Where to start
A fund manager at a major Chinese asset management firm, known for focusing on growth sectors, is facing significant losses. A new fund he manages has seen its net asset value drop to 0.66 yuan just 46 days after its launch, resulting in a cumulative loss of nearly 34%. His flagship fund also experienced a sharp decline in July, with a monthly drop exceeding 30%. This manager gained popularity for his heavy allocation to technology and growth stocks, but the same investment style is now the cause of the downturn. This situation goes beyond one manager's performance, reflecting broader shifts in the firm's equity investment strategy.
The manager's background and portfolio
The manager, who holds a bachelor's degree in mechanical engineering from Tongji University and a master's degree from Shanghai Jiao Tong University, began his career as a mechanical engineer at Shanghai Mitsubishi Elevator. He joined the current fund company in 2019 and has been managing public funds since March 2022. His investment focus is on the manufacturing and technology sectors. He currently manages five funds, with his flagship product achieving a cumulative return of 72.74% since its inception in December 2023. This fund, which manages approximately 282 million yuan, had a maximum six-month return of 55.10% and a cumulative net asset value growth of 135.34% from its inception. However, its heavy concentration in AI hardware and semiconductor stocks led to substantial losses during a sector-wide correction in July. The fund's top ten holdings are concentrated in these technology areas, with stocks like Jiaocheng Ultrasonic, Springs New Materials, Sanfu New Materials, Precision Testing, Jebon Technology, Changchuan Technology, Jingyi Equipment, and Hangzhou Kelin making up over 60% of the fund's net asset value. This extreme concentration, focused on small-cap tech stocks, leaves little buffer during a sector downturn, explaining the magnitude of the recent losses.
Why just 10 ASX 200 shares?
The manager's new fund, established on June 16, saw its net asset value plummet to 0.6603 yuan within 46 days, representing a near 34% loss. This fund significantly underperformed the CSI 300 index, which fell about 6% over the same period. The fund was launched with a capital of approximately 44 million yuan and is designated as a "New Quality Productive Forces" strategy, focusing on AI hardware, storage, semiconductor equipment, humanoid robots, AI applications, and commercial aerospace. Since the fund is still in its closed period, investors cannot redeem their shares. The fund also faces a potential liquidation risk, as it needs to grow its asset size significantly to survive. The net asset value decline has already reduced the fund's total assets from 44 million yuan to an estimated 21 million yuan.
Broader implications for the fund company
The fund company's total assets surpassed the 2 trillion yuan milestone at the end of 2025. However, while its overall scale grows, its two core equity businesses are showing divergent trends. The company's active equity fund management, once a key growth driver, has seen its scale decline. The mixed-asset fund scale, a significant part of this business, has fallen from a peak of 288.92 billion yuan at the end of 2021 to around 170 billion yuan by the end of the second quarter of 2026, a reduction of over 120 billion yuan. Simultaneously, the company's ETF business, another key focus, has also experienced a period of decline. Its total ETF scale fell from a historical peak of 269.6 billion yuan in September 2025 to approximately 215 billion yuan at the end of June 2026, a decrease of over 55 billion yuan. While the total asset size remains substantial, the contraction in these core equity businesses is a notable development.
Comments