China Securities Co., Ltd.: In the first quarter, insurance funds mainly held financial stocks, significantly increasing allocations to defensive and consumer sectors.

China Securities Co., Ltd. released a research report stating that in the first quarter of 2026, insurance funds were mainly invested in the financial sector, with a decrease in concentration and a more balanced industry layout. Non-bank financial institutions remained the largest heavily invested sector, but their proportion decreased, while the proportion of banks increased significantly. Insurance funds significantly increased their allocation in defense and consumption sectors such as electricity and utilities, transportation, home appliances, food and beverages, while reducing their holdings in non-bank financial institutions, telecommunications, and non-ferrous metals sectors. Overall, there was a shift in focus towards high dividend stocks, stable cash flow, and consumer recovery themes, reflecting a balanced and diversified investment approach. The TMT sector funds performed well this week, with an average increase of 5.20% over the past week. Fund positions decreased slightly this week but remained at a moderate level compared to the past year. In terms of style, funds increased their positions in small-cap growth stocks and industries such as electrical equipment. The issuance heat of funds this week was at a relatively low level in the past two years, with index funds being the main type. The main points of China Securities Co., Ltd. are as follows: What was the industry allocation of insurance funds in the first quarter of 2026? In the first quarter of 2026, insurance funds continued to show a clear dominance of the "financial sector," but there was a significant decrease in concentration compared to the end of the previous year. The non-bank financial sector remained the largest heavily invested sector with a proportion of 46.11%, although it decreased significantly by 6.64 percentage points from the end of 2025 at 52.75%, showing that insurance funds still consider it as a core holding even after taking profits; the banking sector ranked second with a proportion of 30.05%, playing a stabilizing role. The combined proportion of these two major financial sectors decreased from 80.11% at the end of the previous year to 76.16%, indicating a shift in insurance fund allocation strategy from extreme concentration to moderate diversification. The combined proportion of the top five industries (including electrical equipment, electronics, and pharmaceuticals) also decreased from 87.26% to 84.73%, indicating increased balance in industry allocation. Given the background of intensified geopolitical uncertainties, insurance funds significantly increased their allocation to defensive assets with natural monopoly attributes, stable cash flows, and high dividends. The proportion of bank holdings increased from 27.36% to 30.05%, an increase of 2.68 percentage points; the proportion of holdings in the electricity and utilities sector increased from 3.46% at the end of 2025 to 4.21%, an increase of 0.75 percentage points; the proportion of holdings in the transportation sector increased from 2.00% to 2.55%, an increase of 0.55 percentage points. In the context of intensified geopolitical uncertainties, utilities, with their stable cash flows, high dividends, and defensive nature of natural monopolies, have become a key focus for insurance funds. Holdings in power companies represented by China Yangtze Power, GD Power Development, China National Nuclear Power, CGN Power Co., Ltd., and Zhejiang Zheneng Electric Power continued to increase significantly, reflecting the demand of funds for active hedging against macroeconomic fluctuations. The transportation industry also benefited from expectations of supply chain restructuring due to changes in the geopolitical landscape and the continuation of high dividend strategies, with assets such as Beijing-Shanghai High-Speed Railway, Daqin Railway, and Shanghai International Airport being favored by insurance funds, demonstrating their pursuit of certain returns in a turbulent environment. The logic of consumer recovery has also been validated by insurance fund allocations, with the home appliance sector seeing a significant increase in holdings from 0.21% at the end of 2025 to 1.30%, an increase of 1.09 percentage points, one of the largest increases among non-financial sectors; the food and beverage sector saw an increase in holdings from 0.82% to 1.30%, an increase of 0.48 percentage points. The increase in allocations to home appliances and food and beverages reflects a revaluation of the direction of "consumer recovery + high dividend consumer leaders" by insurance funds. The home appliance sector benefits from expectations of the replacement of old appliances, increasing exports, and dividend rate increases of leading companies, with white goods leaders represented by Midea Group Co., Ltd. and Gree Electric Appliances, Inc. of Zhuhai becoming the main recipients of insurance funds. The food and beverage sector, as a traditional defensive sector, has regained long-term attention from funds after a decline in valuation, with leading companies such as Inner Mongolia Yili Industrial Group, Wuliangye Yibin, Luzhou Laojiao, Henan Shuanghui Investment & Development, and Chongqing Brewery receiving allocations from insurance funds. This reallocation direction is also in line with the policy orientation