As capital market volatility intensifies and uncertainty surrounding single-asset investments continues to climb, striking the right balance between returns and risk while enhancing the real investment experience has become a central concern for investors. Against this backdrop, FOF—with its standout strengths in diversified asset allocation and secondary risk dispersion—is emerging as a vital tool for everyday investors building their portfolios. As one of the earliest asset managers in China to enter the FOF arena, Zhong Ou Fund has deepened its expertise in multi-asset allocation, and through a well-rounded product lineup and mature research framework, it now offers one-stop investment solutions tailored to a broad spectrum of risk appetites.

Impressive Profitability Metrics for Fund Holders

The 2026 interim fund report marks the first time the proportion of profitable investors has been disclosed, offering a direct reflection of actual returns delivered to holders. Across Zhong Ou’s entire FOF product line, products that have been operational for over a year report that more than 92% of their investors are in profitable positions. As of June 30, Zhong Ou Fund’s total FOF assets under management have exceeded RMB 20 billion. On one front, the firm has comprehensively rolled out its product suite, covering strategies such as diversified asset allocation, proactive fund selection, and ETF-FOF; on another, it continues to pioneer innovation, boasting both some of the industry’s first target-date retirement FOFs and the sector’s inaugural ETF-FOF product. Among these, the two flagship low-volatility offerings—Zhong Ou Yingxuan Wenjian and Zhong Ou Yujian Wenrui—together serve more than 320,000 holders, with both products seeing over 98% of investors in profit over the past year and generating a combined profit exceeding RMB 370 million during the same period. In performance terms, Zhong Ou Yujian Wenrui has delivered a one-year gain of 3.81% (versus a benchmark of 3.16%) and a three-year rise of 10.33% (versus a benchmark of 8.84%). According to asset allocation data from the 2026 interim report, both products have moved beyond the conventional stock-bond dichotomy, incorporating QDII, commodities, and REITs to embody a multi-asset investment philosophy that has historically yielded steady returns.

The Notable Edge of FOF’s Multi-Asset Allocation

China’s public FOF space took its first steps in 2014, launched its initial wave of products in 2017, and has now evolved through early-stage growth and rapid expansion to enter a phase of sustained development. Unlike standard funds that invest directly in equities or bonds, FOF invests in underlying funds, gaining exposure to a broad array of categories including A-shares, fixed income, gold, commodities, REITs, and offshore QDII, thereby seeking to mitigate risks tied to any single asset class or market. In the first quarter of this year, Zhong Ou Fund released its FOF Multi-Asset Allocation Insight Report, which revealed that while many investors recognize the value of asset allocation in principle, their understanding of FOF often stops at “expert fund selection and risk diversification.” Awareness of its broader multi-asset potential remains limited, with most investors confining their allocation horizons to domestic equities, bonds, and gold, while paying scant attention to offshore and alternative assets. Due to practical hurdles such as insufficient expertise, a lack of tools, and investment thresholds, only about 30% of investors have actually turned to FOF for multi-asset allocation, underscoring a clear gap between awareness and real-world adoption. Yet the advantages of FOF’s diversified approach are compelling: first, it achieves full-market asset coverage, breaking through traditional fund investment boundaries to open channels for cross-region and cross-cycle investing; second, it offers secondary risk dispersion through a dual-layer mechanism of underlying assets and underlying funds, aiming to offset volatility via low-correlation assets—gold, for example, can serve as a stabilizer during simultaneous equity and bond downturns; third, it lowers the barrier to entry by delivering a one-stop allocation solution, allowing small sums to participate in global strategies, while target-date retirement FOFs automatically adjust equity exposure through a glide path to match an investor’s life stage; and fourth, it provides a versatile toolkit of strategies—core-satellite, risk parity, Merrill Lynch clock, and barbell approaches—that can be flexibly deployed to suit various macroeconomic environments. Historical backtesting further validates that a multi-asset risk parity portfolio spanning equities, bonds, and gold has historically delivered a superior risk-adjusted return profile compared to any single asset class.

Zhong Ou FOF Moves Toward Multi-Asset Allocation 2.0

As markets evolve and single-asset uncertainty grows, Zhong Ou FOF has progressed from a simple stock-bond allocation framework to formally embrace a more diversified “Multi-Asset Allocation 2.0” phase, or “Fund of Future.” In this stage, the management team uses bonds as a core anchor, adds equities and convertible bonds, and broadens the mix with QDII, commodities, and REITs, incorporating gold, U.S. equities, and U.S. Treasuries into the portfolio. By selecting low-correlation assets, they achieve both geographic and asset-class diversification, relying on the synergy of multiple assets to balance risk and dampen portfolio volatility. Crucially, the team does not adhere to fixed allocation ratios; instead, it dynamically adjusts the weight of each asset class within the bounds of product contracts in response to macroeconomic and market shifts, striving to help investors navigate full cycles in pursuit of long-term, steady appreciation. In practical terms, taking Zhong Ou Yujian Wenrui as an example, fund manager Deng Da has stated that the approach will continue to refine portfolio allocation—particularly across domestic equities, bonds, and commodities—to keep the portfolio stable. Concurrently, the team will steadily advance other planned initiatives for the year: first, patiently waiting for long-end yields to gradually enter a strategic allocation zone; second, improving fund research and intensifying allocation efforts; third, exploring additional alternative assets; and fourth, refining the leverage configuration of bond fund holdings.

