The number of publicly offered exclusive stocks has sharply decreased, with most being highly elastic assets.

Public mutual fund annual reports for 2025 have been fully disclosed. Under an industry landscape in which the trend of institutions clustering around the same stocks continues to deepen, “independent niche stocks” have become an important window for observing fund managers’ differentiated investment ideas.

According to Wind data, by the end of 2025 the number of independent niche stocks across the entire mutual fund market had shrunk by about 30% compared with mid-year. Their market values in holdings were generally on the low side, but they show a tendency for fund managers to prefer high-volatility underlying stocks. In contrast, the institutional clustering phenomenon around core popular targets has intensified further.

Prudent deployment has become the mainstream strategy

Looking closely at mutual fund holdings details at the end of 2025, it is not hard to see that “a small bet to test the waters, followed by prudent deployment” has become the mainstream strategy used by mutual fund institutions to allocate to independent niche stocks, and heavy betting is relatively rare.

In terms of holding size, for more than half of the independent niche stocks, the market value of holdings in any single stock is less than 500,000 yuan, which is typical of exploratory allocations.

In all of 2025, there were only 3 mutual fund independent niche stocks whose holding market value exceeded 100 million yuan. In Hong Kong-listed Rich Health Group, with a holding market value of more than 300 million yuan, it ranks first on the market value leaderboard for mutual fund independent niche stock holdings. This target is jointly allocated by 6 products under Huashang Fund, with a total shareholding of more than 18 million shares—one of the few large-sized mutual fund independent niche stock holdings across the entire market.

The second-highest in holding market value is LaiKai Medicine-B, which is also a Hong Kong-listed company. It is jointly allocated by two products—Xingquan He Yi and Xingquan Social Value—whose fund manager is led by Xie Zhiyu. The combined shareholding exceeds 13 million shares, and the holding market value exceeds 160 million yuan.

In addition, the Hong Kong-listed gaming company Gamatron, with a holding market value of about 118 million yuan, ranks third, jointly held by three products under Yongying Fund.

Polarization in independent niche stocks

When institutions allocate to such assets, their preference for high-volatility targets is especially evident. Wind data shows that among mutual fund independent niche stocks at the end of 2025, the proportion of stocks listed on the Beijing Stock Exchange with a 30% daily fluctuation limit and Hong Kong-listed stocks with no fluctuation limit both exceeded 30%. Some viewpoints hold that these assets can experience large short-term fluctuations and carry higher investment risk, but they also may provide ample room for fund managers to capture excess returns.

In terms of fund type, quantitative funds’ willingness to allocate to independent niche stocks is significantly higher than that of discretionary (subjective) investment funds, which also reflects quantitative funds’ characteristics in differentiated investment strategies.

Although independent niche stocks fit the investment logic commonly mentioned by many institutional participants—“buy when no one is paying attention”—based on market performance since 2026, the price trends of these assets exhibit polarization. Data shows that as of April 1, the gap in year-to-date gains/losses between mutual fund independent niche stocks exceeds 60 percentage points.

Rich Health Group’s stock performance has been outstanding. In 2025, its stock gain doubled; as of April 1, its gain since 2026 has exceeded 3%. LaiKai Medicine-B’s gain since 2026 has exceeded 20%. Some mutual fund independent niche stocks that had strong gains earlier experienced significant pullbacks this year, highlighting their high volatility characteristics. For example, Gamatron’s stock price rose by more than 130% in 2025, but since 2026 it has continued to adjust, with a cumulative decline of more than 13%; NorthSen Holdings, held by only one fund, surged by more than 60% in 2025 and then saw its stock price plunge by more than 40% this year; Chen Guang Medical rose by more than 30% in 2025 and then fell by more than 20% in 2026.

A rational view of clustering

In sharp contrast to the steep drop in the number of mutual fund independent niche stocks and the cooling of allocation enthusiasm, the phenomenon of mutual funds clustering in their holdings of core popular targets has become even more prominent by the end of 2025. Institutional capital has accelerated its concentration toward the leading targets in popular industry tracks, and the holding concentration ratio continues to rise.

Taking the blockbuster target Zhongji Xuchuang in the optical module sector as an example: according to Wind data, at the end of June 2025 the mutual fund holding market value for this target was about 41.75 billion yuan, ranking as the 20th largest heavily held stock among mutual funds. By the end of 2025, its mutual fund holding market value surged to more than 160 billion yuan, jumping to become the second-largest heavily held stock among mutual funds. Meanwhile, the number of fund companies holding this target increased from 137 to 147.

Regarding the core reasons why institutional clustering has intensified, multiple industry fund managers have offered professional interpretations. Fund manager Lin Li (a pseudonym) believes that institutional capital will move toward opportunities with higher certainty, and that the formation of clustering is the result of market choice. Fund manager Chen Peng (a pseudonym) further added that compared with independently discovering niche targets and bearing higher research pricing risk, most funds place more emphasis on investment certainty. Once a certain industry trend is clearly starting to rise and subsequent performance data provides strong support, institutions will collectively follow with follow-up layouts—this is also one of the major reasons behind institutional clustering.

Some fund managers who insist on differentiated investment strategies have also issued risk warnings about excessive institutional clustering. Fund manager Zhao Yin (a pseudonym) admitted that excessive institutional clustering can easily trigger crowded trading, and once the market’s direction shifts afterward, there may be risks such as concentrated sell-offs and large stock price volatility.