On March 27, prominent fund manager Liu Yanchun of Invesco Great Wall released his 2025 annual report, which disclosed significant losses in the funds under his management, sparking strong dissatisfaction among investors.
By the end of 2025, the assets he managed had shrunk by over 80 billion yuan compared to their peak, a decline of approximately 73%.
The poor performance of the funds has led investors to report filing complaints daily. Wind data shows that Liu manages six funds with a total asset size of 31.475 billion yuan. Unfortunately, across short, medium, and long-term horizons, all these funds underperformed the CSI 300 Index during the same periods.
Taking Invesco Great Wall Emerging Growth as an example, over the past six months, while the CSI 300 fell 3.5%, the fund dropped 11.6%. Over three years, the index gained 10.6%, whereas the fund lost nearly 34%.
This exemplifies a pattern of lagging behind in rising markets and falling further in downturns. The experience for investors might best be described as futile.
Invesco Great Wall Emerging Growth is currently his largest product, with combined A/C share classes totaling 15.932 billion yuan, making it the most prominent underperformer in his portfolio.
The annual report indicates that over the past three years, this product accumulated losses exceeding 10 billion yuan, with its net asset value declining about 30%. Specifically, losses were most severe in 2023, reaching 7.2 billion yuan, followed by 2.7 billion yuan in 2024, and nearly 400 million yuan in 2025.
Faced with these substantial losses, investor patience is wearing thin. Some investors in fund forums have questioned their strategy, with one asking, "I started investing in 2021, have been dollar-cost averaging, and am now down 40%. Should I switch to healthcare? Any advice?" Another investor, after five years of holding and continuously adding to their position, still reports a 36% paper loss, rhetorically asking if Liu's strategy is still viable. One individual even claimed to file a complaint daily, vowing to continue until Liu is replaced.
Regardless of investor losses, management fees continue to be collected. The annual report shows that Invesco Great Wall Emerging Growth charges an annual management fee of 1.2%, collecting 230 million yuan in 2025.
The issue of perceived passive fee collection is perhaps even more troubling to investors than the losses themselves. The report reveals that the fund's total stock purchases for the year were under 800 million yuan. Given its size of nearly 16 billion yuan, its one-way turnover rate for the year was only about 4%.
An industry insider remarked that such a low turnover rate is unprecedented, noting that many well-known fund managers typically have turnover rates of at least 30%. While a high turnover rate isn't necessarily better, a rate of 4% is considered extreme, especially when coupled with poor performance, suggesting not just passivity but neglect. They also pointed out that the top ten holdings remained largely unchanged throughout the year, questioning the justification for high management fees without active management, calling the fee income remarkably easy.
As of the end of 2025, the top ten holdings of Invesco Great Wall Emerging Growth were: China Tourism Group Duty Free, Kweichow Moutai, Haid Group, Mindray Bio-Medical, Shanxi Xinghuacun Fen Wine, Midea Group, WuXi AppTec, M&G Stationery, Luzhou Laojiao, and Anhui Gujing Distillery. Compared to the end of 2024, there was only one change in the top ten list: Wuliangye exited, and WuXi AppTec entered. This means Liu made changes to only one major holding throughout the entire year.
In terms of stock performance, eight of these top ten holdings declined in 2025, with only China Tourism Group Duty Free and Midea Group recording gains. The decline was particularly notable for two healthcare stocks: Mindray Bio-Medical fell nearly 22%, and WuXi AppTec dropped almost 20%. The consumer sector also faced pressure: Anhui Gujing Distillery fell over 17%, Haid Group dropped more than 13%, Luzhou Laojiao and Shanxi Xinghuacun Fen Wine declined over 11% each, and Kweichow Moutai saw a slight 3% decrease.
Liu Yanchun's investment outlook remains largely unchanged from the previous year, still anticipating policy support and waiting for an economic recovery. In his 2025 report, he projected that nominal GDP growth in 2026 would be better than in 2025, with corporate profits bottoming out and recovering. He expects the inflation trend to rise due to inventory clearance and the advancement of policies against internal competition.
He believes exports will remain the fundamental driver of growth, with factors supporting strong export growth in 2025 likely to persist in 2026. Fiscal easing in Europe and the US, along with Federal Reserve easing, are also seen as favorable for an upturn in the global manufacturing cycle.
Regarding real estate, unlike his 2024 statement about a high probability of stabilization, he acknowledged a rapid decline in property sales and investment in 2025. Secondary housing prices have fallen back to mid-2016 levels, sales area is down 50% from 2020, and new construction starts have dropped 70%. However, he posits that house-price-to-income ratios and rental yields are approaching a medium-term equilibrium, suggesting sales volume and prices may gradually stabilize in 2026, with the sector's drag on the economy significantly less than in 2025.
On consumption, citing the government's aim to "increase the consumption rate," he expects consumption growth in 2026 to be better than in 2025, provided housing prices stabilize.
Regarding policy, he emphasized that 2026 marks the start of the 15th Five-Year Plan period, with major projects being implemented early. He expects major economic provinces to lead a halt to the decline and a rebound in investment, with policy focus placed on stimulating domestic demand.
In conclusion, Liu Yanchun's investment rationale is coherent, focusing on industry leaders with solid fundamentals, stable cash flows, and good dividends. This strategy worked well during the 2019-2020 consumer bull market, where high concentration and high equity allocation led to significant market outperformance.
However, market dynamics have shifted. Since 2021, market themes have rotated rapidly through sectors like new energy, AI computing power, and high-dividend state-owned enterprises, trends which Liu's consistent holdings largely missed.
Even within the consumer sector, trends have changed. Many fund managers are now allocating to growth-oriented new consumer brands like Maogeping and Mixue Group, reducing exposure to traditional staples like baijiu and home appliances. Few managers still heavily concentrate on traditional consumer leaders.
For investors, the key consideration is whether to continue believing in his steadfast approach, waiting for the consumer style to return, or to adapt to the evolving market trends and consider adjusting their allocations.
Comments