Regarding the current allocation value of major asset classes and the portfolio’s outlook, Deng Da sees a mix of risks and opportunities. The key risk lies in domestic bonds being positioned at relatively high levels, where the upside and downside for yields are asymmetric—a persistent core risk for products with heavy fixed-income exposure. On the opportunity side, the investment value of domestic value and quality blue-chip stocks is near historically favorable levels, China’s leading economic indicators are increasingly close to stabilizing, and as tech growth sectors have pulled back, their appeal has risen. Neutral factors include the still-attractive value of soybean meal, energy, gold, and offshore equities.

Zhong Ou Fund has devoted years to cultivating its FOF expertise. As of June 30, its FOF management scale has surpassed RMB 20 billion, supported by a comprehensive product lineup that spans various risk levels to address diverse client needs. Its investment strategies cover multiple pillars, including diversified asset allocation, proactive fund selection, and proactive-plus-ETF approaches. Zhong Ou was also among the first institutions in China to roll out retirement FOFs; its Zhong Ou Yujian Yanglao 2035, established on October 10, 2018, was one of the industry’s pioneering retirement FOF products. On the innovation front, the firm continues to lead, having launched the industry’s first ETF-FOF—Zhong Ou Jiji Duoyuan Peizhi 3-Month Holding ETF-FOF—with this robust innovative capacity laying a solid foundation for future multi-asset allocation initiatives.

Data sourced from fund periodic reports as of June 30, 2026. Past performance is not indicative of future results, and the performance of other funds managed by the same firm does not guarantee the performance of this fund. Zhong Ou Yujian Wenrui Hybrid (FOF) Class A has posted a cumulative return of 21.07% since inception versus a benchmark of 11.97%. Annual returns and benchmark performance from 2021 to 2025 are as follows: 3.28%/0.88%, -2.45%/-3.69%, 1.26%/-0.24%, 6.19%/6.79%, and 5.14%/1.21%. Fund manager history: Deng Da has managed the fund since March 17, 2022; Sang Lei managed it from April 15, 2020, to March 17, 2022. The product’s investment scope was revised in October 2020 to include depositary receipts and in November 2023 to add public REITs. After the target date is reached in January 2026, the fund will be renamed Zhong Ou Yujian Wenrui Hybrid Fund of Funds (FOF), with investment objectives, scope, and strategies adjusted per the post-conversion contract terms. Please refer to the legal documents for details.

