100 billion yuan.

In the history of China's A-share market, this represents a formidable threshold.

In 2021, several of China's most influential fund managers attempted to manage assets at this scale, but they "returned in defeat." Over the following four years, aside from passive index replication, active equity investment fund managers have refrained from challenging this benchmark.

In 2025, another "national-level" investment team has begun attempting to allocate over 100 billion yuan in capital. This is the Honghu Fund - an insurance asset private equity fund jointly established by China Life Insurance and New China Life Insurance.

As a private equity institution founded by two of the industry's largest insurance companies with relatively strong expertise in equity investment, this company started with over 100 billion yuan in capital deployment.

In just over a year, the fundraising scale of Honghu Phase I, II, and III products has directly exceeded 100 billion yuan, with the first phase product already generating profits of 5.684 billion yuan.

This exemplifies grand ambitions, what it means to spread one's wings like a great bird, and how a single move can affect the entire situation!

From current observations, Honghu Fund appears to be taking an "unprecedented path," and how this journey unfolds and what rhythm it establishes is of great interest.

**Honghu Phases I, II, and III Enter the Market Sequentially**

Due to the unique requirements of insurance capital for long-term equity pilot investments, this pilot round jointly initiated by China Life and New China Life actually operates under a dual-layer management structure.

The management company is called "Guofeng Xinghua," with the full name being "Guofeng Xinghua (Beijing) Private Fund Management Co., Ltd."

The established private equity products are called "Honghu." Among them, Honghu Phase I's full name is "Honghu Zhiyuan (Shanghai) Private Investment Fund Co., Ltd.," Phase II is "Guofeng Xinghua Honghu Zhiyuan Phase II Private Securities Investment Fund," and Phase III is "Guofeng Xinghua Honghu Zhiyuan Phase III Private Securities Investment Fund (No. 1 & 2)."

Phase I completed registration in March last year, Phase II in the first half of this year, and Phase III in the second half of this year, with the total invested capital of Phase III expected to exceed 100 billion yuan.

**Highly Concentrated Holdings**

Although Honghu's three-phase series products each represent hundreds of billions in scale, almost equivalent to the largest public funds in the industry, the probability of Honghu series funds "showing up" in semi-annual reports is extremely low.

These three-phase products currently hold very few and highly concentrated companies.

Honghu Phase I: Yili Group, Shaanxi Coal Industry, China Telecom.

Honghu Phase II: China Shenhua, PetroChina.

Additionally, the minimum shareholding value among the five stocks is just over 1.8 billion yuan, while the maximum reaches nearly 6 billion yuan.

There are no micro-holdings whatsoever.

This most likely indicates that the fund's management has adopted a highly concentrated holding strategy.

**Not Index Investment**

The above holdings not only demonstrate that Honghu Fund has adopted a "highly concentrated" investment approach but also indicate that the fund is not executing any indexing investment policy.

First, the fund's current allocation of 5 stocks and their holding market values clearly do not correspond to any index constituents.

Second, any fund deploying over 100 billion yuan in index investment would actually hold far more than 5 stocks.

For example, the E Fund ChiNext ETF, with a similar scale approaching 100 billion yuan, "appeared" in listed company reports 72 times.

The China AMC CSI 300 ETF, with a scale exceeding 190 billion yuan, "appeared" 74 times during the same period.

Both significantly exceed the total "appearances" of Honghu series funds - 5 times.

**What Are the Stock Selection Criteria?**

Honghu Phase I's holdings first drew attention.

At first glance, these three companies belong to consumer goods, energy, and telecommunications sectors, seemingly without obvious logic. However, when viewed from this insurance asset private equity's investment perspective, they actually share several distinct characteristics:

First, abundant free cash flow - whether it's the dairy industry leader, coal resource giant, or state-owned telecommunications operator, they are essentially cash cows in their respective industries, with light reinvestment pressure and extremely strong profitability and dividend sustainability.

Second, stable industry leadership positions - all three companies are leaders in their respective industries, possessing market share advantages and pricing power, with strong counter-cyclical capabilities.

Third, clear dividend returns - Shaanxi Coal Industry is renowned for high dividends, while Yili and China Telecom continue to enhance shareholder returns, perfectly matching insurance capital's preference for "visible dividends."

Fourth, policy safety cushion - consumer goods, energy, and telecommunications are all strategically important industries with clear policy guidance and controllable risk boundaries, suitable for large insurance capital pursuing stability.

