Zhang Kun Solely Manages E Fund Asia Select Q3 Report: Half of Top Ten Holdings Bet on Global AI Semiconductors

According to the latest disclosure in the third-quarter report, Zhang Kun's only solely managed product, E Fund Asia Select, has assets under management of 3.69 billion yuan. Although it accounts for only one-eighth of his total AUM, it is the key to interpreting his latest portfolio adjustment thinking and best "expresses" Zhang Kun.

As of the end of the third quarter this year, Zhang Kun's three currently managed products had total AUM of 29.307 billion yuan, a quarter-on-quarter decrease of 1.488 billion yuan from the mid-year total of 30.795 billion yuan. After stepping down from products and with AUM continuing to shrink, Zhang Kun's total AUM has fallen by 105.171 billion yuan, or 78.21%, from the historical peak of 134.478 billion yuan set in mid-2021.

After co-managing with Zhang Qi for more than three months, Zhang Kun stepped down from E Fund Quality Enterprise Three-Year on September 30 this year due to work requirements. The product had total AUM of 1.382 billion yuan at the end of the third quarter, down 7.29% quarter-on-quarter and down 10.316 billion yuan, or 88.19%, from its historical peak of 11.698 billion yuan.

Looking at overall top holdings, according to Wind statistics, compared with the end of the second quarter, H World Group-S and Chuantou Energy newly entered the top ten holdings of all products managed by Zhang Kun in the third quarter, while SMIC and Dongshan Precision exited. At the same time, CNOOC rose from the fourth-largest holding to Zhang Kun's top holding, while Tencent Holdings fell from first to second place.

Zhang Kun's only solely managed product at present, E Fund Asia Select, focuses on global AI semiconductors. Half of its top ten holdings at the end of the third quarter are related stocks, namely TSMC, SK Hynix, Samsung Electronics, ASML and KLA.

In his view, the larger adjustment in technology in the third quarter was partly due to the relatively large gains in the first half, while external leverage compression and the medium- to long-term contradiction between AI capital investment and returns were also reasons for the adjustment. Looking ahead to the fourth quarter, the outlook after the technology adjustment remains optimistic, and he remains bullish on some US AI companies with reasonable valuations.

Wind data shows that as of the end of the third quarter, the top ten holdings across all products managed by Zhang Kun were, in order: CNOOC, Tencent Holdings, Kweichow Moutai, Yum China, Luzhou Laojiao, Alibaba-W, Shanxi Fenjiu, Wuliangye, H World Group-S and Chuantou Energy. CNOOC appears among the top ten holdings of all three of Zhang Kun's current products and is the only consensus heavyweight holding in the third quarter.

E Fund Asia Select is Zhang Kun's only solely managed product at present and best represents his own judgment. Compared with his other managed products, this "Asia Select" product has already focused on global AI semiconductors. As of the end of the third quarter, the product's top ten holdings were, in order: TSMC, SK Hynix, Samsung Electronics, CNOOC, Futu Holdings, H World Group-S, Tencent Holdings, ASML, Google-A and KLA. Compared with mid-year, Google-A newly entered the top ten holdings, while Alibaba-W exited the list; at the same time, KLA, the leading US semiconductor inspection equipment company, fell from the fifth-largest holding to the tenth-largest holding.

During the same period, E Fund Asia Select's assets invested in the United States, Hong Kong China, South Korea and Taiwan China accounted for 33.4%, 30.72%, 21.68% and 8.65%, respectively. Compared with the end of the second quarter, the proportion of Hong Kong stock holdings declined slightly, while the proportions of holdings in the United States, South Korea and Taiwan China rose in tandem.

As of the end of the third quarter, E Fund Blue Chip's top ten holdings were, in order: Kweichow Moutai, CNOOC, Tencent Holdings, Yum China, Luzhou Laojiao, Alibaba-W, Shanxi Fenjiu, Wuliangye, Chuantou Energy and Eoptolink. Compared with mid-year, Chuantou Energy and Eoptolink newly entered the top ten holdings, while SMIC and Dongshan Precision exited the list; at the same time, Tencent Holdings slipped slightly from the top holding to the third-largest holding.

During the same period, the product's total market value invested in Hong Kong stocks was 6.041 billion yuan, accounting for 31.91% of net asset value; the total market value of Hong Kong stock holdings increased by 914 million yuan quarter-on-quarter, and the holding proportion rose by 6.8%.

As of the end of the third quarter, E Fund Quality Select Mixed (QDII)'s top ten holdings were, in order: CNOOC, H World Group-S, Tencent Holdings, Alibaba-W, Kweichow Moutai, Shanxi Fenjiu, Wuliangye, Luzhou Laojiao, Yum China and Focus Media. Compared with mid-year, the product's top ten holdings were unchanged, with only ranking adjustments: CNOOC rose from the third-largest holding to the top holding, Tencent Holdings rose from eighth to third, while Kweichow Moutai fell from second to fifth.

During the same period, the product's assets invested in mainland China and Hong Kong China accounted for 45.85% and 41.78%, respectively, with the proportion of Hong Kong stock holdings higher than at the end of the previous quarter.

Zhang Kun: Prefers leading companies whose market share rises against the trend

In the third quarter, the equity positions of all three products rose somewhat, and their structures were adjusted. E Fund Quality Select increased allocations to industries such as banking and pharmaceuticals and reduced allocations to industries such as food and beverages; E Fund Blue Chip increased allocations to industries such as real estate, utilities and pharmaceuticals and reduced allocations to industries such as electronics. E Fund Asia Select adjusted the structure of industries such as technology, finance and consumer goods and increased allocations to the US, South Korean and Taiwan China markets.

At the individual stock level, Zhang Kun's team still holds high-quality companies with excellent business models, clear industry landscapes and strong competitiveness.

Regarding the reasons for the larger technology adjustment in the third quarter, Zhang Kun summarized: on the one hand, there was the factor of relatively large gains in the first half, while external leverage compression and the medium- to long-term contradiction between AI capital investment and returns were also reasons for the adjustment. Over the medium and long term, the team still sees positive progress in the technology industry, including the continued rollout of Agents, the expansion of consumer-facing AI and the overall closed loop of cloud revenue. Looking ahead to the fourth quarter, technology has already undergone a relatively large adjustment; even with the suppression of macro interest rates, some US AI-related companies with reasonable valuations and steady growth can still be seen having recently hit stage highs, and the overall outlook remains optimistic.

Zhang Kun has always believed that a company's business model (whether the business itself can generate abundant free cash flow and allocate it wisely) and competitive moat (a significant leading position compared with peers and strong bargaining power vis-à-vis upstream and downstream) are very important. However, companies with similar business models and competitive moats may still show significant operating gaps in different environments. A long-term upward economy is the soil for a company's long-term growth and plays a very important role; the influence of the base probability is profound over the long term, and to a large extent affects whether the free cash flow generated by the company 5-10 years later can significantly exceed the current level. The team will also continue to expand its research scope and strive to include more high-quality companies in the portfolio.

In his view, with the introduction of China's "15th Five-Year Plan," the policy direction is expected to shift toward a policy cycle of repairing domestic demand and boosting consumption. The domestic deflationary cycle is nearing its end, household consumption is also expected to recover, and the share of household consumption in China's GDP (currently about 40%) still has considerable room to rise over the medium and long term.

Based on the present, Zhang Kun prefers to invest in leading companies that can still increase market share in various industries despite adversity.

This article comes from the WeChat public account "Cailian Press," author: Feng Qijuan, published by 36Kr with authorization.