Summary of Key Points
The ETF market in the first half of 2026 has experienced a stark contrast: on one hand, there was a surge in new products (a net increase of 165), while on the other hand, the total market size shrank by 1.25 trillion yuan. Broad-based ETFs have become the main source of capital outflows (with over 1.67 trillion yuan flowing out this year, reaching a two-year low), whereas industry-themed ETFs have managed to attract nearly 100 billion yuan in contrarian fashion (sectors such as power grids, communications, and securities firms being the most popular). The ranking of leading fund companies has also changed (E Fund Group has surpassed Huaxia Fund Group, while Guotai Fund and Haifu Tong Fund have made significant gains), indicating a decrease in market concentration. In the future, the market size may be volatile, but differentiation will continue—wide-based ETFs are likely to see continued outflows, while themed sectors will remain favored by investors.
Detailed Analysis
1. More new products, yet a shrinking total market size?
This year, the ETF market has been very active, with new funds launching almost every week, resulting in a net increase of 165 products and over 60 billion shares issued. However, despite this activity, capital has been drifting away: the total market size of ETFs has decreased from around 6 trillion yuan at the beginning of the year to 4.77 trillion yuan, a reduction of 1.25 trillion yuan (a decline of more than 20%).
The reason for this paradox is simple: fewer funds are entering the market, while more are exiting. Broad-based ETFs, which cover a wide range of companies, have seen significant outflows, and the nearly 100 billion yuan flowing into themed ETFs is not enough to offset these losses. For example, the CSI 300 index ETF alone has seen outflows of over 800 billion yuan, which is equivalent to the total inflows from ten power grid equipment ETFs.
2. Why are broad-based ETFs becoming major sources of capital outflows?
Broad-based ETFs were once the favorites of investors due to their diversification. However, this year they have become the main targets for capital withdrawals:
- Net outflows this year exceeded 1.67 trillion yuan, reducing their market size to 1.07 trillion yuan (a two-year low).
- The CSI 300 ETF saw the largest outflow at 8056 billion yuan, followed by the CSI 1000 and SSE 50 ETFs with outflows of over 170 billion yuan each.
- Only a few broad-based ETFs (such as the CSI 2000 and SSE Index ETFs) have seen capital inflows; most are experiencing significant shrinkages.
The reason is clear: the A-share market has not performed well overall, meaning broad-based ETFs are not generating profits, and investors have shifted their funds to sectors with greater potential for growth.
3. Which themed ETF sectors are attracting capital in contrarian fashion?
Contrary to the decline of broad-based ETFs, themed ETFs (focusing on specific industries) have become highly sought after, with nearly 100 billion yuan flowing into them this year. Investors are particularly interested in two types of sectors:
- High-growth sectors: Power grid equipment (Huaxia Fund Group’s ETF saw inflows of 19.9 billion yuan), communications (Guotai Fund Group’s ETF saw inflows of 14.3 billion yuan), and energy storage (these sectors have shown strong performance).
- Sectors that have recently corrected: Securities firms (whose first-quarter profits exceeded expectations, attracting 14 billion yuan in inflows) and innovative drugs (which have been underperforming and are now being bought on dips).
It’s important to note, however, that some themed ETFs have started to show signs of capital withdrawal, such as those in semiconductor equipment and power grid equipment, with outflows of over 1 billion yuan each in the past week, indicating a rotation of investor interest.
4. Major reshuffle of fund companies' rankings: who is making gains?
The shrinkage of broad-based ETFs has impacted traditional leaders in the market:
- E Fund Group has surpassed Huaxia Fund Group: E Fund Group’s ETF market size is now 606 billion yuan, compared to Huaxia’s 602.3 billion yuan, a difference of just 4 billion yuan—E Fund Group has moved up to the top for the first time.
- Guotai Fund and Haifu Tong Fund have made significant gains: Guotai Fund Group has risen from 7th to 4th place due to inflows from themed ETFs (especially in communications and gold sectors), while Haifu Tong Fund has climbed from a lower position to 12th place through bond ETFs.
- Decreased market concentration: The top ten fund companies now account for only 67.9% of the market, down from 74.8%, indicating that smaller companies can also compete successfully with niche products (such as themed and bond ETFs).
5. What lies ahead for the ETF market?
Analysts predict:
- Volatile market size: The overall market size is unlikely to shrink significantly and will likely fluctuate around 4.77 trillion yuan.
- Increased differentiation: The trend of broad-based ETF outflows will continue (due to the lack of overall A-share market growth), but high-growth and sector-specific themed ETFs are expected to attract more capital.
- Opportunities in niche areas: Non-leading fund companies can gain a foothold in the market by offering differentiated products, such as those targeting specific industries or bonds.
In one sentence:
This year’s ETF market has seen broad-based ETFs declining while themed ETFs gaining momentum. Ordinary investors should consider sectors with strong growth potential or that have recently corrected, but be cautious about the risk of capital rotation.