# AI rally

How a Star Manager and Strategic Drift Turned a Promising China Fund into a Cautionary Tale

A Huaxia Fund product launched in late 2020 with a tech-and-consumption strategy has underperformed severely, suffering near-50% cumulative losses and a nearly 70% drawdown amid manager turnover and strategy drift. Successive managers failed to restore performance in time to capture the 2024–25 AI-led market recovery, exposing governance and succession weaknesses within the asset manager. The episode highlights systemic risks in China’s mutual fund industry: overreliance on star managers, misalignment between rhetoric and trading, and the reputational danger of poor product governance.