HEAD-TO-HEAD: Tianhong vs JP Morgan

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Pictured above: Li Huang, Fitch Ratings

In the five years since it launched, China-based Tianhong Asset Management’s Yuebao has become the world’s largest money market fund, holding RMB 1.56trn ($233bn) in assets.

Yuebao became widely popular in China largely because it was one of the first fund products to be distributed through a payment platform, Alibaba’s Alipay.

However, the fund’s size has raised liquidity risk concerns for Chinese investors and the financial industry as a whole. Yuebao accounts for 25% of China’s money market industry. Taken together with the next two largest money-market funds in the country, the figure is 35%.

Movements in China’s money market products are likely to influence the country’s mutual fund industry. In terms of assets, money market funds make up 50% of the domestic mutual fund market.

The second largest money-market fund in the world is in the US: The JP Morgan US Government Money Market Fund. As of the end of September, the fund had assets of $140bn.

The JP Morgan product carries comparatively lower risk than Yuebao for the domestic financial industry and for investors, according to Li Huang, associate director for funds and asset managers rating group at Fitch Ratings.

The JP Morgan fund only accounts for 5% of the all money market products in the US. In addition, total US money market funds account for 14% of the country’s mutual fund industry.

FSA has asked Li to provide a comparative analysis.

Snapshot as of September 2017

Source: Fitch Ratings

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