Harvest Fund Management's performance over the past year has been less than stellar when compared with other major fund houses. Today, we look at what some of the firm's prominent fund managers have been investing in.
As of the end of the second quarter, Harvest Fund had four equity fund managers with assets under management exceeding RMB 10 billion. These were Wang Guizhong, Gui Kai, Chen Tao, and Meng Xia. The pecking order has seen a significant reshuffle since the end of last year. Wang Guizhong has risen to the top spot for the first time, with assets surpassing RMB 20 billion, while veteran Gui Kai has slipped to second place. Meanwhile, Tan Li, who was long considered a leading figure in consumer and value investing with a presence in the hundred-billion club, has now fallen out of this elite group. In her half-year report, she admitted fault, citing a "severe underweight in TMT stocks." Her main fund product has returned just 0.45% over the past six years, barely managing to avoid a loss.
Wang Guizhong Becomes Harvest's New Top Fund Manager
The most direct driver of this change in ranking has been the wave of interest in artificial intelligence. By the end of the second quarter, Wang Guizhong, with seven years of investment experience, saw his assets under management surpass RMB 20 billion for the first time, buoyed by the strong performance of his funds focused on frontier tech and tech innovation. Notably, the Harvest Technology Innovation and Harvest Innovation Pioneer funds saw their scale expand to RMB 7.8 billion and RMB 6.01 billion respectively, delivering returns of roughly 88% and 60% over the past year.
The surge in both performance and scale is no accident. For instance, Harvest Technology Innovation's top ten holdings are almost exclusively leaders in semiconductor equipment and AI hardware, including companies like Zhongke Feice, GigaDevice, AMEC, NAURA, Junzheng, Luxshare Precision, Piotech, Hwatsing, Novosense, and SMIC. In his half-year report, Wang explained, "In the first half, investment opportunities in AI hardware driven by AI demand, price increases, and domestic supply chains were abundant. We focused on bandwidth and memory, selecting the most cost-effective segments based on actual industry momentum."
In contrast to Wang's aggressive rise, Gui Kai's scale tells a different story. Although his six funds total RMB 19 billion, an increase of over RMB 1 billion from the end of last year, he has been overtaken in the rankings due to Wang's faster growth—a "passive decline" where scale increased but position fell, though he remains in the race. Gui Kai's largest fund is Harvest Emerging Industries, which delivered a 31% return over the past year, a respectable but not outstanding performance. Looking ahead, Gui Kai expressed cautious optimism in his quarterly report. He believes that given the significant gains and high industry concentration in the tech growth sector in the first half, market volatility is likely to increase markedly in the second half, and divergence within the tech growth sector is expected. He remains relatively positive on the medium-to-long-term outlook, noting that the low-interest-rate environment and industrial upgrading trends remain favorable for equity assets.
Tan Li Loses Her Place in the Hundred-Billion Club
The change at the top is not the only notable shift; Tan Li's shrinking scale is equally significant. By the end of the second quarter, her total assets under management had fallen from RMB 12 billion to RMB 7.97 billion, dropping her out of the hundred-billion club. As a fund manager focused on consumer and value styles, her recent performance has been weak, with her scale declining from a peak of over RMB 30 billion in the second half of 2021. After falling below RMB 20 billion for the first time in the fourth quarter of 2023, her assets have continued to slide, dropping below RMB 10 billion in the first half of this year—a dramatic two-thirds reduction.
Her flagship fund, Harvest Value Long-term, posted a loss of 12.19% over the past six months, and its one-year return has also been below average. Its top ten holdings—including SITC International, Tongkun Group, China Resources Land, Ninebot, CNOOC, Ping An Insurance, Neway Valve, Zijin Mining, Longfor Group, and Nanjing Steel—are uniformly value and cyclical plays. Regarding her poor performance, Tan Li acknowledged in her half-year report that it was mainly due to a severe underweight in TMT. "First, we admit that failing to identify the trend and get involved before this industrial cycle started is our failure. Due to the limits of our circle of competence, our research and tracking of the rapidly changing TMT sector were inadequate. Even before the cycle began, we found it difficult to accept the overall valuation levels of the TMT industry, which prevented us from keeping pace when fundamentals changed dramatically." She noted that according to current market forecasts, most companies' ROE, PB, PE, and PS metrics are at cyclical highs—essentially the most optimistic expectations. The second-quarter public fund reports confirm this, showing a clear "structural repositioning" with significant increases in high-growth AI hardware supply chains and major reductions in pro-cyclical and new energy sectors tied to the economic cycle. Allocations to the electronics sector have reached over 40%, and allocations to TMT and broader tech have hit 70%, with an extremely high level of consensus on increasing AI hardware supply chain positions.
"As a large economy, if this structure persists, it is probably not very healthy, and internal circulation will be difficult. The development of a major economy should be balanced to be resilient and to drive overall income growth and employment stability," Tan Li commented. Looking to the second half, she stated that while maintaining positions in energy, precious metals, and some industrial metals, she would pay more attention to certain cyclical assets, actively seek opportunities for a bottom in the consumer sector, and continue to value high-dividend assets, emphasizing the importance of maintaining a balanced offensive-defensive portfolio. "We have always believed that value will eventually return; what is needed is strict adherence to investment discipline and patient waiting."
Do you think she will see the value return she speaks of?
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