Report Abstract In 2024Q4, the trend of passive replacing active continued, and the "redemption to break even" further increased the disturbance faced by active funds on the liability side. In the face of the "shrinking circle" on the liability side, the influence of active funds on market pricing may depend more on stage consensus. Referring to the Northbound experience from 2016 to 2021, passive funds and insurance funds that can still obtain incremental funds may provide a way for active funds to regain pricing power. Summary I. The stock position slightly fell back, and performance once again showed the characteristics of "the strong getting stronger"; equity funds faced net outflows on the liability side. In 2024Q4, the stock position of active equity funds fell slightly to 84.84%, with a continued increase in Hong Kong stock allocation. Structurally, the proportion of active equity funds with stock positions above 90% decreased. In 2024Q4, the top 30% of funds ranked by performance recorded average positive returns, and funds performing well in 2024Q3 were more likely to maintain their top performance ranking in 2024Q4. On the liability side, equity funds (both active and passive) in 2024Q4 experienced significant net redemptions after nine consecutive quarters of incremental funding on the liability side. However, the trend of passive funds replacing active funds continued: 1) the net outflow of active funds increased from 121.87 billion yuan in 2024Q3 to 277.47 billion yuan in 2024Q4; 2) passive funds decreased from a net inflow of 538.8 billion yuan in 2024Q3 to 164.17 billion yuan in 2024Q4. It is worth noting that the continuation of the "redemption to break even" trend in 2024Q4 exacerbated the disturbance faced by active funds on the liability side. II. Active equity funds: the struggle between asset-side "rotation" and liability-side "shrinking circle." In 2024Q4, the concentration of holdings of active equity funds fell again, emphasizing the need for a 3-year business cycle and stable profit fluctuation (ROE stability). In terms of industries, active equity funds mainly increased their positions in the electronic, banking, new energy industry chain, chemical, steel, and home appliance sectors in 2024Q4, while reducing their positions in non-ferrous metals, communications, real estate, computers, and pharmaceuticals. It is worth noting that the allocation proportion (18.36%) and over-allocation proportion (+7.11%) of the electronics sector reached historical highs in 2024Q4. Correspondingly, the over-allocation proportion of the non-ferrous metals sector (-0.10%) fell sharply to an under-allocation status, while the resources and public utilities sectors remained at varying degrees of under-allocation. In addition, in 2024Q4, Hua... In Institutions purchase ETFs first, followed by individual investors, which is also one of the important micro mechanisms for short-term market fluctuations.Risk warning: Calculation error. Report Body 1 The stock position of active equity funds in 2024Q4 has slightly decreased, but the allocation to Hong Kong stocks continues to increase; performance once again shows the "strong get stronger" characteristic; the liability side of equity funds (active + passive) experiences outflows of funds again, with the trend of passive replacing active continuing. 1.1 The stock position of active equity funds in 2024Q4 has slightly decreased, but the proportion of allocation to Hong Kong stocks has marginally increased In terms of positions, the stock position of active equity funds in 2024Q4 has slightly decreased, with a noticeable decrease in the A-share position and continued increase in the Hong Kong stock position. Specifically: the overall stock position of active equity funds has decreased slightly from 84.89% in 2024Q3 to 84.84% in 2024Q4, while the A-share position has decreased from 75.36% in 2024Q3 to 74.08% in 2024Q4. It is worth mentioning that the proportion of active equity funds with stock positions above 90% has decreased. 1.2 In 2024Q4, the performance of active equity funds once again exhibits the "strong get stronger" characteristic We divide active equity funds for each quarter into 10 groups based on performance, P1, P2,..., P10, where P1 is the group with the worst performance, and P10 is the group with the best performance. Further analysis reveals: In 2024Q4, the top 30% of funds in terms of performance (P10, P9, P8 groups) on average recorded positive returns, showing once again the "strong get stronger" characteristic. Specifically: on one hand, the average performance of the top 10% of funds mostly exceeded 10%, with a significant performance gap compared to the 10% to 20% group, surpassing the performance gaps of other adjacent performance groups. On the other hand, funds with good performance in 2024Q3 tend to continue to maintain better performance in 2024Q4, while funds with poor performance in 2024Q3 also have a higher probability of performing poorly in 2024Q... 1.3 In 2024Q4, equity funds (active + passive) once again experienced