Labubu doll craze bet pays off for Chinese fund manager who drops liquor stocks to ride Gen Z's emotional spending wave
A 30-year-old fund manager in China is defying traditional investing strategies by turning to Gen Z trends. Xie Tianyuan, who manages the Penghua Selected Return Flexible Allocation Mixed Fund, has delivered a 24% return so far this year. This places his fund in the top 3% of nearly 2,300 funds, according to Bloomberg. Instead of betting on long-favored sectors like technology or liquor, Xie shifted his focus to emotional consumer brands, including Pop Mart, the company behind the popular Labubu dolls.
A strategic shift to emotional consumption
After taking over the fund in 2024, Xie made a key change—he replaced the fund's top holding, liquor producer Kweichow Moutai Co., with Pop Mart. Pop Mart now holds a 10.5% share in his portfolio, the highest permitted by his investment guidelines. Explaining his approach, Xie said, 'I pick companies that have breakthrough products, new business models and innovative sales channels, products that are both visually appealing and fun.'
Gen Z trends lead portfolio direction
Xie, who grew up immersed in Japanese anime culture, credits that experience for helping him spot design trends and character appeal. He blends his personal interests with online research to identify rising brands. His other major holdings also reflect Gen Z consumer behavior. They include Mao Geping Cosmetics, which has surged 83% this year, pet food brand Yantai China Pet Foods, and Chongqing Baiya Sanitary Products.
He believes consumer behavior is changing fast. 'The line between what is considered 'old' and 'new' consumption is blurring,' he said. 'Even old trees can sprout new shoots,' he added, emphasizing that traditional companies may have to reinvent themselves to survive.
Regulatory risks remain
Despite Pop Mart's success, the brand isn't immune to risk. Recently, its shares declined after Chinese state media called for stricter oversight of 'blind box' toys—products sold in mystery packaging to encourage repeat purchases.Xie Tianyuan's bet on emotional consumption reflects a shift in China's investing landscape shaped by Gen Z consumer behavior.
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