On March 26, Chinese fintech giant Ant Financial and asset management company Vanguard Group, which managed USD 5.6 trillion as of the end of August 2019, launched (in Chinese) a fund investment service on Alipay, Ant's multiservice platform. The new product, named 'Help you invest,' has a minimum investment threshold of only CNY 800 (USD 113). The service fee is charged at approximately 0.0014% of the total daily assets, which is deducted from the account on a quarterly basis and is charged at the time of transfer.
This fund's investment advisor introduced their service based on the VCMM (Vanguard Capital Markets Model) model, which is combined with investment goals and risk preferences to generate tailored investment strategies for each user. In addition, the product will provide a predicted rate of return. In general, it can be regarded as a 'Lazy Investment' service aimed at users who lack professional knowledge and have only a small amount to invest with.
Before the birth of this product, the cooperation between Ant Financial and Vanguard was established in December 2019. Besides the 'Help You Invest' function on the home page, other additions include financial market reports, investment tips and basic market knowledge – with others on the way. Other Internet giants in China are also showing interest in this area and providing investment-related services for clients. Examples include Tenpay, which is transforming from a transaction platform to a tailored service provider. It focuses first on investor education and growth and second on asset allocation and investment advisory services.
As for the fund investment advisor industry in China, in October 2019, the Securities Regulatory Commission officially launched (in Chinese) a pilot project for public fund investment consulting. Five fund companies became the first batch of pilot institutions for this business. Three third-party fund sales companies also completed trial filing last year, including Ant Financial. On February 29, 7 brokers and 2 banks were approved for this project. Players gather in the fund investment advisor track and compete for market share.
Since Alipay owns huge customer flows and Vanguard owns investment management experiences, their marriage will be a strong competitive advantage in this emerging market – a market where other problems may still endure. For instance, a senior person in the asset management industry reminded (in Chinese) users, "Is the Vanguard Group's investment experience transplanted to the domestic market really suitable? The question should be asked. For example, good asset allocation portfolios are based on the correct understanding of market allocations and predictions. Can foreign institutions understand the Chinese market to beat domestic institutions? This also requires market inspection."