Debond Stable Growth Fund Q1 Surges 4B Yuan, Posts 21.57B Yuan Loss

Debond Stable Growth Mixed Fund (德邦稳盈增长) released its first-quarter 2026 report on April 21, revealing rapid asset growth alongside significant investment losses. The fund’s assets under management reached 50.42 billion yuan by quarter-end, up 4 billion yuan from 10.11 billion yuan at the end of 2025, representing a single-quarter increase of approximately 40 billion yuan.

Despite the expansion, fund performance lagged its benchmark. As of quarter-end, Class A and Class C share net values stood at 0.9727 yuan and 0.9592 yuan respectively, with quarterly returns of -2.38% and -2.50%, underperforming the benchmark return of -1.50%. The fund reported a combined loss of 21.57 billion yuan across both share classes during the quarter.

Subscription and Redemption Activity

The fund experienced substantial capital flows during Q1. Class A shares received 7.09 billion shares in subscriptions, while Class C shares saw 218.09 billion shares purchased, totaling 225.17 billion shares in new subscriptions. Simultaneously, redemptions reached 182.93 billion shares—4.81 billion from Class A and 178.12 billion from Class C. Net new subscriptions for the quarter totaled 42.25 billion shares.

The combination of large inflows followed by significant outflows, coupled with negative net value returns, meant that many investors experienced paper losses during the quarter.

Regulatory Context

The fund’s activity occurred amid regulatory scrutiny of large-scale subscription practices. In January 2026, China’s Securities Regulatory Commission issued a monitoring notice regarding a fund company’s single-day subscription volumes exceeding 10 billion yuan. The notice identified that the fund company had engaged in marketing cooperation with internet influencers lacking fund sales and industry qualifications, paying substantial advertising fees to encourage investors to purchase products through coordinated announcements of large purchases. The regulator found this practice induced investors with mismatched risk tolerance to purchase medium-to-high risk products. The SEC subsequently ordered corrective measures, suspended acceptance of new public fund product registrations for the company, and held responsible the general manager, compliance officer, and internet business department heads.

Portfolio Composition and Manager Strategy

Fund managers Lei Tao and Lu Yang made significant portfolio adjustments in Q1 2026, with five new holdings entering the top 10 positions. The fund’s top 10 holdings as of quarter-end were: Zhongkong Technology (688777), Hehelix Information (688615), Kunlun Wanwei (300418), Wangsu Technology (300017), Deepin Technology (300454), Zhuoyi Information (688258), Hand Information (300170), Taxfriend Group (603171), Wondershare (300624), and Haitianruisheng (688787).

Zhongkong Technology, Wangsu Technology, and Deepin Technology represented first-time positions since the fund’s inception. The fund also repurchased Haitianruisheng, which it had liquidated in the second half of 2025, elevating it to the top 10. Kunlun Wanwei returned to the top 10 after more than one year of absence. Managers significantly increased holdings in Hehelix Information, Zhuoyi Information, Hand Information, Taxfriend Group, and Wondershare, demonstrating concentrated positioning in the AI application sector.

Fund Manager Investment Thesis

In the quarterly report, Lei Tao and Lu Yang outlined their investment logic. They noted that AI applications emerged as a market focus in early 2026 amid dense catalysts, followed by sustained market weakness and volatility. Despite market pressures, they observed continued progress in large language model capabilities and the emergence of Agent products such as OpenClaw gaining traction.

“We believe intelligent agents have taken initial form, and the era of AI applications is gradually opening,” the managers stated.

They identified three key drivers: declining computational costs, improving model capabilities, and increasingly mature scenario-based products. The managers observed a market narrative shift from “large model consumption” and “winner-take-all” theories toward “AI application wealth creation” and “AI application growth in China” perspectives.

Regarding future prospects, Lei Tao and Lu Yang projected that 2026 will see continued AI model advancement, with base model capabilities addressing both individual and enterprise-level requirements. In multimodal capabilities, they anticipated progress toward “world models” that could understand physical rules and generate new capabilities.

“We remain optimistic about AI applications as a secular industry trend,” they emphasized. Large language model companies pursue artificial general intelligence (AGI) and AI OS ecosystems, while application-layer companies stand to benefit from a new era. “Good business opportunities lie not in whether they are 2C, 2B, or other business models, but in capturing genuine user needs and solving customer problems through AI methods.”

The managers also highlighted data elements as strategically valuable. They argued that data scarcity and quality attributes have become critical to AI application companies’ competitive moats and industry value enhancement. “High-quality data is the fuel for large model capability iteration and the core asset for AI application companies to achieve deep scenario deployment and differentiated competition.”

Conclusion, Lei Tao and Lu Yang noted: “After extended exploration, we believe an increasing number of entrepreneurial companies are well-positioned to seize opportunities.” They projected that AI-driven business revenue will gradually increase from 5% of core business toward a 10%-20% “sweet spot,” with valuation expansion and performance realization driving sustainable market momentum.