of "stabilizing growth and promoting consumption" in 2026. At the same time, there has been a moderate increase in allocations to growth sectors, with holdings in the machinery, pharmaceutical, and automotive sectors increasing from 0.70%, 0.89%, and 0.83% to 1.12%, 1.19%, and 1.05% respectively. Insurance funds have not simply shifted to defensive assets, but have continued to marginally allocate to high-quality manufacturing sectors with industrial upgrading logic and medium-to-long-term growth potential, reflecting a philosophy of balanced offense and defense. Non-bank financial institutions have significantly reduced their holdings, while cyclical and telecommunications sectors have seen profit-taking. While the non-bank financial sector remains the largest with an absolute proportion of 46.11%, the market value of holdings decreased significantly from 910.38 billion yuan at the end of 2025 to 731.505 billion yuan, with the proportion decreasing from 52.75% to 46.11%, a decrease of 6.64 percentage points, making it the sector with the largest decrease in holdings in this period, showing the determination of insurance funds to switch between high and low within the financial sector. The proportion of holdings in the telecommunications sector decreased from 1.68% to 1.23%, a decrease of 0.45 percentage points, with the market value of holdings decreasing from 28.993 billion yuan to 19.449 billion yuan; the proportion of holdings in the non-ferrous metals sector decreased from 1.26% to 1.08%, a decrease of 0.17 percentage points, with the market value of holdings decreasing from 21.658 billion yuan to 17.181 billion yuan. In addition, the proportion of holdings in the real estate sector decreased from 0.83% to 0.72% (-0.11%), while sectors such as agriculture, forestry, fisheries, media, and computers saw varying degrees of decrease in proportions. These divestiture operations indicate that insurance funds tend to realize some cyclical and thematic gains during quarterly reallocations and shift positions to safer utility and consumer sectors with performance certainty. What are the main characteristics of major insurance funds' holdings in the first quarter of 2026? From the institutional perspective, the equity allocation of insurance funds in the first quarter of 2026 was not simply a rotation of industries, but a structural rebalancing led by the top insurance funds. China Life Insurance Group still dominated with holdings of 908.955 billion yuan, accounting for 57.29% of the total sample; Ping An Insurance Group ranked second with 233.904 billion yuan, accounting for 14.74%. At the same time, the Zhongan Life Insurance Group, Taiping Insurance Group, New China Life Insurance Group achieved increases in holdings of 120.17%, 20.47%, and 18.02% respectively, indicating that the incremental impact of insurance funds is not concentrated in one point but further strengthened and diffused by second-tier institutions after the direction is defined by top institutions. China Life Insurance Group remains the most dominant force in this round of insurance fund increases. The non-bank financial sector within the China Life Insurance Group decreased from 85.48% in the 2025 report to 78.87% in Q1 of 2026, while the banking sector increased from 2.69% to 5.23%, home appliances from 0.16% to 1.64%, and transportation from 0.65% to 1.11%. Looking at it from the institution-stock dimension, the top 20 increases are dominated by China Life Insurance Group, accounting for 9 of them, making it the core driver of insurance funds' diffusion from concentrated holdings in non-banks to a diversified allocation of "bank holdings + consumer manufacturing + transportation dividends." Ping An Insurance Group shows a configuration feature of "bank bottom holding stability, strengthening of public dividends." While its proportion of bank holdings decreased slightly from 76.81% to 75.25%, the proportion of electricity and utilities increased from 11.92% to 14.16%, and the transportation proportion remained around 4.17%. Its representative increases were mainly in CGN Power Co., Ltd., Zhejiang Zheneng Electric Power, and SDIC Power Holdings, indicating that the second largest force in insurance funds is continuing to optimize its structure along the framework of high dividends, public attributes, and low volatility. Aside from the top insurance funds, the marginal changes to watch in Q1 of 2026 are the significant increase in presence of some institutions. The Zhongrong Life Insurance Group's holdings increased from 14.616 billion yuan to 32.181 billion yuan, an increase of 120.17%; the Taiping Insurance Group increased from 28.167 billion yuan to 33.933 billion yuan, an increase of 20.47%; the New China Life Insurance Group increased by 18.02%, and the CHINA TAIPING Group increased by 7.38%. This means that beyond China Life Insurance and Ping An Insurance, more insurance fund institutions have started to actively participate in this round of allocation switches. The Zhongrong Life Insurance Group had a total holding of 32.181 billion yuan, the most eye-catching increase in this period, with a market value of holdings increasing by as much as 120.17% from the 2025 report of 14.616 billion yuan. Its configuration is the most aggressive, with bank holdings rising from zero to 33.29%, with Industrial Bank being the largest holding; at the same time, it increased holdings in industries such as machinery, pharmaceuticals, food