Liu Xiao, Zhang Jimin: Diversified Allocation, Why Is It the Right Time?

Ask AI · How can a diversified allocation FOF control investment volatility through discipline?

This year, geopolitical risk has been rising, market volatility has increased, and it has become harder for a single asset to generate returns. Many investors have therefore shifted their attention to FOF products with stronger “shock resistance.” Data shows that as of 2026/3/31, across the market, the past 6-month average return of steady strategy FOF was 0.48%. Over the same period, the return of the CICC bond aggregate (total return) index was 0.33%, and the CSI 300 index was -4.11% (see the table below).

(Data as of 2026/3/31: only FOFs whose first day of establishment falls within this interval are included; only performance of the main share class of FOFs is included. Steady strategy FOF data across the market comes from Galaxy Securities, including: 10.2.1 bond-type FOF (Class A), 10.4.1 hybrid-type FOF (equity assets 0-30%)(Class A), 10.11.1 target retirement risk FOF (equity assets 0-30%)(Class A); it does not include target-date retirement FOFs. Non-reporting-period data of each FOF under E Fund/兴证全球基金 are reviewed and re-verified by the custodian bank. Data for 2025 comes from the 2025 Q4 report. The averages are arithmetic means. Includes: Xingquan Antai Steady Retirement FOF, Xingquan Anyue Steady Retirement FOF, Xingquan Youxuan Steady FOF. Index data comes from Wind. Past performance does not guarantee future results; fund investing involves risks, so proceed with caution.)

How can a FOF build an “enhanced fixed-income” solution with a new approach? What advantages does the E Fund/兴证全球多元配置 team have? The E Fund/兴证全球 Yingxi Multi-Asset Three-Month Holding Period FOF is currently being issued. It will adopt a steady strategy and bring together high-quality assets from both within and outside China. We invite the prospective fund managers Liu Xiao and Zhang Jimin to share their latest thoughts with you.

Liu Xiao Prospective Fund Manager****

13 yearsFOF expert (4 years in fund research + 9 years in FOF investing). Deeply involved in active fund research and investment. Master’s degree in Software Engineering from Peking University.**

Zhang** Jimin Prospective Fund Manager**

11 yearsdomesticandoverseas experience (2 years overseas + 5 years research + 4 years investment experience). Skilled in multi-asset classes such as equities and indices both at home and abroad. Master’s degree in Financial Engineering from Carnegie Mellon University.

At the current stage, value diversified allocation

**************Q: Compared with traditional “fixed income +” strategies, what are the advantages of E Fund/兴证全球 Yingxi Multi-Asset Allocation FOF?

Liu Xiao**: Traditional “fixed income +” strategies only allocate to two asset classes: domestic bonds and stocks. As a FOF product, E Fund/兴证全球 Yingxi uses a benchmark that includes four asset categories: fixed income, domestic equities, overseas equities, and gold. The fixed-income portion will also consider overseas bonds.

Zhang Jimin**: **These advantages come from the characteristics of a FOF—a FOF mainly selects from a basket of funds. Therefore, it can cover assets worldwide in a more standardized way, with better liquidity. It can also diversify systematic risks at the global beta level. From historical data, there is risk compensation among different asset types, showing a cycle of one asset helping offset another, and their low correlation can help reduce portfolio volatility.

******************Q: **At the current time, is a diversified allocation FOF with a steady strategy worth investing in?

Liu Xiao**: On one hand, different asset classes are in a stage where it’s hard to make clear directional judgments, so it’s reasonable for investors to diversify their asset allocation. On the other hand, in 2024 and 2025, equity assets performed relatively well overall, and the recent increase in volatility is also a normal phenomenon. Therefore, a steady strategy is a relatively better choice.

Zhang Jimin**: **I believe in the low interest rate era, steady strategy FOFs are suitable for a wide range of investors. The equity and gold weights in the fund’s benchmark have a central tendency of 30%, and investors can choose according to their own risk preferences, etc. Second, diversified assets can provide risk compensation to each other, reducing the fragility of allocating to a single market.

Multi-assets + multi-strategies, refined operations

**************Q: ****The team aims to build a “strong benchmark.” Why choose the CSI indexes for stock-picking funds and the MSCI World Index to include in the benchmark?

Liu Xiao, Zhang Jimin**: ****On one hand, the CSI stock-picking fund index has outperformed many major broad-market indices over the long term (see the table below). On the other hand, it also better matches the average return level we may be able to achieve in the domestic fund market.

(Data source: Wind, as of 2026/3/31. Past historical data does not represent the future; fund investing involves risks, so proceed with caution.)

Regarding the MSCI World Index, our research shows that by including both developed-country assets and Chinese assets in the benchmark at the same time, we can form a good complementary relationship. Second, it is difficult for people to accurately predict which region will hold the core opportunities in the future, so we hope the index can cover multiple countries. In addition, MSCI-related indices have a certain level of recognition in China. After research, our team designed a multi-asset allocation series of products.

**************Q: ****Mr. Zhang Jimin, you’ve been deeply involved in overseas equity, quant, and related fields. When your team was among the first in the industry to introduce the MSCI World Index, what challenges did you face at the time?

Zhang Jimin**: ****Our team started this research in 2019. In the early stage, we indeed encountered some challenges, because in 2020, during the pandemic, overseas assets fell significantly while the domestic stock market performed better. But we believe markets operate in cycles. Since we place importance on the complementarity between the MSCI World Index and the CSI stock-picking fund index, we shouldn’t buy only when returns are good and not buy when returns are poor—even, we should take a contrarian approach instead. In hindsight, this strategy generated excess returns.

