A one-click layout of China's growth and innovation "full picture"—the Xingquan ChiNext Composite Index Enhanced Fund is now being launched.

As China’s front line for technological innovation and industrial upgrading, the Growth Enterprise Market (GEM) has gathered a large number of high-quality companies that exemplify the “Three Innovations and Four New” characteristics (innovation, creation, creativity, as well as new technologies, new industries, new business models, and new formats). How to participate efficiently and conveniently in this vibrant market, and share the long-term dividends of China’s growth and innovation, has always been a key concern for investors. Recently, China Merchants Global Fund launched the Xingquan GEM Composite Index Enhanced Initiating Fund (Class A: 026814; Class C: 026815), providing an enhanced investment tool for a one-click “panoramic view” of GEM. The fund was officially launched on March 16, 2026, aiming to achieve sustainable excess returns through mature quantitative strategies, closely tracking the target index.

Anchoring a New Growth Core: GEM Composite Index, the “Gathering Place” for China’s Growth and Innovation

The target tracked by this fund—the GEM Composite Index (399102.SZ)—almost covers all stocks listed on the Shenzhen Stock Exchange GEM. As of the end of 2025, it included 1,348 constituent stocks, with a total market value coverage of over 99%. This feature allows it to reflect the overall changes in the GEM market, from leading companies to emerging stars in niche sectors, providing investors with a “one-click” tool to position themselves in China’s growth and innovation.

From an index core perspective, the GEM Composite Index has a clear “tech innovation” attribute and a “growth-oriented” background. Its constituent stocks are widely distributed across key sectors representing new productive forces, with the top five weightings—Power Equipment (21.9%), Electronics (14.3%), Communications (12.3%), Pharmaceuticals & Biotech (9.5%), and Computers (8.8%)—accounting for a total of 66.9%. These sectors cover strategic emerging industries such as new energy, AI computing power, and biomedicine, and include leading enterprises in critical parts of the industrial chain. Meanwhile, the index’s fundamentals also show strong growth. According to Wind data, by mid-2025, the constituent stocks of the GEM Composite Index saw a 7.03% year-over-year increase in revenue and an 11.22% increase in net profit attributable to shareholders over the past year. Over a longer period, their revenue growth over the past five years reached 96.37%, surpassing mainstream broad-based indices like the CSI 300 and Wind All A, confirming its intrinsic value as a “gathering place” for growth and innovation. From a long-term investment perspective, since its base date on May 31, 2010, through the end of February 2026, the GEM Composite Index has increased by 323.08%, with an annualized return of 9.90%, demonstrating long-term cyclical return potential. As of the end of February 2026, the index’s P/E ratio was 73.51, at the 68.23 percentile over the past ten years, well below the peak P/E of 174.93 in the same period, providing a solid valuation foundation for growth opportunities.

Quantitative Empowerment: Strong Support from Xingquan Platform, Striving for Long-term Excess

Given the large number of constituent stocks, broad industry coverage, and significant stock differentiation within the GEM Composite Index, how to effectively extract excess returns? The solution offered by the Xingquan GEM Composite Index Enhanced Fund is to leverage the quantitative research strength of China Merchants Global Fund’s quantitative team, adopting a “multi-factor quantitative stock selection + portfolio optimization” enhancement strategy. Under the premise of closely tracking the target index and strictly controlling tracking error, the fund uses quantitative models to systematically select effective factors—such as valuation, growth, profitability, and market sentiment—from over 1,300 stocks, constructing a portfolio with the potential for excess returns.

China Merchants Global Fund has been deeply involved in index investment for 16 years, with its passive investment capabilities recognized with a five-star rating from China Merchants Securities over three years. In recent years, the firm has continuously improved its quantitative investment strategies, with its quantitative team regularly tracking over 3,000 factors and over 2,000 factors in its database daily; it manages more than 300 strategies, with over 100 strategies tracked daily across nearly 30 different indices. Its proprietary quantitative platform integrates strategy development, trading execution, and performance tracking, equipped with industry-leading high-frequency data processing and machine learning capabilities, providing technical support for factor discovery and model iteration. The four publicly offered quantitative strategies established for over six months have all achieved excess returns relative to their benchmarks since inception. The launch of this Xingquan GEM Composite Index Enhanced Fund applies its quantitative research system to the highly promising GEM “panoramic view,” aiming to offer investors a clear risk-return profile and long-term allocation value.

Risk Warning:

China Merchants Global Fund commits to managing and using fund assets with honesty, integrity, diligence, and responsibility, but does not guarantee profits or minimum returns. Investors should carefully read relevant fund contracts, prospectuses, and other documents, and choose investment products suitable for their risk tolerance. The short operational history of Chinese funds may not reflect all market phases. Performance of other funds managed by the fund manager or previous funds managed by the fund manager does not guarantee future performance. The opinions expressed are personal and do not represent the company’s stance, for reference only. Investment in funds involves risks; please choose carefully. Past performance does not predict future results. Active equity funds include equity hybrid funds and stock funds. Investment involves risks; please proceed cautiously.

Manager Profile: Huang Zhiyuan
Joined China Merchants Global Fund in March 2018, currently serving as a quantitative investment fund manager. Since March 2018, he has been a fixed income researcher; since January 2022, a convertible bond and quantitative researcher; since January 2023, an assistant fund manager; and since December 2025, a fund manager for Xingquan Huiji Fund.

This fund is a stock fund with higher expected returns and risks than hybrid, bond, and money market funds. It mainly invests in the constituent stocks of the target index and alternative stocks, with risk-return characteristics similar to the index. The fund’s risk rating is R3, not capital guaranteed. It can invest in Hong Kong Stock Connect stocks, facing exchange rate risk and Hong Kong market risk. As an enhanced stock index fund, it aims to effectively track the GEM Composite Index while slightly enhancing the portfolio to achieve returns exceeding the benchmark, seeking long-term asset appreciation. The asset allocation is: at least 80% of assets in stocks (with 0-50% of stock assets in Hong Kong Stock Connect stocks), and at least 80% of assets in the GEM Composite Index’s constituent stocks and alternatives. Each trading day, after deducting margins for stock index futures, government bond futures, and stock options, the fund maintains a cash or short-term government bond investment ratio of at least 5% of net assets (excluding settlement reserves, margin deposits, receivables). Subscription via direct sales channels for Class A shares is free of charge; other sales channels charge subscription fees based on the amount (less than 2 million yuan: 0.30%; 2-5 million yuan: 0.20%; 5 million yuan or more: 1,000 yuan per transaction). Redemption fees for individual investors vary by holding period, with different rates for less than 7 days, 7 days to 1 year, 1-2 years, and over 2 years. Management fee is 0.80% annually; custodian fee is 0.15% annually. No sales service fee for Class A shares; Class C shares have an annual sales service fee of 0.20%, which is returned to investors upon redemption or contract termination. For continuous holdings of Class C shares less than 365 days, the sales service fee is accrued daily and paid monthly; for holdings over 365 days, it is refunded upon redemption.