and beverages, home appliances, and electricity, demonstrating a diversified layout. The New China Life Insurance Group had a total holding of 27.188 billion yuan, an increase of 18.02%, maintaining its backbone in pharmaceuticals while increasing holdings in banks, electronics, and pharmaceuticals, reflecting a balanced strategy of balancing banking and technology growth. The CHINA TAIPING Group had a total holding of 30.023 billion yuan, with a clear increase in holdings in central government-owned enterprises and high dividend varieties, indicating a preference for high dividend central government enterprises for the group, with a clear defensive nature. The China Pacific Insurance Group had a total holding of 33.933 billion yuan, accounting for 2.14%, showing a distinct "transportation + utilities" configuration feature compared to other institutions, with a high proportion of transportation at 34.01%, including core assets such as Beijing-Shanghai High Speed Railway and Shanghai International Airport; banking weighting of 15.03%, with Shanghai Rural Commercial Bank as the main holding; electricity and utilities weighting of 10.54%, with holdings in assets such as Zhejiang Zheneng Electric Power and Inner Mongolia Mengdian Huaneng Thermal Power Corporation. Summary and Outlook of Insurance Fund Holdings in the First Quarter of 2026 In summary, the allocation of insurance funds in the first quarter of 2026 has gradually shifted from the "highly concentrated non-bank" allocation at the end of 2025 to a new balance of "stable financial bottom holdings and diversified industry structure": on one hand, banks have replaced non-bank financial institutions as the most clearly increased allocation in this period; high dividend, low volatility assets remain the main theme of insurance fund allocations; on the other hand, electricity and utilities, transportation, home appliances, food and beverages, and some pharmaceuticals and machinery sectors have seen simultaneous increases in allocations, indicating that insurance funds are making a more balanced layout around the three main themes of dividends, defense, and consumer recovery. In the context of low interest rates and a policy direction of stable growth continuing, sectors such as banks and utilities with high dividends are expected to remain the core holdings of insurance funds, while consumer leaders and high-quality manufacturing assets with industrial upgrading logic are likely to continue receiving incremental funds support from insurance funds. Looking ahead, the first main theme of insurance fund allocations is likely to continue the high dividend defense strategy. Based on the industry migration results in the first quarter, banks, electricity and utilities, and transportation continue to be the most clearly increased allocations by insurance funds, with banks being the industry with the largest increase in proportion in this period. In the context of low interest rates and ongoing equity market volatility, high dividend, strong cash flow, and low valuation assets of central government enterprises are expected to remain the most important bottom holdings for insurance funds, with assets like China Yangtze Power, Beijing-Shanghai High Speed Railway, Daqin Railway, and some large banks, still expected to receive funds support from insurance funds. The second main theme is the reconfiguration opportunities of consumer recovery and quality growth. In the first quarter, sectors such as home appliances, food and beverages, pharmaceuticals, machinery, and automotive saw varying degrees of increases in proportions, reflecting that insurance funds are not staying within a single defensive framework, but gradually increasing their allocations towards the direction of consumption recovery and manufacturing upgrade above stable income bottom holdings. Based on logical deduction, if the policy of stable growth and promoting consumption continues in 2026, and if the valuations of some consumer and growth sectors remain within a relatively reasonable range, then leaders in home appliances, food and beverages, pharmaceuticals, and core assets in industries with industrial upgrading logic are likely to remain important points of incremental long-term insurance fund allocations. The third main theme is the incremental effect brought about by the diffusion of other insurance fund institutions. From the perspective of this round of holdings migration, institutions like the Zhongrong Life Insurance Group, Taiping Insurance Group, New China Life Insurance Group, and CHINA TAIPING Group are no longer passively following the top insurance funds, but are forming their own configuration features in directions such as regional banks, utilities, transportation hubs, pharmaceutical businesses, and leading manufacturing. Based on logical deduction, as the equity allocation capabilities of second-tier insurance fund institutions continue to improve, their incremental support for regional banks, utilities, transportation hubs, pharmaceutical businesses, and leading manufacturing assets may become an important marginal variable in the future market style evolution. At the same time, cases like China Life Insurance increasing holdings in Ping An Insurance demonstrate an increasing recognition within insurance funds of high dividend, low volatility assets in the same industry, indicating a possibility of continued development of inter-industry mutual holding logic in the future.