Lu International (Hong Kong) has launched an open robo-advisory platform in the territory that offers individual asset allocation advice through “Lucy”, its artificial intelligence-powered system, according to a statement by the firm.
Lucy will offer portfolio options taking into consideration the investor’s financial profile including their income, financial objectives, risk appetites and investment objectives. Advisory fees will be waived for a limited period and there is a low minimum investment threshold.
“AI-backed solutions can enable retail investors choose an appropriate strategy that will be executed by sophisticated algorithms offering peace of mind,” said Cai Hua, CEO of Lu Hong Kong.
Concurrently, BNY Mellon Investment Management has agreed to provide its outsourced chief investment officer services to give investment advice to Lu Hong Kong based on the risk profiles and investment restrictions defined by the robo-advisor. It will be the first Asia Pacific ex-Japan collaboration for both Lu Hong Kong and BNY Mellon IM, according to the statement.
Lu Hong Kong claims that its platform will eliminate the impact of emotional bias by offering a systematic and quantitative tool that ensures retail investors stick to a risk management strategy that meets their risk preference and investment targets.
It also believes that the platform will reduce the time associated with face-to-face know-your-customer processes — especially for tech-savvy investors — and offer typically expensive sophisticated and complex investment strategies at lower cost.
Lu is a subsidiary of retail fintech enterprise Lufax Holding, an associate company of Ping An Insurance of China. Lu’s wealth management platform was set up first in Singapore in 2017, and then extended across the region to Malaysia, Indonesia and also Thailand through a partnership with Kasikornbank.
Most recently, it teamed up with Schroders Singapore to offer digital wealth management services throughout Southeast Asia. The collaboration will make use of Schroders’ investment management skills and Lu’s digital capabilities to co-develop multi-asset products and services, including thematic and sustainable investments, for various types of retail clients in the region. The service will officially launch in early Q4 2021, a Lu spokesperson told FSA.
Lu also launched an app in Hong Kong in August 2020, that has subsequently expanded to include offerings of US-dollar denominated funds.
By using Lu Hong Kong’s open robo-advisory platform, retail customers will invest in a model portfolio that may include BNY Mellon Investment Management funds and other leading asset managers across equities and fixed income in both developed and emerging markets. As well as providing OCIO services, BNY Mellon IM has $2.2trn in AUM, according to the firm.
“We are looking forward to working more closely with digital banks, fintech startups, as well as wealth managers and family offices looking for an outsourced investment solution,” said Doni Shamsuddin, head of Asia-Pacific (ex-Japan) at BNY Mellon Investment Management.
According to a report by German data research firm Statista, the total number of users of robo-advisory services in Hong Kong is expected to increase by 28% to 215,500 this year and reach 368,800 by 2025; total AUM associated with investments made with the help of robo-advisors is forecast to more than triple to $6.4bn by 2025 from $1.74bn in 2021.
Looking forward, Lu Hong Kong plans to use its financial technology capabilities to increase access to robo-advisory services following the official launch of the cross-border wealth management connect scheme.