New Fund Managers Post Heavy Losses in 2026 AI Rally, Some Drawdowns Exceed 30%
In the 2026 AI-driven technology rally, many newly appointed active equity fund managers have suffered significant losses, with some drawdowns exceeding 30%. As of August 15, at least 200 managers with under one year of tenure were active. Cases in Shanghai, Beijing, and Shenzhen show losses of 15% to over 30%, while some earlier gains evaporated. Second-quarter data shows AI hardware allocations reached record highs, prompting calls for tighter risk controls.
During the 2026 AI technology rally, a number of newly appointed fund managers have incurred notable losses. As of August 15, at least 200 active equity fund managers had been in their roles for less than one year. Because their portfolios are heavily aligned with the AI technology theme, several newcomers have suffered substantial losses, while earlier gains accumulated by managers who entered the market sooner have also eroded considerably.
Specific cases illustrate the trend. At a Shanghai-based public fund, a new manager took over a fund on June 11, having recently transitioned from a research role. By the end of July, the fund's cumulative loss had exceeded 30%, before rebounding somewhat to a decline of more than 15% as of August 15. The fund's major holdings include AI technology assets such as Zhongji Innolight, Eoptolink Technology, and Tianfu Communication. At a Beijing-based fund, another newly appointed manager began managing a thematic fund on June 5; by August 15, the fund was down more than 20%, with major holdings also concentrated in AI technology. At a Shenzhen-based fund, a manager appointed in late December 2025 took over a fund in February and holds chip stocks such as Fudan Microelectronics; the fund is currently down more than 30%.
Elsewhere in Shenzhen, a fund managed by a newcomer had posted a gain of more than 100% at the end of June, but after the July correction, its return had fallen to just above 30% by August 15. A colleague at the same firm saw a similar reversal, with paper gains accumulated in the first half being cut by roughly 60%. These drawdowns have prompted fund managers to reflect on their strategies.
Regarding portfolio positioning, second-quarter data for actively managed equity funds show that allocations to AI hardware (such as optical modules, PCBs, and semiconductors) rose to 54%, with an overweight ratio of 30.4%. Both figures were at historical highs for mainstream sectors, with the allocation second only to the financial and real estate sectors in the second quarter of 2009, and the overweight ratio the highest ever recorded for a mainstream sector. One involved manager said that going forward, position management and crowding monitoring would be incorporated into routine investment frameworks, with strict caps on single-sector exposure and a moderate increase in allocations to low-correlation assets.