HK’s non-ETF robo-advisor

Li Ting, Yunfeng Financial Group

Li believes that Youyu Wealth’s fund selection capability is a key differentiator for the robo-advisory platform.

“Most of the robo-advisors are using ETFs. We are using active funds. If you are using ETFs, you pretty much only need one capability, which is asset allocation,” she told FSA.

Youyu Wealth was first launched in April last year in Hong Kong and is now available on iPhones and Android devices. The app, which is available in both English and Chinese, advises on a portfolio of mutual funds in six major asset classes: equities, bonds, REITs, commodities, allocation funds and money market funds, according to the firm.

The number of funds available to investors has grown to 351 from 145 when it was launched, Li said, adding that the funds are products from 17 fund houses, such as Blackrock, Franklin Templeton, Pimco and T Rowe Price. Value Partners, which recently signed a distribution agreement with the firm, is expected to be the latest to join the list, she said.

Li noted that the firm uses a fund selection process to bring funds onto the platform. “We have been very selective in terms of managers, so the goal for us is to not build a fund supermarket.”

The firm has a team of six responsible for fund selection. They put funds through a proprietary quantitative analysis that screens for short- and long-term performance, capital flows and third-party ratings.

They also conduct a qualitative analysis of the funds by interviewing fund managers and conducting onsite due diligence, according to Li.

Yunfeng Financial has begun to offer its platform to other distributors, such as banks, Li said, though she declined to disclose how many clients the firm has under this business-to-business arrangement.

“Other financial institutions approach us as others cannot do the technology part or they want the manager selection part. Some of them just use Morningstar, but that is just one database.”

The focus list

Although there are 351 funds on the platform, Youyu Wealth has a focus list, similar to what the banks have, the app shows. Currently there are 11 funds on the focus list. Li said clients can choose the recommended funds they prefer for specific asset classes.

There are seven model portfolios based on a client’s risk profile, which ranges from conservative to aggressive, the app shows.

The asset allocation of the model portfolio, as well as the focus list, are updated on a quarterly basis based on the firm’s investment committee, Li said.

Youyu Wealth’s current focus list

Source: Youyu Wealth