In 2025, HuaBao Fund faced a surprising outcome with its “HuaBao Professional, Specialized, and Innovative Mixed Initiation Fund” (abbreviated as “HuaBao Special Fund”) declaring liquidation, despite achieving a net value increase of over 60% this year and over 100% in the last year. This fund’s termination underscores two key points: first, its performance significantly outpaced competitors and benchmarks within its category; second, it was predominantly financed by the company itself, with minimal external investment, effectively meaning that HuaBao Fund had been self-sustaining this fund for the past three years.
In total, HuaBao Fund has liquidated seven funds this year, six of which were actively managed equity funds. As a mid-sized fund management company with an asset management scale of 360.923 billion RMB, its mixed fund management is notably under 20 billion RMB. Contrastingly, the growth of its ETFs has been robust, becoming a core engine for strategic expansion.
With a total under 15 million RMB, the HuaBao Special Fund was immediately liquidated as its three-year threshold was reached. Initiation funds, required to collect at least 10 million RMB from fund companies or high-level executives, typically have a lower threshold compared to standard funds. Launched on September 27, 2022, the HuaBao Special Fund garnered 14.5366 million RMB at inception, marking it as a 'mini fund' where HuaBao contributed 10 million RMB, nearly 70% of the total.
Targeting specialized and innovative public companies, the fund struggled in its first two years, dropping nearly half its value with a historical low of 0.5455 recorded on September 23, 2024. Despite a 11.66% loss in 2023, it performed relatively well against peers. By 2024, performance exhibited a V-shaped recovery; however, it still recorded a 7.23% decline for the year as the average return for peer products was 3.38%.
Despite a significant net value surge of over 60% year-to-date, reaching 1.1935 RMB per unit prior to liquidation, the fund never attracted investors due to its earlier poor performance leading to a total asset count of only 14.3183 million RMB, well below the 200 million RMB warning threshold.
Additionally, since inception, the fund manager, Zhong Qi, experienced minimal success managing funds in light of his previous roles at Everbright Securities, Haitong Securities, and Minsheng Securities. He joined HuaBao Fund in 2021 but managed only three funds, all of which were mini funds.
The HuaBao YuanShi Mixed Fund, which had only been active for seven months, also fell victim to liquidation after failing to maintain a minimum scale, dropping from an initial 237 million RMB to just 17 million RMB by mid-year. In total, 2025 saw the liquidation of seven funds from HuaBao Fund, driven primarily by issues surrounding asset scalability.
As competition intensifies within the public investment sector, HuaBao Fund has seen a decline in market share particularly among actively managed equity funds despite its 2020 fourth-quarter peak of over 300 billion RMB. Today, its market position remains stagnant, and with ongoing market fluctuations, many active fund managers struggle with low asset scales.
In recent years, the firm seems to have shifted its strategy away from actively managed funds toward index funds, especially ETFs, capitalizing on favorable market trends. As a result, the company's ETF assets have multiplied sixfold over the past six years, reflecting a growing focus on this segment within their strategy.
With a new chairman, Xia Xuesong, placed at the helm following former chairman Huang Kongwei's resignation, HuaBao is at a crucial juncture. Xia aims to reinforce core advantages while pushing product innovations, particularly in the ETF space. Whether this change can rejuvenate HuaBao’s stalling fund management scale over the past four years remains a pressing challenge for the firm.
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