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News about collective purchase restrictions on QDII funds has been coming one after another.

On July 15, Huabao Fund issued an announcement stating that in order to protect the interests of fund shareholders, Huabao Nasdaq Select Fund (Class A: 017436; Class C: 017437) will suspend large-scale subscriptions (including regular fixed-amount investments) from July 16, 2024 (Tuesday).

The fund announcement shows that from July 16, 2024 (Tuesday), the maximum amount of cumulative subscription (including fixed investment) for Class A fund shares of Huabao Nasdaq Select Fund in a single fund account in some sales institutions (excluding direct sales counters and online direct sales platforms) will be set at RMB 20,000 (inclusive) per day; the maximum amount of cumulative subscription (including fixed investment) for Class C fund shares in a single fund account in some sales institutions (excluding direct sales counters and online direct sales platforms) will be set at RMB 20,000 (inclusive) per day.

This is the 57th QDII fund to issue a "purchase restriction announcement" since July. Huabao Nasdaq Select Fund is also a relatively rare actively selected "U.S. stock market technology" QDII fund on the market.

QDII fund purchase restrictions: becoming a trend

The "purchase restriction trend" of QDII funds is becoming more and more serious.

As of July 12, 2024, there are 136 QDII funds in the market that are in the state of suspending subscription or suspending large-scale subscription, accounting for more than 45% of the 300 QDII funds in the market. It is worth mentioning that the purchase restriction is accelerating. In just half a month since July, 56 QDII funds have announced purchase restrictions one after another, and the pace is surprisingly consistent. (Data source: Wind)

These data directly point to two major characteristics of the current QDII fund market: first, current investors are enthusiastic about subscribing to QDII funds; second, the relatively limited QDII quota is being consumed at an accelerated rate.

While QDII funds are subject to bulk purchase restrictions, their performance has been rising.

Take the Huabao Nasdaq Select Fund (Class A: 017436; Class C: 017437), which has just disclosed the purchase restriction announcement, as an example. This QDII fund has been established for more than a year since March 2023. As of March 31, 2024, the Huabao Nasdaq Select A (017436) has a return of up to 36.26%, and the Huabao Nasdaq Select C (017437) has a return of up to 35.84%. (Data source: 2024 fund first quarter report)

In fact, just 5 days ago (July 10, 2024), the unit net value of Huabao Nasdaq Select A just hit a new high of 1.7298 yuan since its establishment.

Get on the "U.S. Stock Market Technology" Express

The popularity of QDII funds stems from the strong performance of overseas markets, which is fully demonstrated in the U.S. technology sector.

In the first half of this year, technology giants such as Microsoft, Nvidia, and Apple took turns to sit on the throne of "the world's largest market value", which attracted global attention. As of July 12, 2024, the Nasdaq index has risen by more than 22% this year. (Data source: Wind)

The first quarterly report of the fund in 2024 shows that as of the end of the first quarter, more than 70% of the positions of Huabao Nasdaq Select Fund were allocated to the two major TMT industries of technology and communications. The top ten holdings of Huabao Nasdaq Select Fund are all technology giants with strong performance in the US stock market, namely Nvidia, Microsoft, Apple, Amazon, Tesla, Meta, Broadcom, Alphabet, Netflix, and Marvell Technology. The top ten holdings account for nearly 70% of the total positions.

Top 10 holdings of Huabao Nasdaq Select Fund

Data source: 2024 first quarter fund report; time as of March 31, 2024

Zhao Qiyuan, fund manager of Huabao Nasdaq Select, wrote in the fund's first quarterly report: "Huabao Nasdaq Select Fund selects stocks with good quality, strong moats and industrial trends in the Nasdaq 100 Index, highlighting the technological attributes of the product."

As it includes a number of Nasdaq star technology giants, Huabao Nasdaq Select Fund has a strong "U.S. stock market technology" feature and can more quickly reflect changes in the U.S. stock market technology sector.

How long can the U.S. stock market’s technology rally last?

Performance is the basis for supporting stock prices. In the first quarter of this year, Microsoft, Google's parent company Alphabet, and Meta all performed well, with revenue, net profit and other performance indicators exceeding market expectations. In addition, the Federal Reserve is expected to start cutting interest rates this year, which has also added fuel to the strength of US technology stocks.

How long can the U.S. tech stocks continue to rise?

This is the question in the minds of QDII investors.

"I know that many investors feel that the overall valuation of the U.S. stock market is no longer cheap, but I think whether there are still investment opportunities in the U.S. stock market depends mainly on whether companies can achieve profit recovery." Zhao Qiyuan said, "This mainly depends on two points: First, whether there is an increase in revenue, which is closely related to the inflation trend of the U.S. economy. Of course, artificial intelligence technology is also an important incremental factor. At present, except for NVIDIA, the contribution rate of artificial intelligence technology to the traditional business of other technology companies still needs to be improved; second, the attitude of the Federal Reserve on interest rate cuts. Changes in interest rates are also important analytical indicators. I think once the Federal Reserve starts a downward interest rate cycle, or there are more breakthroughs in artificial intelligence technology, for technology giants with strong fundamentals and a good business structure, the performance side may usher in more positive factors."

