China’s quantitative hedge fund industry just lived through one of its worst months on record. Long-only quant funds averaged a 17% loss in July, a drawdown severe enough to erase not just recent gains but, in many cases, everything accumulated over the prior year.
Out of more than 1,300 products tracked by Shanghai Suntime Information Technology Co., only 4% managed to finish the month in positive territory.
What happened, and why it hit so hard
The proximate cause was a sharp reversal in AI-linked and technology stocks, which had been the engine powering many of China’s most popular systematic trading strategies.
The CSI 1000 Index, a broad gauge of smaller Chinese companies that quant funds often target, fell almost 20% in July.
