Nvidia's Plunge Jolts QDII Funds: Tech Leaders Shift to Diversification Amid Market Volatility

Nvidia, the leading stock for many QDII funds, faced a significant drop in stock price on July 30, marking its largest single-day decline in almost three months. This 7% drop contributed to an overall 23% pullback for Nvidia in the recent period.

Nvidia's substantial price decline hit the performance of QDII funds focused on U.S. tech giants. For example, the Jia Shi Fund, which previously outperformed other funds, reported a noticeable performance downturn due to its significant holdings in Nvidia, which constituted 8.80% of its portfolio by the end of Q2.

The broad withdrawal from Nvidia has also spurred adjustments in other tech-heavy stocks, such as ASML, Microsoft, Google, and Meta. Fund managers are broadening their portfolios to include sectors outside technology, such as pharmaceuticals and consumer goods, to mitigate risks associated with AI and semiconductor investments.

Fund managers emphasize the importance of balance. For example, Li Bohan, the manager of the Construction Bank Emerging Markets mixed fund, plans to maintain significant positions in AI-related high-end chips and the semiconductor supply chain, but warns of short-term price volatility.

Similarly, Chen Guoguang and Li Yaozhu, managers of different QDII funds, highlight geopolitical risks and cyclical industry factors. They advocate for a diversified approach to include stable, high-dividend assets and established tech giants while reducing holdings in overvalued tech companies.

Investment decisions now reflect a cautious optimism, with managers focusing on long-term technological benefits and the potential for AI capacity growth despite immediate market fluctuations. Nvidia's delay and subsequent market responses underscore the shifting landscape of tech investments and the increasing need for diversified investment strategies.