As China's private equity industry matures, the RMB secondaries market has concluded its first full structural cycle. A profound performance paradox has emerged in this ecosystem: while traditional portfolio theory promotes diversification, an aggravated power-law return distribution means broad asset dispersal effectively destroys value rather than creating it.

Based on Nebula Advisors' proprietary database tracking 15 years of fund performance, Stanley Geng compares RMB-denominated funds against global benchmarks. The analysis reveals that conventional diversification strategies may actually undermine returns in this market, where a small number of funds generate outsized gains that skew the entire return profile.

For secondary investors, this paradox presents both opportunities and risks. The market's maturation creates potential for alpha generation through selective concentration, but requires abandoning traditional portfolio construction principles. Understanding the unique return dynamics of Chinese private equity is essential for navigating this evolving landscape and achieving sought-after returns in the secondaries space.