A leading quantitative private equity firm, Hangzhou Longcheer Technology Co., Ltd. (referred to as Longcheer), recently announced that starting July 3rd, it will suspend new subscriptions and additional capital applications for its quantitative market-timing strategy products. This move is a proactive step to control the strategy's scale and focus on the refined operation of existing capital. Previously arranged fundraising plans with specific cooperation channels will continue as originally scheduled.
In recent years, proactive "fund closures" have become an important choice for many private fund managers to balance scale and returns. According to industry observers, this measure helps control scale, stabilize performance, protect investor interests, and also reserves space for strategy iteration, reflecting an institution's professional commitment to strict risk control and stable operation.
Halting Subscriptions to Balance Scale and Returns
In its announcement, Longcheer stated that this proactive closure is to protect the long-term interests of existing holders of its quantitative market-timing strategy products and the effectiveness of the strategy itself. It represents the company's long-term oriented choice between "scale" and "returns." During the suspension period, redemptions of existing holdings by investors will not be affected, and products under other strategy lines will remain open normally.
Public information shows that Longcheer was founded in 2011 and completed its registration as a private fund manager with the Asset Management Association of China in April 2014, making it one of the earliest quantitative hedge fund companies in China. As of June 30, 2026, the company's assets under management have risen to the range of 60 to 70 billion yuan.
Proactive fund closures by private fund managers are not unprecedented in the industry. For example, the billion-yuan scale private fund company Hainan Evolutionary Theory Private Fund Management Co., Ltd. announced in May this year that to effectively safeguard investor interests and ensure the continuity and stability of strategy operations, it would suspend new client subscriptions for some products starting May 9th, with existing clients' additional investments, redemptions, and other business unaffected.
Li Chunyu, a fund of funds manager at Rongzhi Investment, stated that proactive fund closures are an important indicator of the private fund industry's maturity and institutions prioritizing holder interests. "When a product's size approaches or reaches the capacity limit of its strategy, continued fundraising would increase transaction impact costs, potentially force the fund manager to buy non-core holdings with lower expected returns, and dilute alpha returns. Proactively 'closing' the fund controls scale, protects performance, and is responsible to existing clients. Simultaneously, temporarily refusing new capital reserves space for strategy iteration, allowing the investment research team time to refine models, adjust parameters, or switch strategy frameworks, avoiding passively managing excessively large funds before a strategy is mature. Furthermore, proactively saying 'no' during market exuberance or rapid product expansion shows that private fund institutions are not blindly pursuing management fee scale but instead focus on long-term stable operation and preemptive risk management, reflecting professional risk control awareness and a prudent business philosophy."
In fact, this is not the first time Longcheer has closed its quantitative market-timing strategy products. In April 2025, the company announced that to ensure a good long-term investment experience for existing investors in its quantitative market-timing products, it would suspend subscriptions and additional investments for these products starting May 1, 2025, to focus on managing existing capital and consider reopening subscriptions at an appropriate time.
Why was the "closure" applied only to quantitative market-timing strategy products? A representative from Longcheer explained that the company regularly conducts dynamic assessments of individual strategy categories. This closure specifically targets the quantitative market-timing strategy, while the scale of its stock selection strategy is far from reaching capacity limits. This action stems from Longcheer's commitment to long-termism and its core principle of safeguarding investors' long-term interests in the most responsible manner. After the closure, the strategy will continue normal iteration and optimization. The company will consider reopening subscriptions based on strategy capacity and market conditions in the future, with specific details to be announced officially.
Market Volatility and Divergent Product Performance
This year, the performance of quantitative market-timing strategies has diverged significantly. Some products have achieved considerable absolute returns with positive alpha, while others have posted positive returns but negative alpha, and some have faced pressure on both fronts. Compared to last year, product performance has been more volatile. In Li Chunyu's view, this is closely related to the market environment. On one hand, the market has shifted from a trending to a volatile pattern. Quantitative market-timing strategies excel at capturing trend movements, but this year the A-share market has featured increased volatility and divergent sector performance, causing traditional price-volume signals to become less reliable and reducing the success rate of trend judgments. On the other hand, structural market divergence has compressed the space for alpha returns. Capital has been highly concentrated in a few hot sectors, making it more difficult to generate alpha from stock selection, while market-timing signals are also easily disrupted by extreme individual stock movements.
Jiao Bing, a researcher at GES Fund, noted that the essence of a quantitative market-timing strategy model is to infer future market trends based on historical data patterns such as price action, trading structure, and volatility characteristics. However, a crucial premise for this inference to hold is that future market structures remain sufficiently similar to the past. If rare situations occur, such as abrupt policy changes or sharp shifts in market style, the model can easily "fail."
"Overall, as the quantitative industry has rapidly expanded in scale, issues like increased strategy crowding and product homogenization have become prominent, gradually diluting the industry's overall alpha returns. Some industry analysis suggests that the current challenges facing the quantitative industry are concentrated in areas like rapid factor decay, alpha convergence, and diminishing returns from traditional factors. When a large number of similar strategies make similar buy/sell decisions based on the same market signals, originally effective trading opportunities are quickly arbitraged away," Jiao Bing said.
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