**Heavy Holdings That "Count Money Daily"**

Wall Street Insights noted that in Honghu Fund's view, heavily held stocks are companies that can "count money daily."

Let's break this down specifically:

Yili Group recovered over 60 billion yuan in cash in the first half of the year, typically generating hundreds of billions quarterly, and can even surge above 100 billion during peak seasons, making the dairy business a continuous "cash harvesting machine."

Shaanxi Coal Industry is like a "cash waterfall," absorbing 86.3 billion yuan in the first half of 2025. During favorable coal price cycles, it can easily cross the 100 billion threshold quarterly, directly converting resource dividends into real money.

China Telecom is also a "billing-style" stability machine, with operating cash flow reaching over 240 billion yuan in the first half, regularly rolling in hundreds of billions quarterly with remarkable stability.

According to iFinD data, the dividend yields of Yili Group, Shaanxi Coal Industry, and China Telecom are 4.37%, 6.76%, and 3.54% respectively.

**Underlying Investment Logic**

From Honghu's stock selection and financial indicator analysis, this institution's underlying logic might be: seeking enterprises with stable operating cash flows, sustainable capital recovery capabilities, and long-term dividend capacity.

In one sentence: "Cash flow is king."

This aligns perfectly with Honghu Fund's establishment mechanism. According to corresponding accounting standards, Honghu Fund may continuously harvest dividend distributions through active investment in high-dividend individual stocks while realizing capital appreciation from disposing of some heavy holdings, continuously enhancing the company's total assets.

Meanwhile, it won't "backlash" or excessively "inflate" the short-term profits of the two insurance companies due to holding market value fluctuations.

Additionally, the emergence of Honghu Phase II reveals another possibility: the management treats Honghu Phases I and II as a unified asset portfolio. Therefore, currently disclosed holdings of Honghu Phase II do not overlap with Phase I.

We can also observe that although Honghu Phase II has a relatively short establishment period (officially established on May 27, 2025), it has completed primary position building in a short time. The disclosed holding stocks continue a similar path to Phase I but with different holdings. This likely indicates that the trading team maintains a "buy list," with Honghu Phases I and II each selecting position-building targets from this list according to specific strategies.

**China Life Asset Management Team's "Previous Achievements"**

Honghu Fund's trading team comes from China Life's asset management team. We notice that Honghu's earliest heavy holdings - Yili Group and China Telecom - already had "China Life Insurance Company Limited – Traditional – General Insurance Products – 005L – CT001 Shanghai" in their shareholder lists.

The "Traditional – General Insurance Products" here likely represents an insurance company's most fundamental and largest active equity investment "pool."

In other words, this represents China Life's most typical equity investment "model portfolio," providing a comprehensive view of this insurance capital equity investment team's "style" and "DNA."

From disclosed holding situations, as of the end of June 2025, this insurance product's top 30 A-share holdings had market values ranging from approximately 600 million to 17 billion yuan.

The largest holding was China Unicom, with market value exceeding 17 billion yuan, followed by China Telecom, Yili Group, CITIC Bank, Daqin Railway, China Shenhua, Shuanghui Development, China Mobile, China State Construction, China Merchants Expressway, etc., all with market values in the billions.

The overall characteristics are clear:

First, concentrated industry distribution: finance, energy, telecommunications, transportation, and consumer leaders are key allocation sectors for long-term capital.

Second, prominent leadership attributes: almost all are leading state-owned companies in their industries, possessing market share and policy safety cushions.

Third, substantial cash flows: these companies share the common feature of massive operating cash flow scales and high dividend ratios.

**Increasingly Clear "Approach"**

Further analysis reveals that China Life's insurance account's attitude toward financial stocks is somewhat "intriguing."

While China Life's historical holdings indeed include individual bank stocks like CITIC Bank, Bank of Suzhou, and Bank of China, the holding scales are far smaller than telecommunications, energy, and transportation sectors.

When compared with Honghu Fund's heavy holdings, the logic corresponds very clearly. Yili Group represents consumer staples leadership; China Telecom is a billing-style cash machine; Shaanxi Coal Industry aligns with the allocation philosophy for energy companies in insurance accounts.

From this perspective, although Honghu Fund's scale is still in early growth stages and insufficient to "manifest" in as many companies as massive insurance capital pools, it is already making choices using similar strategies:

Seeking large state-owned enterprises with stable cash flows and clear dividends, using "real money flow" to capture asset appreciation opportunities.

If China Life's insurance account is a vast forest, then Honghu Fund is a small sapling within it - though small in branches and leaves, it grows in the same direction as the forest.