Of the 124 asset management companies in China, about 100 of them are distributing products on the Alibaba-owned Ant Fortune platform, the firm said in a statement, referring to data from the Asset Management Association of China.
Ant Fortune is a wealth management platform that caters to consumers with little financial management expertise. In 2017, the firm launched Caifuhao (“Fortune”), which allows third-party financial institutions to sell investment products directly to investors inside the Ant Fortune investing app.
According to the statement, Caifuhao gives financial institutions access to artificial intelligence capabilities such as user profiling, operational optimisation and smart marketing.
For mutual fund sales, it has an advantage over Chinese bank distribution networks, according to an Ant Fortune spokesman in an email reply to FSA.
“In traditional consignment channels, fund managers lack technical tools and services that accurately understand the needs of investors.
“Using Caifuhao, fund managers can better understand customer needs through AI intelligence engine, and recommend financial products and investor education services (including investment experience, market analysis, etc.) suitable for their risk-based preferences,”
He gave an example of fund managers improving efficiency on the platform. An AI smart mapping function on Caifuhao automatically generates the content needed for investor education services such as charts. “This content production process, in the past, required the fund manager to hire an external design team, which took about a week to produce.”
In terms of fund distribution in China, the firm claims that asset managers have had an average of 70% growth in the number of transacting users since they opened Caifuhao accounts.
“To give an example: by the end of 2018, the number of users of Huaxia Fund, which opened on Caifuhao, achieved a 600% increase, and the number of fixed-income customers increased by 300%,” according to the spokesman. However, he did not provide data on the number of clients that represents before and after Huaxia signed on to the platform.
The statement said that 4000 products from 80% of China’s asset management industry were being distributed via its platform.
However, a firm spokesman had no knowledge of funds sold through the Mutual Recognition of Funds scheme on the platform.
Another Alibaba product, Yuebao, which is also tied to its online payment platform Alipay, is the world’s largest money market fund. It is managed by Tianhong AM, the biggest fund management firm in China.
Launched in 2013, Yuebao quickly gained popularity, amassing around RMB 100bn ($14.5bn) in assets from 30 million investors six months after it was rolled out.