Investors from mainland China are taking Guotou Ruixin Fund and its fund manager, Shicheng, to court, with the case scheduled to be heard on January 13th at the Hongkou District Court in Shanghai. It is rare in investment dispute cases for one of the defendants to be a fund manager, making this case the subject of wide industry attention. The outcome of this trial is thought to have far-reaching implications.
According to information from the Shanghai High People’s Court, on January 13th, the Hongkou District Court in Shanghai will hear the case of Guotou Ruixin Fund and its star fund manager, Shicheng, with the plaintiff being Li Zhihua, suing for a financial entrusted management contract dispute.
Reported by Shenzhen Blue Media Technology (Chengdu) Co., Ltd.’s “Blue Financial” on January 8th, it is not uncommon in China for public funds to be sued, but it is very rare for a fund manager to be named as a joint defendant.
The case first involves whether suitability obligations have been adequately fulfilled. Shicheng’s managed fund has long concentrated heavily on a single track, with extreme volatility. Were these products sold to ordinary investors with insufficient risk tolerance? Did the fund company fully disclose potential risks?
Secondly, there is a serious deviation between investment style and contract agreements. For instance, the Guotou Ruixin New Energy Fund managed by Shicheng clearly stipulates that the proportion of investment in the new energy theme should not be less than 80%. However, data service provider Wind data shows that as of the end of the third quarter of 2025, the proportion of holdings in new energy individual stocks was only 5.95%, and the main direction had shifted to non-agreed areas such as AI and robotics. Some investors question: “If you are optimistic about AI, why not buy an AI-themed fund? When we buy a new energy fund, it is because we believe in the long-term development of the new energy industry.”
Of particular interest is the strong rebound of the new energy sector in 2025, with Ningde Times hitting a historic high. Sticking to the new energy track may lead to better performance.
Data shows that from 2021 to the first half of 2025, the total losses of the 6 funds managed by Shicheng amounted to 16.472 billion yuan, with the largest drawdown exceeding 70%. Many investors were deeply trapped, and the management scale dropped from over 20 billion at its peak to less than 10 billion. However, the poor performance did not affect fees, as these 6 funds still collected a total of approximately 1.1 billion yuan in management fees during the same period.
The report points out that Shicheng’s status as a defendant reflects the dilemma faced by public fund managers under the pressures of performance and scale: whether to adhere to the original strategy or follow market trends. Additionally, when the fund contract clearly specifies the investment scope, can the fund manager justify significant deviations on the grounds of “flexible adjustments”? The judgment of this trial may influence the compliance judgment of future fund managers’ investment decisions.
Public information shows that Guotou Ruixin Fund (Guotou Ruixin Fund Management Co., Ltd.) was established in 2002, formerly known as China Everbright Fund Management Co., Ltd. In 2005, Guotou Trust Investment Co., Ltd. and UBS Group acquired stakes in the company at 51% and 49%, respectively, making it a joint venture fund management company.