Quant Hedge Funds Tumbled Over 20% in July, with Lingfeng Down 22.15% as Institutions Pivot to AI 'Second Half'

According to China Daily Economic News, China's quantitative hedge fund industry faced systemic drawdowns in July, with multiple funds reporting monthly net losses exceeding 20% and annual returns swinging from positive to negative.

Lingfeng Quant's nine disclosed products saw eight turn negative year-to-date, all declining over 20% in July with the largest drawdown at 22.15%. Mingtan Investment's 14 products included nine with negative annual returns. Institutions attributed the correction primarily to market sentiment and trading structure shifts rather than a stalling of AI advancement. Fund managers noted AI is transitioning from an infrastructure-focused "first half" toward an application-driven "second half," where declining smart solution costs unlock broader opportunities.