net outflows on the liability side, with the trend of passive replacing active continuing. The "redemption for break-even" phenomenon magnified the disruptions faced by active equity funds on the liability side. In 2024Q4, equity funds (active + passive) ended the streak of receiving incremental funds on the liability side for 9 consecutive quarters, experiencing significant outflows of funds overall. Specifically, active equity funds were significantly redeemed on a net basis and saw an increase in size, while passive funds saw a significant decrease in incremental funds received: 1) For active equity funds, in 2024Q4, the size of newly established funds slightly rebounded, but the existing portion continued to be significantly redeemed on a net basis, with an increase in redemption size. Overall, the net outflow on the liability side (new issuance + net purchases) of active equity funds increased from 1218.67 billion yuan in 2024Q3 to 2774.72 billion yuan in 2024Q4, reaching a level similar to 2021Q2. It is worth mentioning that the liability side (new issuance + net purchases) of active equity funds has experienced net outflows for 7 consecutive quarters. 2) For passive equity funds, the size of newly established funds significantly rebounded in 2024Q4, while the existing portion saw a notable decrease in net purchases. Overall, their liability side decreased significantly from 5388.05 billion yuan in 2024Q3 to 1641.76 billion yuan in 2024Q4. In contrast to active funds, passive equity funds have received substantial incremental funds for 7 consecutive quarters. In summary, the trend of passive funds replacing active funds continues, but the presence of factors such as "redemption for break-even" further magnified the disruptions faced by active equity funds on the liability side, with a relatively high proportion of active equity funds' liability side having yields in the range where redemption probability is higher by the end of 2024Q4. 2 Active Equity Funds: The challenge between "rotating" on the asset side and "shrinking circle" on the liability side 2.1 The concentration of holdings in active equity funds in 2024Q4 has once again decreased In 2024Q4, the concentration of holdings in active equity funds decreased again. Specifically, both the CR50 and CR100 of active equity funds' holdings as well as the Gini coefficient of holdings have decreased, and with the continuing redemptions on the liability side, the proportion of holdings of the top 50/100 stocks in terms of market capitalization has accelerated in their decline. 2.2 From a cognitive cycle perspective, active equity funds have increased their focus on the 3-year economic environment (3-year net profit growth rate, 3-year ROE), and the volatility of earnings (ROE stability) From a cognitive cycle perspective, the focus of active equity funds on the current net profit growth rate has significantly decreased, with an increased emphasis on the past 3-year net profit growth rate, past 3-year ROE, and ROE stability. This implies that, marginally, active equity funds have increased their focus on the 3-year economic environment (3-year net profit growth rate, 3-year ROE) and earnings volatility (ROE stability). 2.3 2024Q4 allocation direction: sectors such as electronics, banks, new energy industry chains, chemicals, steel, and household appliances have been increased, while sectors like non-ferrous metals, communications, real estate, computers, and pharmaceuticals have been reduced to different extents. From a style perspective, in 2024Q4, active equity funds mainly increased their holdings in mid-cap/small-cap growth, large-cap/small-cap value sectors, and reduced their holdings in large-cap growth and mid-cap value sectors. In terms of industries, looking at changes in overallocation ratios, relative/absolute allocation changes, in 2024Q4, active equity funds mainly increased their holdings in electronics, banks, automobiles, new energy, chemicals, steel, and household appliances, and reduced their holdings in non-ferrous metals, communications, real estate, computers, pharmaceuticals, etc. It is worth noting that active equity funds increased their allocation to the electronics sector.The overweight ratio (+8.36%) and the heavily overweight ratio (+7.11%) have both reached their historical highs. Correspondingly, the overweight ratio for the non-ferrous sector has fallen significantly to underweight status (-0.10%), while the resources and utilities sectors are still underweight to varying degrees. In addition, in the fourth quarter of 2024, SMIC-U, Hua Chuang in the North, and Gree Electric Appliances have newly become the top 10 heavy positions in actively biased stock funds. Ningde Times is still the largest heavy position, while Guizhou Maotai has slipped to become the third largest heavy position.2.4 The rotation behavior of actively biased equity funds will continue to be one of the important factors affecting the absolute return level of the industry in the future. First of all, by comparing the alpha of funds holding different