Zhao Qiyuan analyzed that the suppression of technology stock valuations by interest rate hikes may be coming to an end. With the continuous advancement of artificial intelligence technology, the value of assets related to disruptive innovation will become increasingly prominent.

Note: The holdings are from the first quarter report of 2024. The top ten heavily-weighted funds at the end of each quarter shown in the regular report are only the holdings on the end of the quarter. It does not mean that the fund has always held it in each complete quarter, nor does it mean that it will continue to be held in the future. The above holdings are for illustrative purposes only and are not intended as investment advice. The market is risky and investment should be cautious.

Data source: Fund periodic reports, Wind.

Risk Warning: Huabao Nasdaq Select Fund is issued and managed by Huabao Fund. The sales agency does not bear the investment, redemption and risk management responsibilities of the product. Investors should carefully read the fund legal documents such as the "Fund Contract", "Recruitment Instructions", "Fund Product Information Summary", etc., understand the risk and return characteristics of the fund, and choose products that are suitable for their own risk tolerance. The fund manager has rated the risk level of Huabao Nasdaq Select as R4-medium-high risk, suitable for active investors (C4) and above. The performance of other funds managed by the fund manager does not constitute a guarantee of fund performance. The past performance of the fund does not indicate its future performance, and fund investment should be cautious! Sales agencies (including fund managers' direct sales agencies and other sales agencies) conduct risk assessments on this fund in accordance with relevant laws and regulations. Investors should pay attention to the suitability opinions issued by the fund manager in a timely manner. The opinions of various sales agencies on suitability are not necessarily consistent, and the risk level evaluation results of fund products issued by fund sales agencies shall not be lower than the risk level evaluation results made by the fund manager. The fund risk-return characteristics and fund risk level in the fund contract differ due to different considerations. Investors should understand the risk and return of the fund, carefully choose fund products based on their own investment objectives, time frame, investment experience and risk tolerance, and bear the risks themselves. The registration of this fund by the China Securities Regulatory Commission does not mean that it has made a substantive judgment or guarantee on the investment value, market prospects and returns of this fund. The views of the fund manager only represent the views at that time, which may change in the future. They are for reference only and do not constitute any promotional materials, investment advice or guarantees for any business, nor do they serve as any legal documents. In addition to the general investment risks such as market volatility risks similar to domestic securities investment funds, overseas market funds also face special investment risks such as exchange rate risks faced by overseas securities market investments.

Huabao Nasdaq Select Fund was established on March 2, 2023. Its performance benchmark is the Nasdaq 100 Index yield adjusted by the RMB exchange rate × 90% + the after-tax interest rate of RMB demand deposits × 10%. The net asset value growth rate and its performance benchmark growth rate of Huabao Nasdaq Select A in the first full year since its establishment (2023) were 37.87% and 38.89% respectively; the net asset value growth rate and its performance benchmark growth rate of Huabao Nasdaq Select C in the first full year since its establishment (2023) were 37.51% and 38.89% respectively. Since its establishment (March 2, 2023-March 31, 2024), the cumulative net asset value growth rate of Huabao Nasdaq Select Fund A shares has been 47.82%, the cumulative net asset value growth rate of Fund C shares has reached 47.30%, and the fund performance benchmark return is 49.75%.

Zhao Qiyuan currently manages two QDII funds, Huabao Overseas Technology LOF and Huabao Overseas New Energy Vehicle. Among them, Huabao Overseas Technology QDII-LOF was established on April 11, 2023, and its performance benchmark is the Nasdaq 100 Index yield × 80% + Hang Seng Technology Index yield × 10% + CSI Comprehensive Bond Index yield × 10% adjusted by the RMB exchange rate. The net value growth rate of Huabao Overseas Technology QDII-LOF A in the first full year (2023) since its establishment and its performance benchmark growth rate were 34.89% and 25.38% respectively, and the net value growth rate of Huabao Overseas Technology QDII-LOF C in the first full year (2023) since its establishment and its performance benchmark growth rate were 34.76% and 25.38% respectively. Huabao Overseas New Energy Vehicle was established on May 23, 2023. Its performance benchmark is the yield of the CSI Hong Kong and US listed Global Intelligent Automobile Thematic Index × 80% + the yield of the Hang Seng Index × 10% + the after-tax interest rate of RMB demand deposits × 10%. The net asset value growth rate of Overseas New Energy Vehicle (QDII) A (017144) in its first full year (2023) since its establishment and its performance benchmark growth rate were 8.26% and 16.18% respectively. The net asset value growth rate of Overseas New Energy Vehicle (QDII) C (017145) in its first full year (2023) since its establishment and its performance benchmark growth rate were 8.07% and 16.18% respectively.

（CIS）

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