It's red ink galore at Chinese investment funds. More than half of the 72 fund managers to issue 2nd quarter results made losses, with stock funds leading the decline. Several fund managers are apologizing for their misjudgements.

Chinese investment funds are feeling the pinch from tighter liquidity conditions.

The industry posted a loss of nearly 50 billion yuan, or $8 billion. Stock funds lost the most--with 45 billion yuan in red ink. Redemptions poured in during the second quarter, with cash funds being the hardest hit. Its redemption ratio has reached nearly 42 percent.

"At the later part of June, the central bank tightened liquidity measures, which led to market panic and resulted in some short term performance drop in funds. And end of June is also a settlement period for funds in China, that's why we see heavy losses in holdings. " said Lin Yun, finance commentator.

Tom Liu, CEO of data provider ChinaScope Financial says the downward pressure on the economy has made investment less rewarding. This creates hot money outflow from China, and lowers the expected value of the RMB in the near term. But he also says the central bank's recent interest rate reforms may help liquidity flow to the right investments.

The worst performers of the first half were index funds and those focused on resources stocks. For the second half, many funds are turning their focus to industries such as healthcare, food, and information technology.