2026, this category is "hot"

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This year, FOF has become the first “hot” category.

Wind data shows that as of March 16, 2026, a total of 45 new FOF funds were established in the market, with an issuance scale of 66.25 billion yuan.

What does this data mean? In the same period last year, 14 new FOF funds were established in the market with a scale of 13.84 billion yuan, representing year-on-year increases of 221.4% and 378.68%.

Let’s first take a look at the fact that FOF funds have always been a relatively niche track. Why have they experienced such explosive growth this year?

First, the market environment has provided a boost.

Let’s revisit the overall market landscape since 2025.

On one hand, the A-share and Hong Kong stock markets have been generally fluctuating upward, with structural opportunities frequently appearing. However, the volatility risk of single assets remains prominent. For investors, it is difficult to accurately grasp structural opportunities, and their risk tolerance is limited. This market characteristic, where opportunities exist but making profits is challenging and fear of pitfalls prevails, provides space for FOFs, which emphasize diversified allocation and smooth volatility, to showcase their advantages.

At the same time, the one-year fixed deposit interest rate has officially dropped below 1%, and the returns on low-risk products like traditional bank wealth management and deposits continue to decrease. A large amount of risk-averse capital pursuing stable returns has fallen into a “scarcity of quality low-risk assets” dilemma, leading to an increasingly urgent demand for professional allocation tools like FOFs, which combine stability with moderate return potential.

On the other hand, the repeated fluctuations in the market have fundamentally changed investors’ views on wealth management. The previously blind chase for super high returns from single funds and specific assets has gradually faded, and the concept of “diversified allocation and stable appreciation” has started to take root.

More importantly, with over 50 trillion yuan in household time deposits maturing, the demand for reallocation of funds in a low-interest-rate environment has become pressing. As a fund of funds, FOFs can attack and defend, with professional teams selecting quality targets and diversifying across categories. They can effectively reduce volatility while balancing stability and return elasticity, addressing the pain points of ordinary investors in selecting and allocating funds, making them an excellent solution for absorbing maturing deposits.

It can be said that the unique secondary risk diversification and core advantages of professional fund selection in FOFs precisely match the current market demand, making them the core direction for fund diversion. This is a trend of favorable timing, location, and people.

Second, the underlying assets available for FOF investment are increasingly complete and rich.

Since 2025, the domestic ETF category has continued to expand, covering various assets such as stocks, bonds, commodities, and cross-border investments, providing FOFs with efficient and transparent allocation tools. At the same time, the new public fund regulations have imposed stricter requirements on performance benchmarks, information disclosure, and investment operations, making the operations of actively managed funds more standardized and transparent, further enhancing the reliability of FOF selection and portfolio construction.

In addition, commodities such as gold, crude oil, and non-ferrous metals, along with increased volatility in overseas markets, present opportunities and risks, making it difficult for ordinary investors to independently analyze and operate. With professional investment research capabilities, FOFs can flexibly allocate across categories and markets, effectively avoiding tail risks while capturing diverse opportunities, providing investors with one-stop solutions, and thus gaining more market attention and recognition.

It can be said that against the backdrop of asset scarcity and the upgrading of allocation concepts, the continuous enrichment of underlying tools and more standardized operations, combined with cross-market and cross-category professional allocation capabilities, have made FOFs truly a quality solution suited to the current market. It is foreseeable that as the demand for asset allocation continues to be released, FOFs will usher in broader development space.

This year’s market environment is becoming increasingly complex; how should we make good use of FOFs?

The simultaneous adjustments of various assets in March this year have made it more challenging for investors and FOF managers.

The changes in the market this year are essentially short-term anomalies triggered by the resonance of multiple extreme negative factors such as geopolitical conflicts and tightening liquidity. These are merely short-term emotional factors and do not reflect the normal state of the market.

From a historical perspective, stocks, bonds, and commodities have long exhibited significant characteristics of return rotation and risk hedging. This indiscriminate decline is only a phase of panic release and does not conform to the long-term pricing logic of major asset classes. I believe that as emotions stabilize and fundamentals recover, the differentiation and hedging effects between assets will gradually return.

Furthermore, the global situation will remain complex and changeable, and the rotation rhythm of various assets is bound to accelerate further, posing higher tests for FOF managers’ judgments on major assets, strategy switching, and risk control capabilities.

Therefore, when choosing FOF investors in the future, investors should no longer only look at short-term performance but focus on the manager’s macro framework, multi-asset allocation experience, and drawdown control capabilities. Choosing a more professional and stable manager will help grasp opportunities and control volatility in a rapidly rotating market.

What kind of FOF fund manager should be chosen?

When selecting an FOF fund manager, the first thing to check is whether the allocation system is clear and whether there is a mature macro framework and risk control logic, rather than relying on intuition to adjust positions; secondly, they should have practical experience in multiple markets, having gone through bull and bear markets and understanding how to respond to rapid market rotations; finally, performance should be reviewed.

Let’s take Zeng Hui from Guotai Fund as an example.

First, look at the allocation system.

