The star fund manager, who recorded a 40% loss in just two months, has fallen from his long-revered pedestal.

If you bought a star fund two months ago and open your account now, you may find that:

1 million yuan, only 600,000 yuan left.

The fund manager goes to work normally every day, the fund trades normally, and the quarterly report is released normally.

However, the money quietly decreased by 40% without any trace.

This is not a fictional story. This is a real experience that happened to many fund investors in the summer of 2026.

The protagonist of the story is XXX, a star fund manager of a certain fund.

In 2025, the fund she managed achieved an annual return of 123.4%, ranking 7th among 1789 similar funds.

She became famous overnight with this outstanding performance.

After that, the scale of the fund she managed expanded rapidly, and the total assets under her management once approached 30 billion yuan.

The XX Science and Technology Innovation Mixed Fund she managed also evolved from an ordinary fund to a "divine fund" in the eyes of fund investors.

Then, just one year later, the story took a sharp turn for the worse.

In the summer of 2026, this fund experienced a maximum drawdown of more than 40%.

A year ago, the comment section was full of "Goddess YYDS".

Two months later, the comment section was filled with:

"Give back my hard-earned money."

Here comes the question:

How could it make 123% profit last year, but lose 40% in just two months this year?

Let's first take a look at the numbers.

If you invested 100,000 yuan:

Now there is only 60,000 yuan left.

If you invested 1 million yuan:

400,000 yuan is gone.

And after losing 40%, you cannot get back your principal just by a 40% rise.

To rise from 600,000 yuan back to 1 million yuan, the fund needs to increase by 66.7%

This is the cruelest math in investment.

At the end of May 2026, this fund was still at a high level.

At that time, tech stocks were the most popular track in the market.

PCB, optical modules, semiconductors...

One popular track after another kept rising.

But starting from June, the market reversed suddenly.

Tech stocks collectively pulled back, many popular stocks fell by 30%, 40% or even more from their highs.

The net value of this fund also slid all the way.

At the end of July, the drawdown of this fund in the past month reached 34.87%.

By August, the cumulative maximum drawdown in two months exceeded 40%.

A star fund that rose by 123% last year suddenly turned into a "horror story".

But what is really worth studying is not how much it fell, but:

Where exactly did the money go?

The answer is hidden in the fund's second quarterly report.

What on earth did she buy?

In the second quarter of 2026, the fund suddenly made large purchases of two companies:

Kingboard Laminates, Kingboard Holdings.

Both companies belong to the "Kingboard Group" system, with highly related businesses.

Kingboard Laminates is the leader in the copper clad laminate industry. Copper clad laminate is an important upstream material for PCB.

The explosive growth of AI computing power demand has driven the demand for servers, switches and other equipment, increased the demand for PCB, and made copper clad laminate a popular track sought after by the market.

The investment logic is actually very attractive:

AI computing power growth - PCB demand growth - copper clad laminate demand growth - leading enterprises benefit.

Therefore, the share price of Kingboard Laminates has been rising all the way since 2025, hitting a peak of HK$107.2.

The share price of Kingboard Holdings also rose to a maximum of HK$151.8.

The problem is: when did the fund manager make these large purchases?

The answer is: the second quarter of 2026.

At the end of the first quarter, the top ten heavily held stocks of the fund did not include any Kingboard companies.

By the end of the second quarter, Kingboard Laminates directly became the third largest heavily held stock.

The market value of the position: 2.089 billion yuan. Accounting for the net value of the fund: 8.36%.

Kingboard Holdings became the sixth largest heavily held stock.

The total of the two companies: 3.714 billion yuan. Accounting for the net asset value of the fund: 14.87%.

And that's not all.

The other two funds managed by this fund manager also heavily hold stocks of the Kingboard system.

If we add in copper clad laminate related stocks such as Shengyi Technology, more than 6 billion yuan of the about 30 billion yuan assets under her management is bet on the copper clad laminate industry chain.

More than 20% of the position is concentrated in one segmented track. This is not just simple optimism, but a very aggressive concentrated bet.

And the most distressing part is yet to come.

The fund manager was buying, but the major shareholders were selling

When the fund manager made large purchases of Kingboard stocks in the second quarter, what were the major shareholders of Kingboard doing?

Selling.

On June 17, Kingboard Laminates announced that a wholly-owned subsidiary of its controlling shareholder Kingboard Holdings placed 155 million shares at HK$76 per share, cashing out about HK$117.8 billion.

In March, Kingboard Holdings had already placed 130 million shares, cashing out about HK$27.3 billion.

In late June, the major shareholder Hallgain Management continued to reduce its holdings.

Since 2026, the total amount of cash cashed out by Kingboard shareholders has reached tens of billions of Hong Kong dollars.

A very interesting scene emerged at this time:

On one side, major shareholders are selling.

On the other side, public offering funds are taking the orders.

At the end of the first quarter, public offering funds across the market held about 16.27 million shares of Kingboard Laminates.

By the end of the second quarter:

The number surged to 178.6 million shares, with a net increase of more than 162 million shares.

The number of shares placed by Kingboard Holdings on June 17 is 155 million shares.

The two numbers are very close.

Among them, this fund manager alone holds 24.257 million shares.

More crucially, the price.

On June 17, the placement price of Kingboard Laminates was HK$76. Not long before that, its share price had already hit a peak of HK$107.2.

In other words, when the fund built its large position, this was already a popular track that had risen a lot.

Then the market reversed. In July, the share price of Kingboard Laminates fell all the way from HK$107.2 to HK$37.72.

The maximum drop: 64.81%.

The share price of Kingboard Holdings also fell sharply from around HK$151.8.

