Summary of Key Points
Guangfa Fund has traditionally grown rapidly by "cultivating star fund managers" such as Zheng Chengran (a rising star born in the 1990s), Liu Gesong (a leader in growth investment), and Fu Youxing (a benchmark for value investing). However, with changes in market cycles and stricter regulatory policies, these star managers have gradually stepped down to reduce their workload. Zheng Chengran has reduced the number of products she manages from eight to five, and the fund's assets have fallen below one billion yuan; core members like Liu Gesong and Fu Youxing have also scaled back their management responsibilities or left the company. The firm is shifting from a star-centric model to a more team-based platform approach, aiming to address issues related to over-reliance on individual stars and significant performance fluctuations. This transition has shown initial success (the fund's assets have grown against the trend, and products in the AI sector have performed well), but it also faces challenges such as uneven performance and lack of investor trust.
Why Have Star Managers Collectively Reduced Their Workloads?
The mass departure of star fund managers is not accidental; it is a result of both stricter external regulations and internal limitations:
- Regulatory Pressure: In the past two years, regulators have called for the "high-quality development" of public funds. For example, in 2025, the China Securities Regulatory Commission (CSRC) proposed building a platform-based, team-driven research and investment system, and in 2026, it changed the performance evaluation criteria—performance evaluations for active equity fund managers must now account for more than 80%. If a manager's returns lag the benchmark by more than 10% over three years, their compensation will be reduced by at least 30%. The previous practice of star managers managing multiple products (up to ten) to drive growth is both illegal and unprofitable, so they need to reduce their workload.
- Internal Challenges: The shine around these star managers has faded. They gained popularity thanks to specific market trends (such as the surge in the new energy sector), but these trends are cyclical. For instance, after the new energy market downturn in 2022, Zheng Chengran's fund experienced a significant loss, and Liu Gesong's fund underperformed by nearly 20% compared to the CSI 300 index over three years. With poor performance, their managed funds have shrunk (from a peak of 48.2 billion yuan to 7.8 billion yuan), forcing the company to replace them with new managers.
From "Cultivating Stars" to "Building a System": What Has Guangfa Done?
Guangfa is trying to move from a star-centric model to a more collaborative team-based system. The firm has taken the following steps:
- Recruiting New Managers: In the past year, it hired 17 new fund managers (an average of only four in the industry), focusing on diverse styles—such as Wu Chenggen, who specializes in low-valued stocks, Zhou Zhishuo, who focuses on contrarian investing, and Su Wenjie, who specializes in cyclical sectors—to address the company's over-reliance on growth investment.
- Experienced Managers Assisting Newcomers: After stepping down, star managers are helping new employees with research and training. For example, Liu Gesong is sharing his expertise with Wu Yuanyi, and Fu Youxing allowed new managers to co-manage core products before leaving the company.
- Diversifying Research Teams: The firm is no longer focusing solely on growth investment but expanding its scope to include value, balanced, cyclical, and AI sectors, ensuring that different teams are responsible for various areas to reduce overall risk.
Transition Results: A Mixed Bag
The transformation has not been without challenges:
- Positive Progress: Despite industry-wide declines in fund sizes (e.g., Huaxia and E Fund), Guangfa's non-monetary fund assets increased by 9.1 billion yuan to 953.2 billion yuan, ranking third in the industry, thanks to the success of niche themes (such as AI) and fixed-income products.
- Performance Variations: While some products (especially those in consumer and pharmaceutical sectors) performed poorly, 19 active equity products achieved returns of over 100% in the past year, with several exceeding 200%, indicating the platform's ability to focus on promising areas.
- Trust Issues: Investors remain skeptical due to concerns about the new management team and the effectiveness of the new system. For example, although the fund managed by Fu Youxing's successor has performed well (3.7% growth in the past six months), 292 million units were redeemed in the first quarter. Additionally, some investors have already reserved their shares for the fund's opening period.
Transition Difficulties: Investor Uncertainty and System Improvements Needed
The transition to a platform-based model is not yet complete, and there are two major issues:
- Investor Confidence: With experienced managers leaving and new ones taking over, investors are unsure about the fund's performance. For instance, although the fund managed by Fu Youxing's successor has performed well, it still saw significant redemptions.
- System Effectiveness: It is unclear whether the new system truly diversifies risks. If multiple products in the same sector (e.g., AI) are heavily invested in a trending sector, they may all suffer if that sector performs poorly. Moreover, poor risk management is evident in the underperforming funds.
Can the Platform-Based Model Sustain Growth for Another Decade?
Guangfa's direction of transition is correct (moving from star-centric to team-based models is an industry trend), but there is still a long way to go. The company needs to address two key issues: how to ensure effective collaboration among different teams and how to build trust with investors quickly. Ultimately, the success of a fund company depends on its ability to generate consistent returns for investors, not just on the number of star managers it has.
(The entire analysis is written in plain language to make it understandable to non-financial professionals.)