Amid violent swings in the technology sector and A-share benchmarks posting their largest weekly losses of the year, multiple quantitative private funds have seen their net asset values suffer significant drawdowns. Facing spreading market panic, a group of private fund firms is opting to stabilize investor confidence with real-money self-investment. According to an incomplete tally by China Business News, five private fund firms have announced plans to invest their own capital into their products this month alone, totaling over 200 million yuan (approximately $29.5 million), including top-tier quantitative institutions managing tens of billions of yuan.
On July 19, well-known multi-billion-yuan quantitative private fund Quadratic Investment announced that, based on confidence in the long-term development of China’s capital markets, the firm will use 100 million yuan (approximately $14.8 million) of its own capital to subscribe to its private securities fund products next week. This marks the largest single self-investment this month. Quadratic Investment has rapidly expanded its assets under management (AUM) this year, reaching 40 billion to 50 billion yuan (approximately $5.9 billion to $7.4 billion) by the end of the second quarter, up from 15 billion to 20 billion yuan at the end of the fourth quarter last year.
Just two days before Quadratic Investment’s announcement, on July 17, Xuanxin Asset and Yanhe Investment also unveiled self-investment plans. Xuanxin Asset used 10 million yuan (approximately $1.5 million) of its own capital to subscribe to its managed products that day. Yanhe Investment plans to invest 30 million yuan (approximately $4.4 million) of its own capital into its products within 10 working days starting July 17, with at least 20 million yuan allocated to quantitative stock selection and index-enhanced products. According to data from Simuwang, both firms are quantitative private funds with AUM between 5 billion and 10 billion yuan.
The most frequent self-investor this month has been subjective private fund Shanghai Xiwa. The firm announced on July 15 and again on July 17 that it would use its own capital to subscribe to products managed by fund manager Liang Hong, with subscription amounts of 22 million yuan (approximately $3.2 million) and 20 million yuan (approximately $3.0 million) respectively, totaling 42 million yuan (approximately $6.2 million). Additionally, on July 16, Zhishanzhishan Investment announced that the firm and its team had completed over 30 million yuan (approximately $4.4 million) in self-investments during July. Zhishanzhishan is also a subjective private fund, with current AUM between 1 billion and 2 billion yuan.
This wave of concentrated self-investment comes against the backdrop of a sudden shift in global technology stocks from “surging” to “plunging” since July. On July 17, China’s four major stock indices tumbled collectively, with the Shanghai Composite Index falling below 3,800 points and over 4,000 stocks declining across the board. Wind data shows that during the week of July 13 to July 17, the Shanghai Composite Index, Shenzhen Component Index, ChiNext Index, and STAR Composite Index fell 5.81%, 8.90%, 10.78%, and 17.46% respectively, all posting their largest weekly declines of the year.
Overseas markets were equally jittery. The Philadelphia Semiconductor Index dropped nearly 10% that week, with its monthly decline exceeding 18%. As of July 17, SanDisk (SNDK.O) had fallen over 40% in July, while Micron Technology (MU.O) and Western Digital (WDC.O) each dropped more than 25% for the month. South Korean memory chip giants Samsung Electronics (005930.KS) and SK Hynix (000660.KS) were not spared, with monthly declines of 23.65% and 30.49% respectively.
Amid this global tech stock rout, multiple quantitative private funds have faced a severe “stress test.” Over the weekend, a screenshot showing weekly NAV drawdowns exceeding 10% or even 20% at several quantitative private funds circulated widely on social media, including a claim that a product under Liang Wenfeng’s High-Flyer Quant saw its NAV fall more than 15%. An industry insider told China Business News that most private funds have not yet updated their weekly NAVs, making it impossible to verify the authenticity of the data in the image for now.
However, based on some private fund products that have already updated their NAV data, market concerns about significant drawdowns are not unfounded. Simuwang data shows that the Class A shares of Liangying Xinzhishengchanli Jinji No. 1, managed by quantitative private fund Liangying Investment—which has over 5 billion yuan in AUM—had a unit NAV of 1.55 yuan as of July 17, representing a drawdown of over 25.97% from 2.09 yuan the previous week. Notably, the product had already suffered a weekly NAV decline exceeding 13% in the first trading week of July.
Another product under Liangying Investment, Liangying Risheng Zhuanxiang No. 6, also performed poorly, with NAV drawdowns exceeding 5% for two consecutive weeks as of July 17. The most recent weekly NAV decline was 8.56%, pushing its year-to-date return into negative territory at -9.33%.
Products under several well-known multi-billion-yuan quantitative private funds also saw notable drawdowns. Simuwang data shows that Tianyan Shenzhou Jiyu, managed by the 10-billion-yuan quantitative firm Tianyan Capital, saw its NAV fall 7.95% this week, with a year-to-date return of -4.20%. Mingshi Fund, another 10-billion-yuan quantitative private fund, saw the NAV of its Mingshi Weilai No. 7 Quantitative Stock Selection product decline for three consecutive weeks, with this week’s drop reaching 9.85%.
Below are details of the five private fund firms that have announced self-investments this month:
| Firm Name | Announcement Date | Self-Investment Amount | Firm Type | AUM |
|---|---|---|---|---|
| Shanghai Xiwa | July 15 | 22 million yuan | Subjective Private Fund | – |
| Zhishanzhishan Investment | July 16 | Over 30 million yuan | Subjective Private Fund | 1-2 billion yuan |
| Xuanxin Asset | July 17 | 10 million yuan | Quantitative Private Fund | 5-10 billion yuan |
| Yanhe Investment | July 17 | 30 million yuan | Quantitative Private Fund | 5-10 billion yuan |
| Shanghai Xiwa | July 17 | 20 million yuan | Subjective Private Fund | – |
| Quadratic Investment | July 19 | 100 million yuan | Quantitative Private Fund | 40-50 billion yuan |
Note: Shanghai Xiwa announced self-investments on both July 15 and July 17, totaling 42 million yuan.
In the view of industry insiders, beyond the factors cited in these firms’ announcements—such as “confidence in the long-term healthy development of China’s capital markets” and “aligning interests with investors”—self-investment also serves as an important tool for private funds to convey confidence to investors and reduce large-scale panic-driven redemptions during periods of extreme market volatility.
It is worth noting that despite NAV pressure, the private fund industry as a whole continues to maintain high equity exposure. Simuwang data shows that as of July 10, the equity positioning index for stock-focused private funds rose to 83.70%, up 0.15 percentage points from the previous week, marking three consecutive weeks of increased positioning. This data suggests that most private fund institutions have not turned pessimistic about the market outlook and have instead chosen to add positions counter-cyclically during the correction.
From a market structure perspective, this round of sharp tech sector correction is closely tied to previously overcrowded trades and excessively high valuation expectations. Driven by the global AI investment boom, tech stocks experienced months of rapid gains, with market sentiment reaching extreme euphoria at one point. When macroeconomic expectations fluctuated and some corporate earnings fell short of forecasts, concentrated profit-taking triggered a stampede-like sell-off in stock prices. Quantitative strategies, due to their high exposure to trend-following and momentum factors, were hit particularly hard during this style rotation.
For investors, while self-investment by private fund firms can stabilize confidence in the short term, the long-term performance of products ultimately depends on the managers’ research capabilities and risk control systems. In the current environment of heightened market volatility, balancing returns and risk while optimizing strategy adaptability will be the core challenge facing quantitative private funds.