Zeng Hui adopts a subjective + quantitative investment system, focusing on drawdown control and having rich experience in allocating multiple assets such as stocks, bonds, and commodities.

Zeng Hui does not adopt a static configuration for the four major asset classes but instead conducts wave, timing, and segmented asset rotations based on macro risk control and meso-level rotations.

Next, look at market experience and investment performance.

The FOF product managed by Zeng Hui, Guotai’s Preferred Pilot Fund with equity strategy, has outstanding multi-dimensional historical performance, with a return rate exceeding 112% in the past year, ranking first in multiple categories over the last year, two years, and three years.

Performance chart since Zeng Hui took over Guotai’s Preferred Pilot Fund

Data source: Wind, Galaxy Securities, data as of January 31, 2026, performance data verified by the custodian bank. Zeng Hui’s tenure began on November 10, 2023. The peer comparison refers to Galaxy Securities’ mixed FOF (equity assets 60%-95%), with no related ranking for the past four years or during the tenure. Past performance does not guarantee future results, and the performance of other funds managed by the fund manager does not constitute a guarantee of fund performance.

Another FOF product managed by Zeng Hui, the Guotai Ruiyue FOF with a bond + commodity strategy, has a return rate of 6.22% in the past year, ranking first in its category during the same period. In terms of long-term performance, the return since taking office is 10.52%, with an annualized return of 5.37%, showing significant absolute returns.

Performance chart since Zeng Hui took over Guotai Ruiyue

Data source: Wind, Galaxy Securities, data as of January 31, 2026, performance data verified by the custodian bank. Zeng Hui’s tenure began on March 5, 2024. The peer comparison refers to Galaxy Securities’ bond FOF, with no related ranking for the past three years or during the tenure. Past performance does not guarantee future results, and the performance of other funds managed by the fund manager does not constitute a guarantee of fund performance.

In Zeng Hui’s view, the development of the public fund industry has entered a new stage. Previously, it was a static allocation model; now it is necessary to time rotations. Previously, it was a classic three-tier division of labor in team management; now, it is essential to cultivate versatile talents. The role of FOF fund managers has shifted from being allocators to direct competitors through ETFs. This will be a very brutal elimination race.

He believes the market is like the black and white extremes in the Tai Chi diagram, constantly cycling between excessive rises and falls. The key to investing is to capture the turning points of the “extremes,” rather than getting caught up in the reasonable pricing of the mean. This is a “dynamic” system, adapting to and responding to the ever-changing market.

Compared to traditional multi-asset static allocation models, the Tai Chi quantitative rotation model uses excessive rise and fall extremes as the core investment framework, covering four major parts: macro risk control and timing, meso-level industry rotation, enhancement of four underlying asset classes, and strict risk control on quantitative and principle systems. This connects various assets within a medium to long-term framework while allowing various assets to continuously accumulate and iterate various algorithm models internally.

However, while FOF categories are being enthusiastically embraced, there have indeed been some controversies this year about “FOF allocations failing.”

This year, geopolitical turmoil has been constant, and global markets and commodities have almost all adjusted, with some FOFs that originally relied on diversified allocations to hedge risks struggling to withstand this wave of adjustment. In the face of a rapidly reconstructing world and constantly reassessing asset relationships, it is precisely the time for Zeng Hui’s approach to demonstrate its strength.

Regarding recent changes in the situation, Zeng Hui also addressed investors’ concerns.

Question: How do you view the investment value of various assets in the current context?

Zeng Hui: Our analysis of multi-assets adopts an excessive rise and fall extreme framework: in the bond market, last year’s second half saw a rapid rise in yields driven by various factors such as fluctuations in real estate bonds, new public fund regulations, and an unexpectedly strong stock market, with the yield on 30-year government bonds rising by more than 50 basis points, exhibiting obvious signs of excessive rise. Therefore, there will be a gradual decline in short-term yields, corresponding to a short-term rebound in long bond prices, but in the medium to long term, yields are likely to trend upwards due to economic recovery expectations and potential high oil price shocks; in the stock market, last year was a year of significant valuation expansion, with some industries showing clear signs of excessive rise. Thus, this year may shift the focus to earnings growth, continuing structural trends, but styles may differ significantly from last year.

Question: The price of gold has experienced a roller coaster in the short term; how do you view the current investment value of gold?

Zeng Hui: We view gold dialectically from both mid-term and short-term perspectives: from a mid-term perspective, in the context of expanding global geopolitical conflicts and accumulating risks in U.S. stocks at high levels, some explanations can be drawn by extending the time horizon; from a short-term perspective, at the beginning of the year, gold and silver experienced one of the best performance periods in history, and the heated market is partly due to certain short-term overextension and adjustments, requiring patience to await a process of reduced volatility. The cost-performance ratio of gold investments has returned from a super high level six months ago to a normal level, but after a brief rest, there may again be a significant improvement in cost-performance ratio.

Question: How will oil price trends evolve in the future?