industry funds and the characteristics of the asset and liability sides of funds heavily invested in this sector, we found that, on average, the proportion of new funds heavily invested in this industry and the net subscription situation of funds heavily invested in this sector can to some extent explain the alpha situation of holding funds in this industry, and the explanatory power of the net purchase of the liability side is often better, that is, when the proportion of new funds heavily invested in this industry increases and funds on the liability side that are heavily invested in this industry experience more net purchases or fewer net redemptions, the funds holding that industry often have higher alpha. Furthermore, we calculated the performance of funds heavily invested in various sectors, institutional repositioning behavior, and the subscription and redemption situation on the liability side in 2024Q4 and found that: (1) In 2024Q4, funds that chose to heavily invest in sectors such as TMT, military industry, trade and retail, consumer services, textile and apparel, construction, and transportation performed well. Asset-wise, the proportion of funds heavily invested in sectors such as electronics, computers, military industry, trade and retail, consumer services, textile and apparel, construction, and transportation all increased, with a significant increase in the proportion of funds heavily invested in the electronics sector, while the proportion of funds heavily invested in sectors such as media and communications decreased. On the liability side, only funds heavily invested in the computer sector saw net purchases. Based on our previous conclusion, the higher alpha of funds holding the electronics sector is probably driven by more funds choosing to heavily invest in the electronics industry. (2) In 2024Q4, funds that chose to heavily invest in sectors such as real estate, non-ferrous metals, pharmaceuticals, food and beverages, and coal performed poorly, and a large number of funds chose not to heavily invest in these sectors anymore. Consequently, funds heavily invested in these sectors experienced varying degrees of net redemptions. The fact that a large number of funds no longer heavily invested on the asset side and significant redemptions on the liability side are important reasons for the poor performance of funds in these sectors. In summary, in 2024Q4, actively biased equity funds continued to face indiscriminate redemptions on the liability side. Combined with our previous discussions, the "cost recovery redemptions" on the liability side of actively biased equity funds is still ongoing. From the perspective of the funds themselves at this time, funds holding funds in various industries may rely more on the absolute returns obtained through the active buying and selling behavior of actively biased equity funds in that industry, and gain relative returns through fewer redemptions on the liability side. Considering that the position of actively biased equity funds is still high, this means that the rotation behavior of actively biased equity funds will continue to be one of the important factors affecting the absolute return level of the industry in the future. However, passive funds may to some extent create a certain resonance and hedge. In 2024Q4, passive funds mainly bought into sectors such as electronics, banking, pharmaceuticals, food and beverages, computers, and communications, with resonance between active and passive funds in industries such as electronics and banking, and a certain amount of hedging in sectors like pharmaceuticals, food and beverages, computers, and communications. 2.5 Funds that hit new net asset value highs in 2024Q4 without experiencing the largest historical drawdown: the proportion of assets continues to rise, reaching a high point since 2022, still allocating more to sectors like gold, appliances, and railways Based on the criteria of achieving new net asset value highs in a quarter without experiencing the largest historical drawdown, funds that met this requirement in 2024Q4 saw a continued rise in the proportion of assets, reaching a high point since 2022. These funds allocated more to sectors like gold, appliances, and railways compared to actively biased equity funds as a whole, and allocated less to sectors like liquor, new energy, and consumer electronics, showing a greater focus on sectors such as new energy, agriculture, AI, power systems, pharmaceuticals, and state-owned enterprises in their analysis and outlook for the quarter. 3 "Income+" funds: Significant net redemptions continue on the liability side, with increased allocations to sectors like banking and electronics, showing clear divergences in sectors like power and utilities, traditional energy, electronics, pharmaceuticals, and food and beverages 3.1 In 2024Q4, the scale of "Income+" funds continued to decline, with holdings of stocks/A-shares falling again and reaching their lowest point since 2020Q3 In 2024Q4, the scale of "Income+" funds continued to decline, with holdings of stocks/A-shares falling again and reaching their lowest point since 2020Q3. Specifically, the scale of "Income+" funds decreased from 1753.27 billion yuan in 2024Q3 to 1669.07 billion yuan in 2024Q4, while the allocation to stocks/A-shares fell from 9.47%/8.58% in 2024Q3 to 8.67%/7.75% in 2024Q4, reaching their lowest point since 2020Q3. 