Ant Fortune, a mobile fund sales platform owned by Alibaba affiliate Ant Financial, may consider expanding its range of fixed-term products by sourcing more from securities firms and insurers, says Huang Hao, the company's president.
He spoke to AsianInvestor recently about how the firm – which launched in April last year and is developing a robo-adviser – selects and distributes products.
Ant Fortune uses what it calls an 'artificial intelligence' approach to recommend funds. It makes suggestions based on the each investor's risk appetite and taking account of the funds he or she saves as favourites or asks about in the app’s discussion forum. Users with low risk appetite, for example, won’t receive recommendations on equity funds.
Ant Fortune picks 100-200 funds to recommend to investors from a list of 1,600 offered by the 95 managers on the platform. It reviews those products on a monthly basis. At present, the list mainly comprises funds, including QDII products, run by Chinese managers, plus two authorised under the Hong Kong-China mutual recognition of funds (MRF) scheme.
Ant Fortune's key criterion for fund selection is performance, and it interviews the fund houses and managers to understand their investment strategies, Huang said.
Moreover, the platform likes working with fund houses that share its management philosophy, he added. For example, JP Morgan Asset Management has been promoting the concept of automatic investment plans globally, so it naturally matches Ant Fortune’s campaign, he noted.
Ant Fortune's most popular products are fixed-income funds, followed by hybrid and equity funds, said Huang. It can only offer onshore or MRF scheme funds.
Being part of Alibaba, which has experience of lending, the platform also sells fixed-term products that invest in loans to individuals or small and medium-sized enterprises, which it sources from financial institutions.
Another part of the offering are automatic investment plans, which entail a fixed amount of money being paid in regularly. Ant Fortune has launched three campaigns for such plans in the past year.
One of these is based on a Hong Kong-domiciled (or ‘northbound’) product under the MRF scheme – the Asian total-return bond fund run by China International Fund Management, JP Morgan AM’s mainland joint venture. The other two plans invest in local hybrid funds – one from Aegon-Industrial Fund Management, the other from Guotai Asset Management.
Another northbound MRF product – a China equity fund from Hong Kong's Zeal Asset Management – is also available on the platform.
China's online fund sales were estimated at about Rmb600 billion ($90 billion) as of end 2015, according to McKinsey. That accounted for about 7% of the Rmb8.4 trillion total mutual funds AUM in China at that time.