The recent dynamics in the A-share market have captivated many investors, especially as the technology sector emerges as a dominant themeNotably, exchange-traded funds (ETFs) focused on areas like robotics and cloud computing have seen remarkable gains, with several ETFs enjoying increases of over 10%. The performance of actively managed equity funds isn't lagging either, with twelve funds heavily invested in technology growth achieving returns exceeding 40%, some surpassing even 60%. Since the market rally began on September 24, 2024, a total of 36 public mutual funds have reported returns of over 100%, with both index and actively managed funds splitting this impressive achievement.

Despite the rising fervor in the market, the flow of funds tells a different taleDuring the past week, A-share ETFs saw continued net outflows, while certain trendy sector ETFs notably attracted substantial investmentsThis trend reflects a more discerning approach among investors, where, even amidst excitement, caution prevails and some have chosen to consolidate their gains.

Delving deeper into the preferences within specific segments reveals intriguing insightsLast week, sectors such as robotics and semiconductors demonstrated significant upward trends, with specialized ETFs for robotics, industrial machinery, and tech-focused chips seeing gains of more than 10%. Yet, while the market heated up, the overall sentiment among fund managers appeared to be one of prudence, with over 37 billion yuan flowing out of the A-share ETF sectorSome of the hardest-hit were the innovative-focused ETFs, including those pegged to the ChiNext and the semiconductor sector, where net outflows were particularly pronounced.

In contrast, ETFs aligned with rapidly advancing sectors like artificial intelligence, brokerage firms, and innovative pharmaceuticals continued to draw considerable interestStrong activity was noted across AI, cloud computing, and robotics segments, bolstered by advancements in domestic large model technologies like DeepSeek and an increasing demand for computational power

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For instance, ETFs tracking the CS AI and cloud computing indices attracted net inflows of 1.744 billion yuan and 1.734 billion yuan, respectivelyMoreover, the overall market's vigorous performance also helped resurge brokerage stocks, leading to an influx of around 1.774 billion yuan into ETFs related to brokerage companies.

The commodities market, particularly in gold, maintained its allure, with significant capital perpetually flowing into gold ETFsProducts tracking the SGE gold index received a remarkable net inflow of approximately 3.945 billion yuan, outpacing other A-share themed ETFs.

With the recent vigorous market activity, it’s also noteworthy that public mutual funds have significantly rebounded after experiencing a period of declineAccording to Wind data, since the notable market recovery began, there have been 36 funds experiencing double returnsAmong these, the landscape is equally divided between actively managed equity funds and passive index funds.

As we entered 2025, the prowess of fund managers in actively seeking alpha became evident, with several actively managed funds significantly outperforming benchmarks like the Hang Seng Technology Index and roboticsUp until February 21, 2025, twelve funds noted returns over 40%, all of which were actively managed, some even boasting returns surpassing 60%.

Interestingly, analysts from CICC noted that in rapidly rebounding markets, actively managed funds can be at a disadvantageGenerally, these funds do not operate with full positions, which can lead to underperformance compared to passive index products during sharp market ralliesThe momentum driving market rebounds often stems from concentrated sectors or industries, while actively managed funds maintain a more diversified allocation, ultimately slowing their recoveries compared to indicesPassive products have gained favor as market attractions due to their diverse portfolios, transparency, and lower fees.

Nevertheless, it appears that the time for active equity funds to make a comeback might be on the horizon

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