3.2 In 2024Q4, the new issuance scale of "Income+" funds saw a slight increase, but there were still significant net redemptions on the liability side From the liability side, in 2024Q4, the new issuance scale of "Income+" funds saw a slight increase, but there were still significant net redemptions on the liability side. Correspondingly, the proportion and scale of funds redeemed, although slightly lower than in 2024Q3, were still relatively high: the newly established "Income+" funds saw a slight increase in scale from 171.10 billion yuan in 2024Q3 to 181.20 billion yuan in 2024Q4. However, in 2024Q4, "Income+" funds as a whole experienced net redemptions of 1430.47 billion yuan, with the proportion of redemptions from 76.23%/77.12% in 2024Q3 to 72.29%/62.07% in 2024Q4, remaining at a relatively high level. 3.3 The allocation direction of "Income+" funds: mainly increasing holdings in sectors such as banking, utilities, pharmaceuticals, food and beverages, coal, transportation, and energy, while reducing holdings in sectors such as machinery, non-ferrous metals, electronics, computers, automobiles, and non-banking financials In 2024Q4, "Income+" funds mainly increased their holdings in sectors such as banking, utilities, pharmaceuticals, food and beverages, coal, transportation, and energy, while reducing holdings in sectors such as machinery, non-ferrous metals, electronics, computers, automobiles, and non-banking financials. This is in clear contrast to the allocation direction of actively biased equity funds in 2024Q4: there are significant differences between the two in sectors such as banking and electronics, with resonance in sectors such as electronics and banking, and some hedging in sectors such as pharmaceuticals, food and beverages, computers, and communications.In the same direction of increasing allocation, both sides reduced their holdings in fields such as mining, computers, and non-banking, but they have significant differences in areas such as electricity and utilities, traditional energy, electronics, pharmaceuticals, and food and beverages.4 Since January 2025, various participants have withdrawn to varying degrees, and the A-share market has once again experienced a process from being mainly bought by Northbound funds and institutional ETFs to being dominated by individual investors, represented by margin trading. Since January 2025, market participants have all shown different degrees of withdrawal, especially the major buying force in the market in Q4 2024 (represented by individual investors, especially margin trading). Since mid-January, with the warming of policy expectations and better-than-expected economic data, the market has once again experienced a rapid version of the "924" market trend. Participants have also experienced a process from being mainly bought by Northbound funds and institutional ETFs to being dominated by individual investors, represented by margin trading. Correspondingly, the positions of actively managed equity funds have gradually increased. Combining the previous discussion, on the one hand, when facing the "shrinking circle" on the debt side, the impact of active funds on market pricing may depend more on stage consensus (concentrated buying to counter redemptions); however, it should not be overlooked that the internal cognitive differences within active funds have increased the difficulty of forming consensus. It is worth noting that passive funds and insurance funds that can still obtain incremental funds currently provide a way out for active funds. Referring to the Northbound experience from December 2016 to early 2021 (see the report "The 'Decade' of Northbound Funds"), the consensus field between active funds and passive funds, as well as insurance funds, may be a direction with relatively less resistance in the future and may also be the path for active funds to regain pricing power. The convergence of holding differences among the three types of participants will be an important observation indicator. On the other hand, with limited room for active fund positions relative to weak pricing power, each new catalyst (policy expectations, and other important events, etc.) may bring about cyclical rapid pricing in the market: Northbound funds and institutional ETFs buy first, followed by individual investors, which is also one of the important micro-mechanisms of short-term market fluctuations. 5 Risk Warning Calculation Error: Numerical models are fits to history, and fitting itself contains errors. Additionally, the statistical sample itself may also cause errors in the calculation results. This article is taken from the WeChat public account "" (Yiling Strategy Research), edited by GMTEight: Chen Xiaoyi.