In the wake of the implementation of the "924" policy, the A-share market has experienced an unprecedented surge, one might call it an "epic market rally." This dramatic shift has revived public enthusiasm for investing, leading to a substantial influx of capital from various sourcesAs novice investors scrambled to open trading accounts, seasoned fund managers took to the ETF market, aggressively reallocating capital.

Between September 24 and October 9, a staggering 124.33 billion ETF shares flowed into the market, resulting in an increase in total scale by approximately 893.24 billion yuan, as reported by Wind dataThis remarkable uptick raises the question: which ETFs attracted this considerable wealth?

First, let's examine the growth in ETF share volumes.

At the forefront of share inflow was the YiFangDa SSE STAR 50 ETF, which saw a substantial increase of 14.86 billion shares

Following closely was another YiFangDa offering, the YiFangDa ChiNext ETF, with a net inflow of 11.69 billion sharesOther significant contributors included the Huatai-Pb SSE 300 ETF, the Harvest SSE STAR Chip ETF, and the Huaxia SSE STAR 50 ETF, each witnessing share increases exceeding 10 billion.

Now, turning to the changes in ETF scale.

Among the various ETFs, the Huatai-PB SSE 300 ETF emerged as the standout winner of this market rally, boasting a scale increase of 111.18 billion yuan and marking its place in history as China’s first ETF to exceed 400 billion yuan in sizeThis newfound milestone was achieved on October 8, when its scale reached an impressive 430.27 billion yuanThe meteoric rise of the Huatai-PB SSE 300 ETF exemplifies the rapid advancement of index funds in China.

Launched in 2012, it took the Huatai-PB SSE 300 ETF eleven years to grow from zero to one trillion yuan

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The subsequent milestones were reached at an accelerating pace: it took only seven months to double to two trillion, and just five months to hit three trillionThe most astonishing leap, however, was its ascent from three trillion to four trillion, which occurred in a mere six trading days.

However, on October 9, a sudden downturn disrupted this exhilarating track recordThe market experienced a swift reversal from its previously rapid rise to a pronounced declineOn that day, while the Huatai-PB SSE 300 ETF still recorded a net inflow of 607 million shares, its total asset size shrank by 27.735 billion yuan, bringing it back down to 402.53 billion yuan.

In addition to the Huatai-PB SSE 300 ETF, multiple other ETFs also experienced growth exceeding 30 billion yuanThe YiFangDa ChiNext ETF's scale surged by 65.35 billion yuan, while the Huaxia SSE STAR 50 ETF increased by 47.05 billion yuan, and the YiFangDa SSE STAR 50 ETF rose by 36.61 billion yuan

Not to be overlooked, the Southern CSI 1000 ETF also saw an increase of 33.11 billion yuan.

However, not all ETFs benefitted equally from this influx of capital.

According to Wind statistics, between September 24 and October 9, twelve ETFs faced net redemptions exceeding 5 billion sharesThe Guotai CSI All-Share Securities Company ETF saw the most significant outflow, with a reduction of 5.57 billion sharesClosely following were the Huabao CSI Medical ETF and the Guolian'an CSI All-Share Semiconductor ETF, which lost 2.613 billion and 2.52 billion shares, respectively.

Despite the outflows, these twelve ETFs managed to generate positive returns within the same timeframeThe star performer among them was the Guotai CES Semiconductor Chip ETF, boasting a remarkable yield of 60.19%. The least performing, on the other hand, was the Huatai-PB Dividend Low Volatility ETF, which still recorded a respectable yield of 8.84%. It appears that indices related to dividends did not perform as well during this market trend, while sectors like semiconductors, pharmaceuticals, and photovoltaics soared.

This phenomenon suggests that investors redeeming high-yield ETFs may be seeking to secure profits, whereas those redeeming lower-yield ETFs might be looking to switch into more flexible options.

In a bid to capture market share, several fund companies have proactively lowered the management fees of some of their ETFs

For example, on October 9, Huaxia Fund announced a reduction in the management fee from 0.50% to 0.15% for its ChiNext 100 ETF and its related fund, alongside a decrease in the custodial fee from 0.10% to 0.05%.

Just a day prior, Penghua Fund similarly announced a reduction in fees for both its Penghua SSE 300 ETF and its connecting fund, also slashing the management fee from 0.50% to 0.15% and the custody fee to 0.05%. Guotai Fund was ahead of the curve, having announced on September 30 a reduction in management fees for its Guotai SSE 300 Enhanced Strategy ETF from 1.00% to 0.50%.

The policy-driven rally may soon hit a plateau.

During this epic market rally, overall ETF performance has been remarkableWind statistics indicate that between September 24 and October 9, fifty-two ETFs recorded gains exceeding 50%.

Two prominent classes of ETFs emerged as leaders of this rebound.

The first category is related to financial technology

The Bosera Financial Technology ETF topped the list with an impressive 76.04% yield, closely followed by the Huabao CSI Financial Technology Theme ETF and the Huaxia CSI Financial Technology Theme ETF, which climbed by 75.34% and 74.64%, respectively.

The second category features chip-themed ETFsMultiple offerings, like the Southern SSE STAR Chip ETF and the Harvest SSE STAR Chip ETF, recorded gains exceeding 60%.

As preceding gains have been substantial, and in light of upcoming market corrections, it is crucial for investors to exercise caution and avoid chasing after high prices for ETFs.

On October 10, the three major A-share indices experienced considerable correctionsThe Shanghai Composite Index fell by 6.62%, the Shenzhen Component Index by 8.15%, and the ChiNext Index dropped by 10.59%.

"The short-term market appears to have entered a phase of high-level turbulence," noted Morgan Stanley Fund

They indicated that, depending on the upcoming fiscal conference, if weekend announcements exceed expectations, there may still be room for market peaksHowever, the policy-driven market surge is likely to conclude, with subsequent developments related to policy implementation, real estate sales, and next year's economic forecasts warranting close observationNonetheless, market activity may not quickly cool, and structural opportunities are expected to remain prominent.

Morgan Asset expressed that the cyclical rise and fall are normal, and from a trading perspective, heightened volatility is likely in the short term, with the risk of correction looming over excessive chasingRecent fluctuations serve as a reminder to investors to remain measured.

As capital flows gradually normalize and market divergence emerges, investors are encouraged to seek out and capitalize on sectors with long-term growth potential.

In the opinion of Du Meng, Vice President and Chief Investment Officer for Morgan Asset Management in China, the current standing of A-shares remains relatively low