The Debang Xinxing Value Flexible Allocation Mixed Securities Investment Fund, heavily concentrated in the AI computing power sector, led performance in the first half of 2026. However, since mid-June, this flexible allocation fund, which manages over 15 billion yuan, has experienced a sharp decline.

According to Wind data, as of August 3, 2026, the Debang Xinxing Value Hybrid A fund has seen a maximum drawdown of approximately 45.8% in the past two months. In July alone, its net value fell by nearly 30%. Launched on June 19, 2015, just one week after the Shanghai Composite Index peaked at 5,178 points, the fund was issued at a market high. Its performance benchmark is the one-year bank deposit rate (after tax). Despite the recent downturn, Wind data shows that as of August 3, 2026, the fund's total return since inception stands at 369.17%, with an annualized return of 14.89%, indicating strong historical performance. In the short term, however, the fund's net value has dropped significantly, falling 41.72% from its peak on June 18 over a period of just over a month.

The fund's current manager, Lu Yang, joined Debang Securities Co., Ltd. in May 2018 before moving to Debang Fund Management Co., Ltd. in June 2021. With less than three years of experience as a fund manager, he is the tenth person to hold this position since the fund's inception, following nine predecessors. Notably, the first manager, He Jing, left after only about three months. Lei Tao and Lu Yang were appointed together on January 30, 2024, but Lei Tao departed in late May 2026. Currently, Lu Yang manages three products totaling over 18 billion yuan, with the majority of assets concentrated in the Debang Xinxing Value fund. As of August 3, his tenure on this fund has yielded a return of 316.41%, but his other funds, including Debang High-End Equipment A (with a -14.96% return) and Debang Wenying Growth A (with a 3.62% return), show significant performance disparities.

Notably, the Debang Xinxing Value fund had a scale of just 933 million yuan at the end of June 2025. A turning point came in the second half of 2025 when the AI computing power rally triggered a surge in both performance and fund size. By the end of the second quarter of 2026, its size had ballooned to 15.011 billion yuan, growing over 15 times in roughly one year. The fund's second-quarter report reveals a highly concentrated portfolio, with the top ten holdings' concentration rising from 61.12% at the end of the first quarter to 73.09%. These holdings are almost exclusively focused on AI computing power hardware, such as optical communication and PCB (Printed Circuit Board) sectors. This extreme concentration amplified gains in the first half of 2026.

In the second-quarter report, manager Lu Yang expressed an optimistic outlook on the AI computing power track, stating, "Since the second quarter, the AI computing power market has remained magnificent, serving as the absolute main line of the market and the core focus of global stock market resonance." Looking ahead to the second half of 2026, he stated, "We continue to firmly believe in the high prosperity of overseas computing power and will focus our investment on communication technology sub-sectors, primarily optical interconnection." He also noted that "the combined capital expenditure of North America's five major cloud providers is expected to exceed $730 billion in 2026, an increase of nearly 80% year-on-year," and that "the prosperity of overseas computing power investment has not only peaked but is accelerating in depth." The fund manager confirmed, "This product will continue to deeply cultivate the sub-track of artificial intelligence computing power."

However, such extreme sector concentration carries a low margin for error. Since July, the AI computing power sector has experienced significant volatility, with heavy holdings suffering sharp declines. This sustained bet on the AI computing power track, following the sector's substantial correction in late June 2026, has led to a net value plunge, exposing investors who bought in at the high point to significant drawdown risk.

Debang Fund Management Co., Ltd., established on March 27, 2012 with a registered capital of 590 million yuan, is a state-controlled financial enterprise headquartered in Shanghai. It is the 70th fund management company approved by the China Securities Regulatory Commission. Its shareholders are Debang Securities Co., Ltd. (80% stake) and Zhejiang Native Produce & Animal By-Products Import & Export Group Co., Ltd. (20% stake). Yuchi Ping, who assumed the role of Chairman on June 18, 2026, previously served as General Manager Assistant, Vice General Manager, and General Manager at Bocom Schroder Fund Management Co., Ltd. Zhang Lu, the General Manager, also serves as Chairman of Debang Innovation Capital Co., Ltd. and Head of Debang Fund Management Co., Ltd.'s Beijing Branch, having previously held roles at Debang Securities Co., Ltd. As of the end of the second quarter of 2026, Wind data shows Debang Fund manages approximately 82.5 billion yuan in assets.

Guidance issued by financial regulatory authorities on July 31 emphasizes integrating Chinese financial culture into corporate governance, promoting principles of honesty, trustworthiness, integrity, prudent stability, and compliance. As fund size grows, enhancing internal controls and achieving prudent and steady management is a critical challenge that fund managers must address.