underscoring a growing preference for stable returns amidst uncertaintyThese ETFs typically include high-dividend-paying stocks, often linked to state-owned enterprises and government-affiliated firms.

Conversely, earlier attention on growth-focused ETFs has waned, leading to these funds being described as “hot potato.” Reports indicate that industry-specific ETFs, including those tracking sectors like semiconductors, beverages, pharmaceuticals, military, and new energy vehicles have seen the largest reductions in share volume

These areas, once the darling of investors, struggled in the first quarter, with many component stocks witnessing steep declines.

Performance metrics indicate that ETFs concentrated on resource stocks, state enterprises, and banks have been among the top performers in terms of growth, while biological medicine-themed ETFs have lagged behind, highlighting a shift in investor sentiment.

The influx of funds into broad-based ETFs during market downturns has been significant, driven in part by major players like Central Huijin InvestmentOn October 23, 2023, Central Huijin publicly declared its intent to purchase ETFs and signaled its plan to incrementally increase its holdingsFollowing this, on February 6, 2024, it reaffirmed its commitment to expanding its ETF investments, stating its recognition of A-shares' value at the time.

Based on data from the public fund reports, Central Huijin emerged as a prominent institutional investor by maintaining a staggering 6.247 billion shares in the Huatai-PB CSI 300 ETF by the end of the first quarter

By the end of that period, it further expanded its holdings to approximately 32.603 billion shares, having purchased a staggering 26.356 billion shares in a matter of weeks.

Furthermore, Central Huijin likely influenced the purchase volumes across several other ETFs, including those managed by Harvest and E FundAccording to comprehensive analyses, this prominent institutional investor acquired substantial quantities in the following: Harvest’s CSI 300 ETF with 15.604 billion shares, Huaxia’s CSI 300 ETF with 16.993 billion shares, E Fund’s CSI 300 ETF with 45.706 billion shares, and Huaxia’s SSE 50 ETF with 15.867 billion shares—all seeing no redemptions in the first quarter, underscoring the trend towards investment over liquidation.

In light of the continuous capital inflow into broad-based ETFs, they have undoubtedly taken center stage in the equity market this year

As of April 22, a total of 48 new ETFs have been launched, amassing a total issuance scale of 31.07 billion yuan, excluding QDII funds; in contrast, the total issuance for stock mutual funds stands at 373.76 billion yuanInvestors have particularly shown preference for products like the CSI A50 and various dividend-themed ETFs, with multiple new issuances surpassing the 1 billion yuan mark, reflecting their popularity.

Currently, the market shift from an early-year rebound to a state of stabilization has prompted continued interest in large-cap ETFsExperts suggest that growth-focused ETFs will require patience as investors wait for the right market catalysts in terms of relevant government policies or economic signals.

One fund manager shared insights on this investment trend, indicating that they tend towards larger-cap ETFs while strategically incorporating some mid- and small-cap products as complementary choices

This duality allows for balanced exposure across the investment spectrum.

In recent research, Huabao Securities has posited a stronger outlook for large-cap stocks, pointing out historical tendencies during April’s earnings season where large caps consistently perform better than their smaller counterpartsIndicators derived from industrial capital and foreign investments suggest a consistent preference for large-cap assets from a funds flow perspective.

Further commentary on sector-specific ETFs has highlighted the need to recognize unique opportunities as policies aimed at upgrading industries, such as “old-for-new” initiatives, gain tractionThis warrants close attention to investment opportunities arising from corresponding industry chains.

According to Jiang Han, a senior researcher from the Pangu think tank, the influx of investments into broad-based ETFs in the first quarter reflects a certain optimism among investors regarding an overall recovery and value correction within the market