**************Q: ****Does diversified allocation have advantages in responding to unexpected “black swan” events?

Liu Xiao**: **Diversified asset allocation itself is indeed an effective way to respond to “black swan” events. Often, it allows the portfolio to cover both positive impacts and negative shocks at the same time, smoothing overall portfolio volatility. By adhering to an unchanged long-term strategic asset allocation structure, it can naturally help manage the impact of sudden risks.

**************Q: ****In investing, what aspects will you use to pursue excess returns?

Liu Xiao**, Zhang Jimin**: ********Mainly from meticulous research and active management across multiple dimensions:

**• **For example, in overseas bond investments, we not only research target companies, but also cross-validate with third parties to comprehensively assess risks. This multi-layer verification approach runs throughout the research and investment process.

**• **In the domestic equity market, we identify truly accountable fund managers and excellent funds using both qualitative and quantitative methods. We also integrate style considerations and position ourselves on the left side of the cycle to strive for excess returns.

**• **In overseas equity markets, excess returns mainly come from capturing discount/premium opportunities and operating alternative funds. For example, when some domestic funds trade at relatively high premiums, we will shift to similar assets in the Hong Kong market for replacement; then switch back once domestic premiums fall. When selecting ETFs, we conduct in-depth reviews of details such as trading commissions and cash management efficiency—these factors can significantly affect returns over the long term.

**• **For gold, we will select specific products. For example, gold ETFs can seek interest returns through collateralization or investment, so we will prefer products that are more refined in cash management.

**• **In addition, we will enhance portfolio returns through multiple strategies such as block trades and fixed-increase (private placement) offerings.

******************Q: **In March this year, the “Guidelines for Performance Benchmarks of Open-End Securities Investment Funds” (short for “Guidelines”) were officially implemented. Do the Guidelines align with the team’s理念?

Zhang Jimin**: **The理念 is highly aligned. For example, an article published in 2024—“Lin Guohai: Reflections on Fund Product Performance Benchmarks”—analyzes the importance of investment around benchmarks. Our team has also accumulated rich experience in this area. Many gains and losses in the capital market essentially come from the cycle. We have experience and confidence in navigating cycles, and at key times we maintain conviction rather than following the crowd. This helps us strive for excess returns relative to the benchmark. This is actually a difficult task, but we still want to do something that can be long-term and win the trust and recognition of loyal clients.

Simplicity through the Way Continuous pursuit of winning rates

**************Q: ****Why doesn’t the team do sector rotation strategies?

Liu Xiao**: First, in the industry, sector rotation is often implemented using more passive-type tools. But many active funds have the capability to generate excess returns over the long term, and we are confident in selecting excellent funds. Second, sector rotation may reduce product stability, leading to harder-to-control deviation versus the benchmark and a less controllable probability of winning on returns. Our team focuses more on the probability of outperforming the benchmark.

Zhang Jimin**: ****We don’t do rotation because historical data shows this approach may be difficult to sustain. If a fund manager achieves long-term success through sector rotation, then he/she should be known and recognized by the market continuously, but it’s hard for us to find such examples. We are more inclined toward a “weak-beats-strongers” mindset—looking for patterns with a “high probability of winning,” aiming to enhance performance above the benchmark. This better matches the team’s investment philosophy and a data-driven logic.

**************Q: ****In the eyes of the two of you, what else is unique about the team?

Liu Xiao**: **The most core point is: across all aspects—from product design, investment philosophy, to issuance timing—everything is practiced with the goal of pursuing long-term returns for holders. To achieve this goal, the team’s products all use a “strong benchmark,” and their risk-return characteristics are clearer. In addition, in investment management we continuously strive to outperform the benchmark and control volatility. This means holders’ trading behavior may be more rational, reducing the urge for high buy / low sell decisions.

Zhang Jimin**: **We are committed to helping investors truly make money. If we calculate the total profits of funds across the entire market since open-ended public FOFs were established, the total scale share of the team’s FOFs is less than 8%, but they have contributed to nearly 18% of the market’s total profits. Behind this result, the biggest advantage is sticking to discipline and cooperating with each other within the team. We rarely rely on individual judgment. This approach may not produce outstanding performance in the short term, but over longer periods it tends to perform well.

(Data source: Galaxy Securities, “Cumulative quarterly profits of funds managed by fund managers,” only open-ended public FOFs are included; data as of 2025/12/31.)

******************Q: ****As a FOF fund manager, what attracts you the most?

Liu Xiao**: **The sense of achievement in the job isn’t something you gain overnight; it comes from continuously accumulating and continuously learning through a “steady, small-step” approach. After gaining full understanding of new asset categories, we then build the corresponding investment framework and incorporate it into the portfolio management plan—continually expanding the boundaries of our understanding and management. Ultimately, the results are also in a state of ongoing optimization and improvement.

Zhang Jimin**: **This profession has “unmystified” many investment methods for me, enabling me to see the essence of investing and grasp the mainline. I once listened to a podcast where they said that doing “style rotation” in asset allocation is a “physical labor” type of job. While the methodology itself isn’t inherently better or worse, having a sustainable way of working is better. For example, when I conduct research interviews with fund managers, I usually ask one question: “Do you feel very tired in your work?” If the other party is over-tired for the long term, their career lifespan may be shortened. The appeal of diversified allocation FOFs lies in the ability to sustainably solve many investment challenges.

E Fund/兴证全球 Yingxi Multi-Asset Three-Month Holding Period Mixed FOF

Code: 025826 (Class A) 025827 (Class C)

Earn through multiple assets Aim to be steady and strive to win

New fund issuance from now until April 30