High-Frequency Betting and Sector Rotation: "Gambler-Style" Operations, Fund "Loss King" Liquidation Countdown

Caixin March 22 News (Reporter Feng Qijuan) There are only two trading days left, and the 2025 active equity “Loss King” Xin Yuan Consumer Selection is highly likely to trigger the termination of the contractual agreement for the initiated product and enter liquidation procedures. The outcome is almost certain.

In February this year, Xin Yuan Consumer Selection announced a suspension of subscription, regular investment, and transfer-in services. Since March, it has issued two warnings of liquidation. The announcement states that as of March 24, if the scale of this initiated product remains below 200 million yuan, there is no need to convene a unitholder meeting, and the fund contract will be terminated without extension.

By the end of last year, the combined scale of Xin Yuan Consumer Selection A and C shares was 39 million yuan, still 161 million yuan short of the 200 million yuan “life-and-death line” for initiated products. Although the scale increased by over 30% in the fourth quarter of last year, the absolute increase of 10 million yuan was insufficient to change the overall situation.

Since its inception, this product has consistently hovered at a low level, never establishing a sustainable operational foundation. Meanwhile, institutional investors, who were the main holders in the early stages, are accelerating their withdrawal. The proportion of institutional holdings plummeted in the first half of 2025, losing its scale support.

In fact, this product has fallen into a “double kill” dilemma of scale and performance, with the latest unit net value dropping to 0.4559 yuan.

Beyond its inherent small scale, the ultimate reason for this consumer-themed fund’s liquidation crisis is the combined effect of extreme industry bets and frequent shifts, aggressive stock replacements, and the frequent turnover of fund managers leading to a break in the investment research system.

Looking at the entire market, according to Choice data, there were 381 initiated products (only main codes) established in 2023, with 335 of them launched after March 22. By the end of last year, 82 products had a combined scale below 200 million yuan, including those themed around consumer, new materials, and high-end manufacturing industries.

Gambler-style operations with frequent industry switching

Xin Yuan Consumer Selection was established on March 24, 2023, with an initial scale of only 10 million yuan. Over three years, its scale has shown no significant growth. Additionally, before 2025, the institutional holding ratio of Xin Yuan Consumer Selection A remained above 95%, but this ratio sharply dropped to 42.94% in mid-2025.

Fund withdrawals are directly related to performance losses. The Q4 2025 report disclosed that since inception, Xin Yuan Consumer Selection A and C shares have respectively lost 49.37% and 49.97%, underperforming the benchmark by 46.02% and 46.62%. The gaming sector experienced a significant decline in Q4 last year, yet the fund continued to increase positions in some gaming stocks, further raising the allocation and concentration in the gaming industry.

By the end of last year, the top ten holdings of Xin Yuan Consumer Selection were Tencent Holdings, Kaiying Network, Shiji Huadong, GigaMedia, Perfect World, 37 Interactive Entertainment, Wancheng Group, Jialian Technology, Gbit, and Shenzhou Taiyue. According to Choice, among these, seven are gaming stocks.

At the end of Q3 last year, gaming stocks accounted for half of the top ten holdings.

In fact, since its inception, the fund has adopted an extremely aggressive betting approach. Starting from Q2 2023, Xin Yuan Consumer Selection began heavy concentration bets. By the end of Q2, six of the top ten holdings were pharmaceutical stocks; by Q3, this increased to nine; and by Q4, eight of the top ten were still pharmaceutical stocks.

In 2024, the fund’s industry focus shifted frequently. At the end of Q1, nine of the top ten holdings were pharmaceutical stocks; in Q2, the style changed dramatically, with six auto stocks in the top ten; by the end of Q3, the industry diversification increased, and in Q4, six media stocks appeared among the top ten holdings.

Along with these significant industry adjustments, the top ten holdings of Xin Yuan Consumer Selection also experienced high-frequency, large-scale turnover.

In 2025, the top ten holdings were entirely replaced in Q2; in Q3 and Q4, seven and four stocks respectively were replaced. In 2024, each quarter saw nine stocks replaced, with Tianma Technology as the only retained stock. Similarly, in Q3 and Q4 2023, nine stocks were replaced each time, with a firm holding of Tianma Technology.

It is worth noting that ST Huato was added to the top ten holdings in Q3 last year. This product was placed under ST risk warning in November 2024 due to false disclosures and other financial violations in its annual report. The top holdings of 37 Interactive Entertainment in Q4 last year also faced public reprimand from the exchange during the reporting period.

The aggressive style of stock rebalancing is also related to the fact that the product has experienced personnel changes of three fund managers in less than three years, leading to a lack of continuity in investment strategies. Moreover, the current fund manager, Yao Qifan, is managing his first product, with only half a year of investment experience.

Continuous liquidation of initiated products: How should equity products be arranged?

For Xin Yuan Fund, the failure of its industry-themed initiated funds to pass the three-year survival test is no longer an exception.

On January 19 last year, Xin Yuan Health Industry entered liquidation. As of January 18, this initiated product had a combined scale of only 13 million yuan, failing to meet the 200 million yuan target over three years, and shrinking by more than 60% from its initial scale of 37 million yuan.

This product has maintained a high institutional holding ratio for a long time. By the end of 2024, institutional holdings still accounted for 90.13%. The Q4 2024 report showed that since inception, the fund had lost over 18%, but still outperformed the benchmark by more than 7%. Its unit net value before liquidation had fallen to 0.7756 yuan.

Xin Yuan Fund was established in August 2013, with over 12.5 years of history. During this period, its scale has steadily grown, and its ranking has continuously improved.

According to Wind data over the past ten years, Xin Yuan Fund’s total managed assets first surpassed 100 billion yuan in Q3 2022, reaching 1088.8 billion yuan, ranking 50th among 192 licensed institutions. Less than two years later, the total managed assets exceeded 2000 billion yuan, moving into the top 40 industry rankings and maintaining that position to date.

By the end of last year, Xin Yuan Fund’s total managed assets were 2,470.42 billion yuan, ranking 36th among 167 licensed public fund managers. Excluding FOFs, the scale of fixed income funds and equity funds was 238.89 billion yuan and 7.707 billion yuan respectively, accounting for 96.7% and 3.12%.

It is evident that Xin Yuan Fund still struggles with the “fixed income dominance, weak equity” bias common among bank-affiliated public funds.

According to Choice, Xin Yuan Fund currently has 101 existing products, including 57 bond funds, 25 mixed funds, 12 equity funds, 5 FOFs, and 2 money market funds.

Since the beginning of this year, Xin Yuan Fund has launched five new funds. According to Choice’s three-level classification, these include Xin Yuan Prosperity Select (equity/mixed), Xin Yuan Yuexin Tainyi Bond (secondary bond), and Xin Yuan Zhixiang 180-day Bond (primary bond); the other two are also initiated products—Xin Yuan Xinrui Quantitative Stock Selection and Xin Yuan Xin Selection Multi-Strategy Stable Allocation (FOF), both classified as mixed funds and FOFs respectively.

In 2025, Xin Yuan Fund launched 19 new products, of which only two are bond funds, with the rest being equity funds. Although the number of new equity products seems substantial, considering the existing product structure and actual scale contribution, the company’s efforts in new equity product development remain limited, and it has yet to establish an influential equity product matrix.

It is noteworthy that among these 19 new products, eight are initiated funds. Rapid deployment of products through initiated structures has become a common approach. However, if new products cannot simultaneously establish sustainable performance and scale growth, they are merely “trial-and-error” products, likely to face liquidation.