Zeng Hui: Historically, commodities can be simply divided into two major clusters: precious metals (industrial metals) and crude oil, chemical, and agricultural products, which benefit from liquidity and fundamentals, leading the way in recession, depression, recovery, and prosperity phases. Currently, the Iranian conflict, as a historically significant event, may shift the previously precious metal-dominated commodity market to a market jointly dominated by precious metals and crude oil. Therefore, the increase in oil prices may not be a short-term phenomenon.

Question: How should FOF asset allocation be approached now?

Zeng Hui: We believe that in the past decade, the rise of quantification and ETFs has significantly amplified stock market volatility compared to ten years ago. Therefore, utilizing commodities such as gold and silver, as well as overseas assets for multi-asset allocation, is an inevitable trend. However, the classic theory of using the negative correlation of multi-assets to hedge overall portfolio volatility may also fail in extreme situations. Therefore, based on multi-asset allocation, we will incorporate macro risk control and a core-satellite fund model to enhance drawdown control, meaning that in extreme cases, we will reduce overall positions based on the macro risk control model and allocate more to strong core funds to reduce volatility. Moving forward, we tend to seize structural opportunities in A-shares while waiting for more diversified and lower positions overseas, and commodities will require patience and careful switching of major commodity cycles. All these will be achieved more through various ETFs.

Risk Warning:

As of December 31, 2025, the performance of products under Zeng Hui is listed (including Guotai’s Multi-Asset Steady Selection Fund, which has been established for less than 6 months and is not listed): Guotai Min’an Pension 2040 Three-Year Holding Mixed (FOF) A (established on 2019/07/16, performance benchmark is 14.2% * CSI 300 + 0.8% * Hang Seng China Enterprises Index (valuation exchange rate adjustment) + 85% * CSI Comprehensive Bond, managed by Zeng Hui since December 28, 2023) fund performance from 2020-2025 / performance benchmark: 21.21% / 15.60%, 4.98% / -0.62%, -14.30% / -9.92%, -7.04% / -3.88%, 6.15% / 12.31%, 36.15% / 9.10%. Guotai Preferred Pilot One-Year Holding Period Mixed Fund of Funds (FOF) (established on 2022/01/05, performance benchmark is 60% * CSI 300 index return + 30% * CSI Comprehensive Bond Index return + 10% * Hang Seng China Enterprises Index return (valuation exchange rate adjustment), managed by Zeng Hui since November 10, 2023) fund performance from 2022-2025 / performance benchmark: -14.27% / -12.84%, -15.70% / -6.62%, 3.27% / 14.67%, 66.14% / 12.92%. Guotai Steady Income One-Year Holding Period Mixed Fund of Funds (FOF) (established on 2022/07/05, performance benchmark is 85% * CSI Comprehensive Bond Index return + 10% * CSI 300 index return + 5% * Hang Seng China Enterprises Index return (valuation exchange rate adjustment), managed by Zeng Hui since December 28, 2023) fund performance from 2022-2025 / performance benchmark: -2.42% / -0.46%, -0.97% / 2.34%, 3.72% / 9.90%, 14.24% / 3.41%. Guotai Sector Rotation One-Year Closed Operation Stock (FOF-LOF) A (established on 2022/07/19, performance benchmark is 80% * CSI 300 index return + 20% * CSI Comprehensive Bond Index return, managed by Zeng Hui since December 28, 2023) fund performance from 2022-2025 / performance benchmark: -1.81% / -7.61%, -13.59% / -8.22%, -2.73% / 13.70%, 54.65% / 14.28%. Guotai Ruiyue Three-Month Holding Period Bond Fund of Funds (FOF) (established on 2022/09/23, performance benchmark is 95% * CSI Comprehensive Total Price (Total Value) Index return + 5% * Bank RMB one-year fixed deposit rate (after tax), managed by Zeng Hui since March 5, 2024) fund performance from 2022-2025 / performance benchmark: 0.12% / -0.83%, 3.05% / 2.04%, 4.21% / 4.80%, 4.92% / -1.44%. Guotai Minxiang Steady Pension Target One-Year Holding Period Mixed Initiated Fund of Funds (FOF) (established on 2023/01/10, performance benchmark is 80% * CSI Comprehensive Bond Index return + 20% * CSI 300 index return, managed by Zeng Hui since August 16, 2024) fund performance from 2023-2025 / performance benchmark: -1.84% / 0.63%, 5.41% / 9.61%, 17.21% / 4.09%. Data source: product periodic reports. Past performance does not guarantee future results, and the performance of other funds managed by the fund manager does not constitute a guarantee of fund performance. The fund management team commits to managing and utilizing fund assets with principles of honesty, diligence, and responsibility, but does not guarantee profits, nor a minimum return. Investment carries risks, and investors should carefully read the fund’s prospectus and fund contract before making investment decisions, fully considering their own risk tolerance. Funds carry risks, and investing requires caution.

The fee structure of Guotai Steady Selection FOF is as follows; please refer to the fund’s prospectus and other legal documents for details:

The fee structure of Guotai Ruiyue FOF is as follows; please refer to the fund’s prospectus and other legal documents for details:

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