Online distribution of mutual funds has exploded in China in recent years, with mobile fund sales platform Ant Fortune among the new market entrants trying to expand their slice of a fast-growing pie.
Launched in August 2015, the app – part of Ant Financial, an affiliate of e-commerce giant Alibaba – now has some 25 million active users. Ant Fortune is working on growing its investor base, such as by developing a robo-advisory service.
It declined to reveal its sales volume, but presumably has some way to go to catch Tiantian Fund Sales, the biggest online funds distributor, set up in 2012. As of September 30 Tiantian had 104 managers on the platform selling 3,763 funds, and posted sales volume of Rmb235 billion over the first nine months of this year. The firm does not disclose its user numbers.
At present, Ant Fortune merely recommends products, rather than offering a robo-adviser – which employs an algorithm to combine funds to construct a portfolio – noted Huang Hao, president of Ant Fortune (pictured below).
But it is working on a robo-advisory platform, which he said no Chinese fund house or internet company offers at present, said Huang.
There is a mobile app called Clipper Adviser in China that describes itself as a robo-adviser. However a Shanghai-based consultant said it was not a true robo-adviser because it offered pre-set portfolios for investors to choose according to their risk appetite/investment profiles.
Ant Fortune does has its own embryonic service similar to a robo-adviser, which it calls portfolio management. The service works with six fund houses, each providing three investment portfolios with different risk levels – ‘conservative’, ‘prudential’ and ‘balanced’. The managers are China Merchants, China Southern, Guangfa, Harvest, ICBC Credit Suisse and Tianhong.
Look out for an article in the coming days on how Ant Fortune picks products for its platform.
Ant Fortune's background
The Chinese public's interest in online investing was raised by the success in 2013 of Yu’eBao, Alibaba's money-market fund. As of June 30 its AUM stood at Rmb816 billion ($118 billion), and as of mid-October it had 305 million users.
Following the launch of Yu’eBao, Ant Financial started selling funds on Alibaba’s online shopping platform, Taobao, in November 2013.
The number of partnering fund houses had reached 38 when the company decided to terminate the service in May 2015. It then launched Ant Fortune in August 2015, after investing Rmb200 million ($29 million) and taking a 60.8% stake in fund123.cn, an online distributor, in April 2015.
However, despite the huge perceived potential of mobile wealth management, some fund houses – such as Tianhong, which manages Yu’eBao – are wary of what they see as the high marketing costs of such platforms. This reflects the entrenched advantage of established e-commerce players with huge client bases.
An Ant Fortune spokesperson declined to comment when asked about the marketing costs of using the platform.