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

Caixin News, March 22 — (Reporter Feng Qijuan) With only two trading days remaining, the 2025 active equity “Loss King” Xin Yuan Consumer Selection is highly likely to trigger the termination of the contractual agreement for the initiating product and enter liquidation, with the outcome now hardly in doubt.

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 initiating product remains below 200 million yuan, there is no need to convene a unitholder meeting, and the fund contract will be terminated without extension.

As of the end of last year, the combined scale of Xin Yuan Consumer Selection A and C units was 39 million yuan, still 161 million yuan short of the 200 million yuan “life-and-death line” for initiating products. Although the scale increased by over 30% in the fourth quarter 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 initial holders, are accelerating their withdrawal. The proportion of institutional holdings plummeted in the first half of 2025, losing all scale support.

In fact, the product has fallen into a dual crisis of scale and performance, with its latest unit net value dropping to 0.4559 yuan.

Beyond its inherent scale limitations, 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, in 2023, a total of 381 initiating products (only main codes counted) were established, of which 335 were founded 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.

High-frequency bets and industry rotation as “gambling” operations

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 units have lost 49.37% and 49.97%, respectively, 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.

As of 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.

By 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 in Q2 2023, Xin Yuan Consumer Selection began a heavy concentration betting mode. At the end of Q2 2023, six of the top ten holdings were pharmaceutical stocks; by Q3, this increased to nine, and in Q4, eight of the top ten holdings 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, seven stocks and in Q4, four stocks 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 focus on Tianma Technology.

It is worth noting that ST Huato was added to the top ten holdings in Q3 last year. This product was previously under ST risk warning in November 2024 due to false disclosures and other financial violations. The top holdings in Q4, Sanqi Interactive Entertainment, was also publicly reprimanded by the exchange during the reporting period.

The aggressive rebalancing style is also related to the fact that the product has experienced three fund manager changes 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.

With successive liquidations of initiating products, how should equity products be structured?

For Xin Yuan Fund, the failure of its industry-themed initiating funds to meet the three-year survival assessment is no longer an isolated case.

Last January 19, Xin Yuan Health Industry entered liquidation. As of January 18, this initiating product’s combined scale was only 13 million yuan, far below the 200 million yuan target for three years, and it had shrunk by over 60% from its initial scale of 37 million yuan.

This product’s institutional holding ratio has been high for a long time, remaining at 90.13% at the end of 2024. The Q4 2024 report showed that since inception, it 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.

Founded in August 2013, Xin Yuan Fund has been operating for over 12 and a half years, with its scale continuously growing and rankings steadily improving.

According to Wind data over the past decade, Xin Yuan Fund’s total managed assets first surpassed 100 billion yuan in Q3 2022, ranking 50th among 192 licensed institutions with a total of 108.88 billion yuan. Less than two years later, its total managed assets exceeded 200 billion yuan, moving into the top 40 industry rankings and maintaining that position to date.

As of the end of last year, Xin Yuan Fund’s total managed assets were 247.042 billion yuan, ranking 36th among 167 licensed public fund managers. Excluding FOFs and other products, 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 has not escaped the “fixed income strong, equity weak” 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. Among them, based on Choice’s three-level classification, Xin Yuan Prosperity Select, Xin Yuan Yuexin Tainyi Bond, and Xin Yuan Zhixiang 180-day Bond are respectively hybrid funds, secondary bond funds, and primary bond funds; the other two are also initiating products—Xin Yuan Xinrui Quantitative Stock Selection and Xin Yuan Xin Selection Multi-Asset Stable Allocation (3 months, FOF), both hybrid and FOF products.

In 2025, Xin Yuan Fund plans to launch 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 new efforts in equity are still insufficient and have not formed an influential equity product matrix.

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