Following the departure of star fund manager Qiu Dongrong, Zhonggeng Fund has seen its asset scale steadily decline. Although the firm persists in its integrated investment research approach and adheres to a low-valuation value investing strategy, the fading of its star appeal has left it grappling with dual pressures on both scale and performance.

As the public fund industry accelerates its shift away from relying on individual star managers, many small and mid-sized firms are enduring growing pains while trying to reduce dependence on key figures. Since Qiu's resignation in July 2024, Zhonggeng Fund has faced a series of challenges ranging from shrinking assets to team restructuring.

Wind data shows that by the end of the second quarter this year, Zhonggeng Fund's public offering management scale stood at 9.803 billion yuan. This marks a dramatic fall from its peak of over 40 billion yuan, a decline that took just over three years to unfold. The company continues to uphold its deep-value investment philosophy, yet the current market environment leans heavily toward growth-oriented stocks.

Although some of its products have added AI-related industry stocks to their top holdings this year, overall performance has remained lackluster. Meanwhile, three fund managers have left the firm within the year. Under the combined pressures of shrinking scale, underperformance, and personnel turnover, how can Zhonggeng Fund seize long-term opportunities and win back investor confidence?

Tracing the fall from 40 billion to under 10 billion

Looking back at the firm's trajectory, Zhonggeng Fund officially began operations in June 2018 as a personally-funded public fund company with a clear mandate to focus on value investing. At its founding, Qiu Dongrong, who had already made a name for himself at HSBC Jintrust Fund, joined the founding team. In December of that year, the firm launched its first product, Zhonggeng Value Pilot Fund, managed by Qiu and dedicated to low-valuation value investing.

Qiu's arrival quickly elevated market attention on Zhonggeng Fund. While the fund delivered strong returns of 29.62% in 2019 and 26.67% in 2020, those years were also exceptional for active equity investing overall, with the CSI 300 Index gaining 36.07% and 27.21% respectively. It wasn't until 2021 that Zhonggeng Value Pilot Fund truly stood out, beating its benchmark by more than 30 percentage points. Then in 2022, amid a major market correction, the fund demonstrated resilience by maintaining positive returns, attracting significant attention and driving its scale to as high as 11.663 billion yuan.

By 2023, Zhonggeng Fund managed six funds, and at the end of the first quarter that year, its total management scale hit an all-time high of 41.355 billion yuan. According to Wind data, Qiu managed 32.013 billion yuan of that total, representing 77.41% of the firm's entire public fund assets. In July of the following year, Zhonggeng Fund announced Qiu's departure. Prior to leaving, he had served as deputy general manager and chief investment officer while overseeing five funds.

During Qiu's tenure, some industry observers attributed the firm's success to his "star effect," with investors drawn to his reputation for low-valuation value investing. In fact, by the end of the quarter preceding his departure, the firm's scale had already slipped below 20 billion yuan. The decline continued thereafter, and by the end of the second quarter of 2026, total public fund assets had contracted to 9.803 billion yuan, representing a substantial reduction from the peak seen in the first quarter of 2023 and reflecting a significant adjustment period spanning over three years.

Balancing system building with talent retention

Qiu's exit in July 2024 sent ripples through the industry. At the time, Zhonggeng Fund issued a statement emphasizing that while the fund managers had changed, the firm's continuously evolving investment strategy system and proactive investment team remained unchanged. According to the firm's announcement, fund managers Liu Sheng, Chen Tao, Wu Chenggen, and Sun Xiao were appointed to take over the five funds previously managed by Qiu. The company touted its team-based manager structure as highly compatible with its low-valuation value investing methodology.

Zhonggeng Fund likens its systematically refined value investing framework to a mature, modern "factory" that brings together top talent and establishes a multi-dimensional investment research process. This commitment to building a robust investment research system aligns with the broader industry trend of moving away from star manager dependence. In April 2022, the China Securities Regulatory Commission issued guidelines promoting team-based, platform-driven, and integrated investment research systems for fund managers, explicitly calling for an end to excessive reliance on star managers. Building on that, in August this year, the Asset Management Association of China further advocated for developing platform-based, integrated, multi-strategy investment research capabilities and finding new pathways to break through scale bottlenecks while consistently delivering strong performance.

