China’s largest fund on Alipay lifts investor limits after assets drop 29%

1 min read
(Image credit: Ant Financial)

Ant Financial’s Tianhong Yu’e Bao, the world’s largest money market fund, lifted limits for individual investors on Wednesday following a nearly 30% decrease in asset volume in 2018.

In a notice released Tuesday by Tianhong, individual limits on total investments and daily contributions have been lifted beginning Wednesday to “better meet demands from general investors” (our translation). After five years of breakneck growth, Tianhong Yu’e Bao began trending downward in 2018, with assets under management falling 28.5% to RMB 1.13 trillion compared with RMB 1.58 trillion a year earlier.

Operated by Chinese asset management firm Tianhong and available on Alibaba’s payment platform Alipay since 2013, the fund allowed users to invest at a rock-bottom minimum of RMB 1 ($0.15), and featured yields that reached as much as 4% in mid-2017. Tianhong Yu’e Bao—not to be confused with Yu’e Bao, Alipay’s online wealth management platform—became the world largest money market fund in April 2017 when it was managing assets of $165.6 billion, surpassing JP Morgan Chase’s US Government market fund ($150 billion).

The Ant Financial holding company began capping investments in mid-2017. Investors could not exceed a total maximum amount of RMB 100,000 beginning August 2017, more than halving the limit placed in May of the same year. Four months later, the daily maximum contribution was capped at RMB 20,000. It had also imposed a temporary daily cap in February and March 2018 to ensure the fund’s smooth operation and “prevent the fund from growing too rapidly.”

Its rapid growth sparked concern from regulators in recent years, one of which expressed unease about its “overly large volume compared to offerings from traditional banks”(our translation). China Securities Regulatory Commission (CSRC) implemented new regulations in October 2017, urging public fund managers to prevent asset volumes from exceeding 200 times their risk reserves.

Ant Financial started introducing more funds from local asset management firms on its payment platform beginning in May 2018. Currently, there are 20 money market funds available on Alipay.