The insurance company bought an additional 1 trillion yuan worth of stocks last year, almost all invested in the same type of fund.

Author | Zhi You Yang Ji

On March 25, China Life’s 2025 annual report showed that total premium income for the first time surpassed 700 billion yuan, net profit was 154.78 billion yuan, and total investment return rate was 6.09%.

Among them, China Life’s invested assets have already reached 7.4 trillion yuan. Of this, the publicly traded equity investments have broken through 1.2 trillion yuan; in one year, they increased by about 450 billion yuan. The equity allocation ratio jumped directly from 12.18% to 16.89%—with the stock market seeing frantic “buy-buy-buy.”

“Allocation anxiety” of China’s 3.8 trillion yuan insurance funds

And it’s not just one insurer adding to shares. The 2025 annual reports of five major listed insurers show that their total invested assets amount to 20.7 trillion yuan in aggregate. Direct stock investments surged from 1.43 trillion yuan to 2.5 trillion yuan, an increase of 75.2%, while the share in the portfolio rose from 7.8% to 12.2%.

China Ping An’s allocation to stocks plus equity funds reached 1.24 trillion yuan, accounting for 19.2% (up 9.3 percentage points year-on-year). For New China Life, the equity allocation is even higher at 21.2%.

By the end of 2025, the balance of insurance funds applied across the whole industry had reached 38.48 trillion yuan. Of that, stock holdings at life insurers were 3.51 trillion yuan—an increase of 1.2 trillion yuan in one year. The proportion rose to 10.12%.

Why is it happening now? Because there aren’t many options left.

The 10-year government bond yield is around 1.7%. The traditional “bonds + non-standard assets” model can no longer cover the liability cost above 3%. Non-standard assets are accelerating toward maturity, and new supply is shrinking. Credit spreads have been compressed to historical lows, and pure bond strategies can hardly contribute incremental returns.

These 38 trillion yuan of capital must find a new exit, and the equity market is the only option that can still offer sufficient depth and liquidity. According to Minmetals Securities’ calculations, the scale of incremental equity investments by insurance funds in 2026–2027 will be 1.15 trillion yuan and 1.45 trillion yuan, respectively.

In 2025, net inflows of insurance funds into A-shares exceeded one trillion yuan, setting a historical record.

So what exactly are insurance funds buying?

Thousand-billion-level capital won’t be evenly scattered across the whole market. Judging from disclosed annual reports, ETF holder structures, and channel data, the buying path of insurance funds shows highly consistent characteristics—nearly all incremental flows point to the same direction: low volatility, high dividends, and passive management.

The most obvious is the broad expansion of dividend/“bonus” and high-dividend strategies.

As of January 2026, the total size of dividend-themed funds surpassed 310 billion yuan, nearly doubling compared with the end of 2024.

The logic behind insurance funds’ preference for dividends isn’t complicated: high dividend yields can partially hedge liability costs, and the low-volatility characteristics also fit regulatory constraints on equity risk factors under solvency requirements. In the holdings of China Life and China Ping An, weights in high-dividend sectors such as banks, utilities, and energy have risen significantly.

Meanwhile, broad-market ETFs and bond ETFs take on the other wing of the “passivization” allocation by insurance funds. According to disclosures from the Shanghai Stock Exchange, the scale of ETFs held by medium- and long-term funds in the Shanghai market reached 1.5 trillion yuan, up more than 70% year over year. Within that, insurance funds’ holdings grew by 35%.

CSI 300 ETF, CS A500 ETF, and others have become core vehicles. Bond ETFs serve as new tools for liquidity and duration management.

Another more隐蔽 clue comes from FOFs and wealth-management advisor portfolios. Behind the abnormal data of FOF scale growing 388% year over year, some of the incremental amount may come from insurance funds diversifying concentration risk of any single product via a “group-buying funds” approach. But when you break down the underlying holdings, most ultimately still flow into the same target pools—dividend, low-volatility, broad-market.

No matter which channel the money takes, the endpoint is surprisingly similar. This kind of consistency is, in itself, risk.

When everyone rushes through the same door

Regulators and the media usually use “long-term capital with long-term investment” to define insurers’ move into the market. But if you examine the structure of this round of reallocation carefully, the conclusion may not be that optimistic: the equity increment of 38 trillion yuan of insurance capital is flowing into highly concentrated low-volatility and high-dividend strategy tracks in a highly homogeneous way.

And the crowding on this track may already exceed most people’s imagination.

Crowding first shows up in the homogeneity of the buyers.

Insurance funds, bank wealth-management products, social security, pension funds—these are the largest categories of institutional capital in China. They are almost buying the same type of assets at nearly the same time, following the same logic. They share similar liability structures (rigid costs plus low risk appetite), similar regulatory constraints (solvency/capital drawdown of NAV), and similar evaluation cycles (mostly annual). Therefore, they arrive at similar “best solutions”: dividends, low volatility, high dividend yield.

If a strategy is used by even the competition, it stops being just a strategy and becomes a consensus. And where there is consensus, the opposite side is where stampedes easily occur.

Crowding also shows up in the self-undermining nature of the strategies.

The effectiveness of dividend strategies rests on one premise: the price of the underlying is undervalued, so the dividend yield is high enough.

But when 310 billion yuan of dividend funds overlap with trillion-level insurance funds holding positions directly and buying together, the very act of buying is already pushing up the underlying price and compressing the dividend yield.

The valuation percentile ranks of traditional high-dividend sectors such as banks, coal, and utilities have risen from the historical lows at the start of 2024 to 50% or even higher. Meanwhile, the discount/premium fluctuations of some dividend ETFs have also widened compared with 2024.

The more successful a strategy is, the closer it gets to failure—scale is the enemy of alpha.

Crowding will ultimately be exposed in stress tests.

The label of “long-term capital” for insurance funds masks a reality: the investment return rate directly affects solvency adequacy, management KPIs, and the company’s market valuation. In practice, the evaluation period is often annual or even quarterly.

When the equity allocation jumps from 12% to 17% and even above 20%, the balance sheet’s sensitivity to market volatility is no longer what it used to be. A market pullback on the order of 10% could push solvency metrics close to the regulatory red line and trigger passive de-risking.

And if everyone is forced to sell the same batch of stocks at the same time, “long-term capital” stops being a stabilizer and becomes an accelerator.

The sudden reversal of the global “low-volatility anomaly” in 2016 and the A-share “white horse” stock stampede in 2018 are different versions of the same script.

The reallocation wave of 38 trillion yuan of insurance capital is still underway. What it brings is not only the expansion of public-fund scale and the prosperity of the ETF track, but also a quietly accumulating form of structural fragility.