How China’s young managers grappled with billion-yuan mandates as AI shocks hit portfolios
As Leopold Aschenbrenner’s US hedge fund saw assets wiped off by more than two-thirds in a single month, some of China’s new portfolio managers also felt the shock across the Pacific, learning bitter lessons early in their careers. The 50-day market turmoil, sparked by a global correction in artificial intelligence stocks in June, turned some of China’s rookie managers into an unwitting focal…
China's young portfolio managers faced immense challenges when global AI stocks took a sharp tumble in June, causing the value of many emerging managers' funds to plummet. These inexperienced professionals, many with just a few years of experience, were thrust into uncharted territory as they grappled with their first billion-yuan mandates.
Yuan Zeqiang, a relatively new manager at Caitong Fund Management, saw his two debut portfolios decline by 36 and 33 percent respectively within months of his appointment in June. Despite inheriting a sizable $1.08 billion portfolio, his heavy focus on tech stocks, which had recently seen their valuations plummet, proved disastrous.
Similarly, Wu Dongdong, a four-year veteran at Fullgoal Fund Management, witnessed his newly launched portfolio drop nearly 34 percent in just over a month following its June debut. Meanwhile, Hengyue Fund Management's portfolio manager, Wu Haining, lost nearly 41 percent of her fund's assets in just 55 days after she shifted her focus to AI hardware.
These young investors faced tough questions from clients as their portfolios suffered steep losses, a stark contrast to the seasoned investors who often weathered market turbulence with larger cushions. Even high-profile investors like US hedge fund manager Leopold Aschenbrenner were not immune, as his Situational Awareness LP saw a 67 percent drop, prompting him to offload $16 billion in leveraged positions to Citadel to avoid total liquidation.
This heightened volatility has led to a growing trend of young portfolio managers leaving their positions, with over 1,000 managers exiting funds this year and another 768 registered in China. The explosive growth of China's securities market, driven by the nation's tech boom in Shanghai and Shenzhen, has resulted in assets under management rising to a record 39.7 trillion yuan by the end of June.
Written by urgent.news from South China Morning Post's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