Regulatory messaging has made clear that reducing dependence on star managers is a core objective for the industry's high-quality development. In November 2025, Zhonggeng Fund fund manager Liu Sheng told media that while the market had previously perceived the firm through the lens of "star effect," its core investment research system, culture, and processes remain unchanged, with simply more fund managers now directly involved in portfolio management.

In February this year, Zhonggeng Fund general manager Meng Hui published remarks emphasizing the firm's continued efforts to deepen investment research integration and prioritize talent cultivation and succession. After more than seven years of practice, the firm's low-valuation value investing system has evolved into a distinctive and effective methodology. However, on the ground, the firm has encountered talent retention challenges during its system-building efforts.

Fund manager Wu Chenggen, who took over some of Qiu's products, departed after managing Zhonggeng Value Lingdong Fund for just over a year, joining GF Fund this year. Another manager, Sun Xiao, who had taken over the Zhonggeng Hong Kong Stock Connect Value Fund, also left after roughly a year. Additionally, fund manager Yin Le resigned from the firm earlier this year. Currently, Zhonggeng Fund has six active fund managers, most of whom have relatively short tenures aside from Chen Tao.

Sticking to value while testing the waters

This year, market style has leaned toward growth, with technology stocks performing particularly well in the first half. Despite increased volatility in the second half, tech sectors continue to attract capital inflows. In this environment, products adhering to value investing strategies have generally faced headwinds and delivered relatively flat returns.

Wind data shows that as of September 17, Zhonggeng Value Lingdong Fund leads the firm's product lineup with an 18.31% year-to-date return. However, the fund significantly underperformed its benchmark in the second quarter, primarily due to insufficient overweighting in the AI sector, despite having its top two heavy holdings tied to the AI supply chain. In response, fund manager Zhou Ru'ang noted in the semi-annual report that the team will approach AI development with a more balanced and objective perspective while continuing to adhere to the value investing framework.

Similarly, Zhonggeng Value Pilot Fund, which also follows a deep-value strategy, adjusted its top holdings at the end of the second quarter by increasing allocations to communications and electronics, adding AI supply chain companies such as Eoptolink Technology, Zhongji Innolight, and SMIC. As of September 17, the fund posted a 6.99% year-to-date return, though it experienced a 3.9% decline in net asset value over the past three months.

In contrast, Zhonggeng Value Quality One-Year Hold Fund, which is heavily weighted toward automobiles, Hong Kong internet, and baijiu-related consumer sectors, has faced notable performance pressure, with its NAV down 14.97% year-to-date as of September 17. Meanwhile, Zhonggeng Value Pioneer Fund, which underweighted tech stocks and overweighted domestic demand sectors, saw its NAV decline 4.24% over the same period.

Fund manager Xiong Zhenghuan observed in the semi-annual report that market liquidity divergence has intensified, and consumer sectors may be approaching their optimal entry point over the medium-to-long term. Beyond performance metrics, corporate governance developments have also emerged. According to the fund's semi-annual report, in April 2026, Zhonggeng Fund was subjected to administrative penalties by the CSRC in connection with investment advisory business issues, with four senior executives receiving warnings and fines.

The common plight of small and mid-sized funds

Facing the twin challenges of shrinking scale and underwhelming performance, whether Zhonggeng Fund can build a sustainable investment research system, hold its ground in a volatile market, and regain investor trust through improved results remains to be seen. Meanwhile, competition in the public fund industry continues to intensify. Under regulatory pushes to de-emphasize star managers, small and mid-sized fund companies are under increasing survival pressure.

Over the past few years, Zhonggeng Fund has consistently emphasized its commitment to avoiding reliance on any single star manager, focusing instead on building a platform-based, team-oriented investment research system. However, regardless of the narrative, performance remains the ultimate measure of a fund company's core competitiveness. Regarding the company's future development strategy and investment research system building, inquiries were sent to Zhonggeng Fund's official email, but no response had been received by the time of publication.