China Funds’ 115% Winner Caps a Year of Extreme Divergence
China’s active equity mutual funds closed the first three quarters of 2026 with a striking split: the best performer gained more than 115 percent, while nearly half of all funds lost money, according to figures reported by The Paper, citing Wind data. Across 5,081 tracked funds, the average return was just 2.31 percent, and the gap between the top and bottom performers exceeded 165 percentage points — a measure of how sharply this year’s market rewarded a narrow set of bets.
A Market of Two Halves
Of the 5,081 active equity funds counted — covering ordinary equity, partial-equity hybrid, flexible-allocation and balanced hybrid funds, plus their QDII equivalents — 2,499 funds, or 49.18 percent, posted positive returns. Roughly 40 percent finished the period in the red; 779 funds fell more than 20 percent, and 13 dropped more than 40 percent, per Securities Times.
At the very top sat two funds that doubled investors’ money in nine months, and both are managed by the same person: Yang Zongchang of E Fund. E Fund Supply Reform gained 115.67 percent to take first place, while E Fund Industry Opportunity A rose 111.62 percent to finish second. The two were the only “doubling funds” left standing by the end of the quarter. Third place went to Hui’an Trend Power A, managed by Chen Siyu, at 96.66 percent.
Behind them clustered a group of funds that all gained more than 80 percent — Nuoan Innovation-Driven A, Orient AI Theme A, SWSC Smart Drive A, and Guotai Semiconductor Manufacturing Select A among them. Their holdings told the story: technology, semiconductors and artificial intelligence dominated the leaders, a sign that 2026 was a structural market rather than a broad rally.
The Star Manager and the July Reversal
The ascent was anything but smooth. In the euphoric first half, more than 200 public funds had doubled by the end of June, according to China Fund News, with the count peaking around 244. Then July delivered a sharp technology selloff, and that number collapsed to just two by early August. Yang’s funds weathered the storm, slipping only 8.04 percent and 6.76 percent that month — preserving gains above 110 percent and earning him a reputation for having “escaped the top.”
That resilience was not luck, argued BK Economy in a profile of the manager. A chemistry PhD from Peking University and the University of Hong Kong, Yang joined E Fund in 2014 as a chemicals-industry researcher and built a philosophy of “bottom-up plus cycle factors, seeking opportunities that can traverse cycles.” After the valuations of his tech holdings ballooned, he trimmed positions at the end of the second quarter and turned toward traditional quality companies sidelined by short-term style headwinds. His flagship’s stock position fell from 92.08 percent to 80.70 percent; the newer Industry Opportunity fund cut exposure more aggressively, from 91.46 percent to 73.21 percent.
In his second-quarter report, Yang flagged the risk directly. As the market rapidly raised its expectations for AI, he wrote, the firm also “paid more attention to the pace of large-model commercialization and the risk of volatility in AI capital expenditures.” Looking ahead, he struck an optimistic long-term note, saying China’s wide range of industries still offered “quite a few stocks with attractive valuations.”
The Cautionary Tale at the Bottom
The mirror image of the winners was the market’s worst performer: Peng Hua Manufacturing Upgrade A, managed by Yan Siqian, which fell 49.73 percent. According to Securities Times, the fund cycled through three large-scale overhauls in under a year — from auto parts and robotics to commercial aerospace and solar, then to AI hardware — with a rotation rhythm that fell out of step with the market. Guotai Jinxing A and Guotai Growth Preferred followed at -47.89 percent and -47.46 percent.
The losers shared a common trait, the review found: heavy concentration in theme sectors and poorly timed rotations. Three groups bore the brunt — low-carbon and green-energy funds hurt by weakening solar and energy storage, internet and Hong Kong tech funds dragged down by a deep pullback in HK internet shares, and growth funds that entered the tech trade too late. The same homogeneity that produced 115 percent gains for the leaders also amplified losses for those who mistimed the turn.
What’s Next for the Fourth Quarter
The broader market backdrop helped explain the extremes. Over the first three quarters, the Shanghai Composite fell 3.19 percent to 3,842.19, the Shenzhen Component dropped 4.71 percent, and the ChiNext index slipped 2.12 percent. Only the STAR 50 finished higher, up 13.82 percent. In the third quarter, ChiNext and STAR 50 posted their largest single-quarter declines on record, as semiconductors gave back gains and pharmaceuticals, dividend and cyclical sectors rotated into favor.
Looking ahead, major fund houses expect the fourth quarter to bring consolidation rather than a repeat of the extremes. China Europe Fund described the period as “consolidation with structural divergence under earnings validation,” with style shifting from extreme divergence toward balance and further gains requiring both earnings and policy confirmation. Ping An Fund maintained that AI and technology remain the biggest certainty but warned of style rotation, while HSBC Jintrust said third-quarter reports will be a key window to validate earnings quality, with attention turning to order fulfillment, margins and cash flow.
For investors, the nine-month scorecard carried a clear message. In a market where stock and sector selection mattered far more than broad direction, the difference between a 115 percent gain and a 50 percent loss often came down to discipline — and timing.