Uproar! Tens of Billions in Private Equity Quantitative Funds Hit Record Highs, First Time Exceeding Subjective Long Funds, But Bin Warns of Risk

Ask AI · Di Bin Warns About Quantitative Risks: What Are the Specific Grounds?

Daily Economic News Reporter: Yang Jian   
Editor: Ye Feng

In February this year, the private equity securities product registration market experienced explosive growth, with billion-level leading private equity firms becoming the main force in filings. For the first time, the number of billion-dollar quantitative private equity funds surpassed that of subjective long-only funds. This industry shift has attracted widespread attention in the private equity circle. Industry heavyweight Di Bin issued warnings about risks and engaged in a debate with Wang Yiping, head of a billion-dollar private equity firm.

February Product Filings Doubled Year-over-Year and Month-over-Month

According to Private Equity Data Platform, as of February 28, 2026, a total of 722 private equity institutions had registered 1,366 private securities products, representing a 151.57% increase from 543 products in February 2025, and a 100.88% increase from 680 products in January 2026. Both year-over-year and month-over-month figures doubled, indicating a significant increase in private equity firms’ deployment enthusiasm. This growth highlights the accelerated pace of fund managers’ deployment and a positive industry outlook on the market.

Looking at the registration landscape, billion-dollar leading private equity firms have become the absolute main force. The top three private equity firms by registered products in February were all billion-dollar firms, with 59 firms registering a total of 326 new products, accounting for 25.16% of the total filings that month. They are the core drivers of the overall growth in filings.

Regarding the details of February’s filings, the enthusiasm for registering billion-dollar quantitative private equity funds was high. Ming Sun Investment ranked first with 33 registered products, mainly focusing on macro strategies and multi-strategy hedging; Hei Ying Asset and Shanghai Lingren Private Equity followed with 23 each; Han De Investment and Wanyan Asset registered 22 each; Chengqi Private Equity registered 21; Ming Shi Fund, Evolution Theory Asset, and Jiukun Investment registered 16, 15, and 12 respectively, highlighting the strong presence of top quantitative strategies.

Reviewing the development of quantitative private equity, its scale expansion is clear: at the end of 2019, 4 out of 37 billion-dollar private equity firms (11%) were quantitative funds; by the end of 2021, 24 out of 104 billion-dollar firms (23%) were quantitative; as of February 2026, the total number of domestic billion-dollar private equity firms reached 126, with the number of billion-dollar quantitative private equity funds surpassing subjective long-only funds for the first time. The industry trend toward resource concentration in top quantitative firms is becoming more evident.

Billion-Dollar Quantitative Funds Surpass Subjective Long-Only Funds; Industry Leader Di Bin Warns of Risks

As of the end of February 2026, China’s billion-dollar private equity institutions reached a new high of 126, with most new entrants being quantitative funds. This marked the first time that the number of billion-dollar quantitative private equity funds exceeded subjective long-only funds, indicating that quantitative trading has shifted from a supporting role to one of the dominant forces in the A-share market, sparking strong market reactions.

This industry shift has caused concern for industry veteran Di Bin. Recently, Di Bin, Chairman of Dongfang Harbor, issued a widely circulated warning about the risks of quantitative funds. His concerns about the rapid expansion of quantitative funds have once again brought potential hidden risks to the stock market into public focus. Di Bin believes that large amounts of capital concentrated in small- and mid-cap stocks through algorithms could trigger chain reactions if market conditions reverse or if quantitative strategies fail collectively, potentially causing liquidity to plummet, volatility to spike, and market impact to far exceed that of traditional active funds’ “踩踏效应” (stampede effect).

Currently, the A-share market is in a correction phase, with many sectors showing signs of being “harvested” by quant funds. Some investors have openly said, “On Friday, stocks hit the limit up; on Monday, they hit the limit down—completely a quant harvesting rhythm,” which indirectly confirms Di Bin’s concerns are not unfounded.

In response to Di Bin’s views, Wang Yiping, founder and chief investment officer of Evolution Theory Private Equity, a billion-dollar private fund, offered a different perspective. He stated that after the liquidity crisis in small-cap stocks in early 2024, most billion-dollar quantitative private funds have significantly reduced exposure to small-cap styles. This can be verified through the weekly performance of small-cap stocks during the subsequent two years of weak cycles, which professional institutions can clearly observe as strategy iterations.

A senior executive from a billion-dollar quantitative private equity firm told reporters that the potential risks of micro-cap stocks are not inherent to quantitative investing itself. The core lies in strategy design, risk control standards, and style exposure management. The firm employs four major measures to avoid related risks: first, extremely diversified holdings; second, strict liquidity constraints to ensure orderly exits in extreme situations; third, precise control of style exposure; and fourth, adopting medium- to low-frequency turnover strategies to reduce market impact and promote stability.

Chen Xinwen of Heizi Capital, with many years of experience in the private equity industry, said he understands that behind the “quantitative storm” is a reconstruction of market microstructure and a redistribution of capital discourse. While Di Bin’s warnings deserve industry attention, the market’s complexity far exceeds black-and-white judgments, and one must look beyond appearances to find the truth.

Chen explained that the main risks of quantitative trading include three aspects: First, the risk of “flash crashes” caused by strategy homogeneity. When strategies like market-neutral or index-enhanced become overcrowded, factor failures and collective rebalancing can create negative feedback spirals. The extreme reversal of micro-cap styles in 2024 has shown signs of this, with excessive exposure of many quantitative firms to market-cap factors leading to stampede-like rebalancing and sudden liquidity evaporation in small- and mid-cap stocks. Data shows that the correlation coefficient of domestic quantitative strategies has risen from 0.3 in 2020 to 0.65 in 2024, indicating increasing strategy crowding.

Second, liquidity siphoning effects are distorting pricing logic. High-frequency trading and algorithmic chasing of gains amplify market volatility, especially during fragile sentiment periods, where programmatic stop-loss orders accelerate market bleeding, creating a “downward-spiral” cycle. The DMA strategy crisis in early February 2024 is a clear example, where snowballing stop-loss orders and quantitative liquidations resonated, causing the CSI 500 and CSI 1000 indices to fall over 15% in the short term.

Third, the lack of tail risk hedging is worrisome. Some quantitative products, aiming for high Sharpe ratios, excessively compress risk exposure, but in extreme market conditions, they face liquidity shortages. International examples include the March 2020 US stock circuit breakers and the 2022 UK pension fund crisis, both of which were caused by crowded quantitative strategies triggering systemic risks. The commonality is that when everyone tries to “safely bear risks” through similar risk parity models, the market loses its last liquidity providers.

Daily Economic News