Risk disclosure: Funds involve risk; investors should proceed with caution. The fund manager is committed to managing fund assets with integrity and diligence but does not guarantee profitability or a minimum return. Past performance does not predict future results, and the performance of other funds by the same manager does not constitute a guarantee of this fund’s performance. Before making any investment decision, please carefully review the fund contract, prospectus, product fact sheet, risk disclosure statement, and other legal documents, fully understand the fund’s risk-return characteristics and product features, consider all risk factors, and assess your own risk tolerance based on your investment objectives, horizon, experience, and financial situation—making rational and prudent decisions with a clear understanding of the product and suitability advice. Fund scale growth may reduce strategy effectiveness; investors should be aware of the potential investment risks stemming from scale changes. Zhong Ou Yujian Wenrui Hybrid (FOF), Zhong Ou Yingxuan Wenjian 6-Month Holding Hybrid Initiation (FOF), Zhong Ou Yujian Yanglao 2035 Three-Year Holding (FOF), and Zhong Ou Jiji Duoyuan Peizhi 3-Month Holding Hybrid (ETF-FOF) may invest in Hong Kong Stock Connect eligible stocks. Beyond the general market volatility risks typical of domestic securities investment funds, these funds also face specific risks arising from differences in the investment environment, targets, market systems, and trading rules under the Stock Connect mechanism. Zhong Ou Yingxuan Wenjian 6-Month Holding Hybrid Initiation (FOF), Zhong Ou Yujian Yanglao 2035 Three-Year Holding (FOF), and Zhong Ou Jiji Duoyuan Peizhi 3-Month Holding Hybrid (ETF-FOF) are subject to lock-up or minimum holding periods, during which investors face liquidity constraints from being unable to redeem or sell fund shares. Zhong Ou Yingxuan Wenjian 6-Month Holding Hybrid Initiation (FOF) and Zhong Ou Jiji Duoyuan Peizhi 3-Month Holding Hybrid (ETF-FOF) are hybrid funds with expected returns and risk levels higher than bond funds and money market funds but lower than equity funds. Zhong Ou Yujian Wenrui Hybrid (FOF) is a fund of funds that, while aiming to achieve risk diversification and reduce overall portfolio volatility, seeks to generate steady returns for investors; its expected risk is lower than equity funds and general hybrid funds but higher than bond funds and money market funds. Y-class shares are a separate share class established for personal pension investment fund business, available only for purchase by personal pension clients; the subscription and redemption arrangements, capital account management, and other matters for Y-class shares must also comply with fund legal documents and relevant personal pension account management regulations. Specific risks of investing in Y-class shares include the possibility that the fund may be removed from the personal pension investable fund list, preventing investors from continuing to subscribe; this fund does not guarantee principal or returns and seeks long-term gains. Zhong Ou Yujian Yanglao 2035 Three-Year Holding (FOF) is a fund of funds that, as the target date approaches, gradually reduces equity allocation and increases non-equity allocation to lower overall portfolio volatility and achieve risk diversification; its expected risk and returns are lower than equity funds and general hybrid funds but higher than bond funds and money market funds. Y-class shares are a separate share class for personal pension investment fund business, available only for purchase by personal pension clients; subscription and redemption arrangements, capital account management, and other matters for Y-class shares must also comply with fund legal documents and relevant personal pension account management regulations. Specific risks of Y-class shares include the potential removal from the personal pension investable fund list, preventing further subscriptions; this fund does not guarantee principal or returns and seeks long-term gains. Zhong Ou Jiji Duoyuan Peizhi 3-Month Holding Hybrid (ETF-FOF) is a hybrid fund of funds with risk and expected returns higher than bond-type FOFs and bond funds, higher than money market-type FOFs and money market funds, but lower than equity-type FOFs and equity funds. Sales fee details: For Zhong Ou Yujian Wenrui Hybrid (FOF), Class A subscription fee is 0.80% for amounts under RMB 1 million and RMB 100 per transaction for amounts of RMB 1 million or above; Class C has no subscription fee; Y-class subscription fee is 0.80% for amounts under RMB 1 million and RMB 100 per transaction for amounts of RMB 1 million or above; Class A redemption fee is 1.50% for holdings under 7 days, 0.75% for 7 to 30 days, 0.50% for 30 to 180 days, 0.125% for 180 to 365 days, 0.0625% for 365 to 730 days, and 0% for holdings of 730 days or more; Class C redemption fee is 1.50% for holdings under 7 days, 1.00% for 7 to 30 days, 0.50% for 30 to 180 days, and 0% for holdings of 180 days or more; Y-class redemption fee is 1.50% for holdings under 7 days, 0.75% for 7 to 30 days, 0.50% for 30 to 180 days, and 0% for holdings of 180 days or more; Class C sales service fee is 0.40% per year. For Zhong Ou Yingxuan Wenjian 6-Month Holding Hybrid Initiation (FOF), Class A subscription fee is 0.80% for amounts under RMB 1 million, 0.60% for RMB 1 to 2 million, 0.50% for RMB 2 to 5 million, and RMB 1,000 per transaction for amounts of RMB 5 million or above; Class C has no subscription fee; D-class subscription fee is 0.80% for amounts under RMB 1 million, 0.60% for RMB 1 to 2 million, 0.50% for RMB 2 to 5 million, and RMB 1,000 per transaction for amounts of RMB 5 million or above; E-class has no subscription fee; all share classes have a 6-month lock-up period, after which redemption is permitted without a redemption fee; Class C and E sales service fees are 0.40% per year. For Zhong Ou Yujian Yanglao 2035 Three-Year Holding (FOF), Class A subscription fee is 1.20% for amounts under RMB 1 million and RMB 100 per transaction for amounts of RMB 1 million or above; Class C has no subscription fee; Y-class subscription fee is 1.20% for amounts under RMB 1 million and RMB 100 per transaction for amounts of RMB 1 million or above; Class A redemption fee is 1.50% for holdings under 7 days and 0% for holdings of 7 days or more; Class C redemption fee is 1.50% for holdings under 7 days and 0% for holdings of 7 days or more; Y-class redemption fee is 1.50% for holdings under 7 days and 0% for holdings of 7 days or more; Class C sales service fee is 0.40% per year. For Zhong Ou Jiji Duoyuan Peizhi 3-Month Holding Hybrid (ETF-FOF), Class A subscription fee is 0.30% for amounts under RMB 1 million, 0.20% for RMB 1 to 5 million, and RMB 1,000 per transaction for amounts of RMB 5 million or above; Class C has no subscription fee; Class A redemption fee is 0.50% for holdings under 180 days and 0% for holdings of 180 days or more; Class C redemption fee is 0% for all holding periods; Class C sales service fee is 0.30% per year. The specific sales fees applicable to the products mentioned in this material are subject to the fund legal documents and sales institution business rules as effective on the fund manager’s official website (www.zofund.com) at the time.