The first half of 2025 has been a tale of shifting momentum, surprising winners, and resilient rebounds across China’s fund landscape. Despite external market pressures, major indices—including the A-share trio, Hang Seng Index, and Hang Seng Tech Index—closed higher after a volatile ride. This broad market recovery fueled strong performance among active equity funds: over 6,800 funds posted positive returns in the first six months, representing more than 80% of all active equity funds tracked by iFinD (with different share classes counted separately).
What defined this period was the rapid rotation of hot investment themes, creating fierce competition among sector-focused funds. Ultimately, three sectors stood out: innovation pharmaceuticals, Beijing Stock Exchange (BSE)-focused funds, and new consumer trends. These themes dominated the top 20 performers in the active equity fund rankings for H1 2025.
👉 Discover how top-performing funds are reshaping investment strategies in 2025.
Innovation Pharma Takes the Crown
Innovation pharmaceuticals emerged as the undisputed leader in fund performance. The iFinD data shows that Huafu Hong Kong Advantage Select Mixed (QDII) A claimed the top spot with an impressive 85.64% return by June 30. Remarkably, 14 out of the top 20 best-performing active equity funds were heavily invested in innovation pharma.
This success wasn’t accidental. The sector benefited from a powerful trifecta: favorable government policies, robust capital inflows, and accelerating clinical and commercial progress. Hong Kong’s market, home to many innovative biotech firms nearing revenue generation, provided an ideal environment for growth.
The champion fund, Huafu Hong Kong Advantage, held a fully concentrated portfolio in Hong Kong-listed innovation drugmakers. Its top ten holdings as of Q1 included Rongchang Bio (688331.SH), Kelun-Biotech-B (06990.HK), Innovent Biologics (01801.HK), Hutchmed (00013.HK), Concose Biotech (02162.HK), Hansoh Pharma (03692.HK), Akeso (09926.HK), InnoCare Pharma (09969.HK), Laike BioMed-B (02105.HK), and BeiGene (06160.HK)—all leaders in oncology, autoimmune diseases, and targeted therapies.
Tang Chen, portfolio manager of Nuoan Select Value Mixed, noted that valuation gaps between A-share and Hong Kong innovation pharma stocks are narrowing. “With global pricing models, low barriers to cross-border capital flows, and improving liquidity in Hong Kong, risk-return profiles are converging,” he said.
BSE Funds Surge on Policy Tailwinds
The Beijing Stock Exchange also delivered stellar returns. CITIC Construction Investment BSE Select Two-Year Close-Ended Hybrid A ranked second with an 82.45% return. Two other BSE-themed funds from China Asset Management and Wanjia Fund also cracked the top 20.
The BSE’s rise was supported by structural upgrades. On June 30, the exchange launched the BSE Specialized & Innovative SME Index, signaling maturity and attracting institutional interest. With steady new listings and rising M&A activity, trading volumes and investor attention have surged.
According to Galaxy Securities, institutional ownership of BSE stocks rose significantly in Q1 2025. This trend could inject billions into the market via dedicated BSE funds, particularly boosting high-liquidity “specialized and innovative” SMEs.
New Consumption: High Returns Amid Rising Doubts
New consumer trends secured three spots in the top 20, driven by explosive gains in select stocks. Funds like Guangfa Growth Leading One-Year Hold Mixed, Shenwan Hongyuan Lerong One-Year Hold, and Hengyue Artisan Preferred One-Year Hold all heavily weighted Pop Mart (09992.HK) and Laofu Gold (06181.HK)—which surged 198.6% and 321.53% respectively in H1.
Tianhong Fund attributes this rally to a perfect storm: weak traditional consumption created capital demand for fresh themes; undervalued new consumer stocks beat earnings expectations; and strong retail participation amplified momentum.
However, concerns are growing about sustainability. In May, early investor Fengqiao Capital exited its entire pre-IPO stake in Pop Mart. By mid-June, a sharp correction hit Hong Kong’s new consumption sector—dragging down A-share IP concept stocks. Notable declines included Bruder (00325.HK) (-7.89% in June), Mixue Group (02097.HK), and PetCare (002891.SZ).
Tianhong advises investors to focus on companies with trackable earnings and high-frequency data validation, rather than chasing speculative themes.
Tech Funds: From Worst to First? The June Rebound
At the start of 2025, tech funds were market darlings—fueled by excitement around DeepSeek’s AI breakthroughs. But after March, a prolonged correction hit hard. Funds slow to rotate out of AI and robotics saw steep losses.
By mid-year, Frontsea Harvest Artificial Intelligence Theme Mixed A ranked last with a -24.69% return—the only fund below -20%. Its portfolio was heavily weighted in semiconductor and communication stocks like Core-Link, Rockchip, and Hesai Technology.
Fund manager Jin Zicai, who posted over 30% gains in 2024, saw all six of his funds finish in the bottom ten this year. Similarly, Pioneer Fund’s Liu Zhiqiang had both Pioneer Poly-Excellent A (-18.42%) and Pioneer Poly-Prime A (-16.36%) near the bottom.
Yet June brought a dramatic turnaround.
👉 See which tech sectors are leading the market recovery in Q3 2025.
Multiple tech-focused funds posted explosive gains: Everbright Yinye Tech Select Hybrid A surged 37.21% in June alone—the monthly top performer. Three others—AVIC Opportunity Leading Hybrid A, Debang Xingxing Value Hybrid A, and Xindao Performance-Driven Hybrid A—gained over 30%, all backed by electronics, machinery, and telecom holdings.
Is a Full-Scale Tech Rebound Underway?
Analysts are increasingly optimistic. CITIC Securities’ H2 2025 outlook highlights that AI is moving beyond hype into real-world productivity gains—transforming advertising, gaming, enterprise software, and smart vehicles.
With anticipated releases of DeepSeek R2 and GPT-5 later in the year, the firm believes China’s tech valuation re-rating cycle is far from over.
Frequently Asked Questions
Q: What were the top-performing fund themes in H1 2025?
A: Innovation pharmaceuticals led the pack, followed by Beijing Stock Exchange–themed funds and new consumer trends—collectively dominating the top 20 active equity fund rankings.
Q: Why did innovation pharma funds perform so well?
A: Strong policy support, improved Hong Kong market liquidity, global pricing power of biotech assets, and proximity of many firms to commercialization drove outsized returns.
Q: Are new consumer stocks still good investments?
A: While some names like Pop Mart and Laofu Gold delivered huge gains, valuations are now stretched. Investors should prioritize companies with transparent earnings and real data validation over pure concept plays.
Q: What caused tech funds to underperform early in 2025?
A: After a strong start fueled by AI enthusiasm, tech stocks entered a correction phase starting in March. Funds that failed to adjust their positions suffered significant drawdowns.
Q: Is there evidence of a tech sector recovery?
A: Yes—June saw multiple tech-focused funds gain over 30%, signaling renewed investor confidence as AI transitions from theory to practical application.
Q: What should investors watch for in H2 2025?
A: Monitor the rollout of next-gen AI models (like DeepSeek R2), BSE liquidity trends, innovation pharma pipeline updates, and consumer sentiment shifts—all key drivers for fund performance.
👉 Stay ahead of market shifts with data-driven insights from leading financial platforms.