As 2026 first-quarter fund reports are progressively disclosed, the findings are particularly disheartening for investors in the Dependable Steady Growth Mixed Assets Fund. Earlier this year, this fund gained significant attention due to a surge in performance from concentrating its bets on the AI application sector, coupled with rumors of receiving 12 billion yuan in single-day subscriptions. However, this was soon followed by regulatory penalties for collaborating with unlicensed influencers to promote the fund, the deactivation of the influencer's account, and a substantial decline in the fund's net asset value. The recently published Q1 report now fully reveals the consequences of this frenzy.
The Q1 report indicates that the combined realized loss for the Fund's Class A and Class C shares during the reporting period (January 1 to March 31) totaled -2.157 billion yuan. It is important to note that this loss occurred despite the fund holding considerable unrealized gains early in the quarter. This implies that investors who entered the fund near the market peak in January have likely suffered losses far exceeding the reported 2.157 billion yuan figure. In terms of net asset value, by the end of Q1, the NAV per share for Class A and Class C units stood at 0.9727 yuan and 0.9592 yuan, respectively. Regarding performance, while the fund shows a year-to-date increase of 6.65%, outperforming its benchmark and the CSI 300 Index, its quarterly performance reveals two consecutive quarters of negative returns: a decline of 1.76% in Q4 2025, followed by a further drop of 2.38% in Q1 2026. Over the same periods, the average return for similar funds was an increase of 0.20% and a decrease of 0.30%, respectively.
If the losses can be partly attributed to broader market conditions (beta), the subscription and redemption data disclosed in the report points to an extremely unstable investor base. According to the report on open-end fund unit movements, the combined total of Class A and Class C units was only approximately 1.027 billion units at the start of the year. However, during Q1, total subscriptions reached a staggering 22.518 billion units, while redemptions were also exceptionally high at 18.293 billion units. This indicates that over the three-month period, the fund's investor base was almost completely turned over: over 20 billion units flooded in, and nearly 20 billion units were sold off, often at a loss. This level of extreme turnover, with massive inflows and outflows, is unusual even for many exchange-traded funds (ETFs). Such frenetic activity clearly deviates from normal long-term investment behavior, resembling instead a wave of short-term speculation fueled by online hype. Another noteworthy detail from the report is that the fund manager, Dependable Fund Management Co., did not invest any of its own capital into the fund during the reporting period. This suggests that in this high-stakes gamble centered on "AI application wealth creation," the fund company acted primarily to facilitate and monetize the hype, without committing its own capital to share the risks with its investors. Consequently, all the losses were borne by retail investors who were attracted by influencers and aggressive marketing at the peak of the market.
Despite the significant decline in NAV during the quarter, the fund's managers, Lei Tao and Lu Yang, expressed a steadfastly optimistic outlook in the "Investment Strategy and Operational Analysis" section of the report. The managers stated that AI applications are increasingly becoming the most critical variable in industrial trends, citing the State Council's "Opinions on Deepening the Implementation of the 'Artificial Intelligence+' Action" to emphasize policy support. They reiterated strong confidence in the investment opportunities within the AI application sector for the full year. They pointed to factors such as declining computing costs, improving model capabilities, and the maturing of scenario-specific products. They noted a shift in market narrative from older themes like "large model dominance" and "big tech monopolization" towards new narratives such as "AI application wealth creation" and "looking to China for AI applications." They argued that the combination of frequent positive catalysts and evolving long-term logic has helped restore a balance between buyers and sellers in a market that was previously oversold. Looking at the end-of-quarter holdings, the fund remained heavily concentrated in the AI application theme. Its top ten holdings, including companies such as Supcon Technology, Transn Information, Kunlun Tech, and Sangfor Technologies, had a combined market value of 3.15 billion yuan.
In retrospect, the Q1 report for the Dependable Steady Growth Fund serves not only as a financial statement but also as a revealing case study of industry dynamics. The sequence of events—explosive growth driven by promotions from unlicensed influencers, followed by regulatory intervention, penalties, a suspension of product registrations for the company, and now the report showing massive investor losses and frantic trading—forms a complete cycle demonstrating the negative repercussions of hype-driven strategies. As previously noted, building trust can take years or even decades, but it can be shattered in an instant. For Dependable Fund, the penalty of suspended product registrations may eventually be lifted, but the challenge of regaining investor confidence remains. For the broader mutual fund industry, this episode serves as a stark warning: pursuing short-term scale through hype-driven marketing ultimately harms not only investors but also the fund companies themselves and the very foundation of the industry. Investors should also learn from this incident: exercise greater caution and less blind faith towards "hot" funds heavily promoted by influencers, which show sudden, sharp performance increases based on a single, concentrated theme. In the world of investing, high traffic often leads to crowded trades, and the end of a crowd is frequently a stampede.
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