The monthly drawdown of this fund in July alone reached 38.41%.

Roughly calculated based on the position at the end of the second quarter, the two Kingboard stocks alone may bring floating losses of tens of billions of yuan to this fund.

This is the most thought-provoking part of this plunge.

The fund did not buy at the low point to copy the bottom. Instead, it massively increased its position after the popular track had risen sharply, and then it just encountered the price reversal.

Why did such heavy positions appear?

If it was just buying the wrong stock, there is nothing much to talk about.

Investment is essentially a game of probability. No matter how excellent a fund manager is, it is impossible to make correct judgments every time.

But the problem of this fund manager is worth looking at against a larger background.

Because her 123% return is exactly the starting point of this high-risk bet.

In 2025, technology growth sectors such as AI and semiconductors became the most dazzling direction in the market.

Funds that had long been biased towards value investment obviously missed this round of market rally.

The core value-oriented fund managers of the company heavily held traditional value assets such as China Mobile, Midea Group, China National Offshore Oil Corporation, and Shandong Gold.

The market was rallying on tech stocks, but this fund failed to keep up.

Therefore, the company began to accelerate its transformation towards technology growth.

And this fund manager is the person pushed to the front stage in this process.

In 2025, the fund she managed achieved an annual return of 123.4%.

Ranked 7th, she became famous overnight, and the fund scale expanded rapidly.

Problems may also arise from this:

When a person achieves great success with a certain investment style in a year, it is easy for her to continue to believe in this style.

In 2025, heavily holding tech stocks was an offensive move.

Continuing to heavily hold popular tech stocks in 2026, however, may come with completely different levels of risk.

The higher the stock price rises, the higher the market expectation becomes.

When the market begins to shift from "focusing on logic" to "focusing on price", the risk will also become greater and greater.

She actually realized this herself.

She wrote in the second quarterly report of 2026:

"For these cyclical price-rising varieties, in the stage of rapid price increase, with the rapid rise of share prices, the sensitivity to subsequent prices is also rising rapidly, the share price becomes very fragile. From the perspective of drawdown control, the risk exposure of positions should be reduced in time."

Translated into plain language:

The faster the price rises, the greater the risk, and the position should be reduced.

But the problem is:

She did not reduce her positions early enough.

Prisoner's Dilemma

The most easily overlooked point of this incident is that fund managers are not completely free.

Suppose tech stocks rose sharply in 2025, and you are a fund manager. If you don't buy: others earn 100%, while your fund only earns 20%.

Clients will ask: "Why are others making money, but you don't buy?"

The company will ask: "Why is your ranking so poor?"

Clients start to redeem, the fund scale drops, and your resources and right to speak may also decrease.

So you have to buy. If you get it right, you become a star fund manager, and the scale expands rapidly.

But in the next year, the market style changes. If you suddenly reduce your positions: the market may continue to rise.

You will become the person who missed the rally again.

So fund managers face a very real dilemma: If you don't participate, you may be eliminated. If you participate, you may get hurt when the bubble bursts.

The fund manager's success in 2025 is the best example itself.

If she had not heavily held tech stocks at that time, she would not have obtained a 123% return, nor would she have become a star fund manager.

But precisely because she succeeded in 2025, in 2026 she had to face a new problem:

How to prove that last year's success was not accidental?

As a result, the investment style is likely to shift from an offensive orientation to path dependence.

When the market is rising, it is called "sharpness". When the market is falling, it is called "fragility".

The really dangerous thing is not the 40% loss, but the 123% return

For ordinary fund investors, the most alert number in this story is actually not 40%.

It is 123%. Because a 40% loss will make people feel scared.

But a 123% return will make people greedy.

When a fund earns 123% in a year, the first reaction of the vast majority of people is not to study why it earned so much.

Instead, their first reaction is: "It's so excellent, hurry up and buy it."

The problem is: past returns only represent the past.

What you really should study is: How on earth did this 123% return come about? What industries did it rely on?

What stocks? What valuation? What percentage of positions? How high is the concentration?

How much risk did the fund manager take?

If you don't study these things and only look at the ranking list, you will easily get a classic result:

The fund manager bought at the low point, while you bought at the high point.

He earns from the rally, while you take over the high valuation. This is also why many star funds have very poor user experience for their investors:

The fund manager made good returns in the past few years. After you bought in, you started to lose money. It's not that the fund manager falsified the data.

It's just that the time you bought in is not the same period when he made money.

Should you sell after a 40% loss?

This is probably the most tangled question for many fund investors right now.

"It has already fallen by 40%, is selling now a foolish cut of position at the low?"

The answer is actually very simple: don't decide to continue holding just because you have already lost 40%.

Also don't decide to sell immediately just because you have already lost 40%.

What you really should ask is: "If I have cash in my hand today, would I still be willing to buy this fund?"

If the answer is no, then continuing to hold just because "I have already lost a lot" is very likely to be kidnapped by sunk cost.

If the answer is yes, then continue to study: What does the fund hold now? How is the valuation? How is the industry boom? Has the fund manager reduced risks? Has the fund scale changed? Is the future return-risk ratio worth taking?

How much you lost in the past should not determine what you do in the future. Whether it is worth holding in the future should determine what you do today.

As of the end of August 2026, the story is not over yet.

Can Kingboard companies regain strength in the future? Can the boom of the copper clad laminate industry pick up again?

Can the fund restore its net value back to the previous level? There are no answers for now.

But one number has been left: 40%

It is just a popular track that rose too much, a fund manager made a highly concentrated bet, and then the market style reversed.

1 million yuan can easily turn into 600,000 yuan.

This incident reminds us of at least four things.

First, don't hand over all your