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Tencent begins fund advisory business in China

The service will make use of actively managed funds.

Teng An Fund, a wholly-owned subsidiary of Tencent, has launched its fund advisory business in the mainland, according to local media reports.

Investors are able to access the Tencent’s service, which it calls “Invest Together”, via Wechat, the firm’s social media application, according to a report by China Securities Journal. 

The service currently has two portfolios available, which are the “Zhong Ou Super Equity All Star” portfolio, with an annual fee of 0.75%, and the “Southern Stable Income” portfolio, with an annual fee of 0.5%, the report said.

FSA contacted Teng An Fund for more information, but it was not able to provide more details in time for publication.

The move follows after the firm received its fund advisory licence in December, which allows managers and distributors to tailor investment options for clients based on their financial status and financial management needs and restricts fees to no more than 5% of investors’ net asset value.

In October, the China Securities Regulatory Commission (CSRC) launched a pilot scheme to test the investment advisory business in publicly-offered mutual fund investments, in a move to slowly shift away from the traditional transaction-based model to a fee-based model of selling fund products.

Since the pilot started, 19 firms have been granted the licence (see below).

However, given that the advisory model is new in China, it will be challenging for scheme participants to convince investors to pay for advice.

“It would take time for the advisory scheme in China to go mainstream,” a Cerulli spokeswoman told FSA previously.

“Licensed players need to differentiate themselves to prove that the services are truly value-add. High net worth individuals could be more open to the new scheme, followed by the middle class or mass affluent who are willing to pay for knowledge, and finally, the general retail,” she added.

Another online distributor, Ant Financial, also jointly launched the “Help you to invest” service with Vanguard in April this year. The service comes after Vanguard and Ant Financial in December set up an investment advisory joint venture which targets China’s retail market. Vanguard holds a 49% stake in the joint venture.

According to the China Securities Journal report, Ant Financial and Vanguard’s service now has 200,000 users with an AUM of RMB 2.2bn ($317m).

While Tencent makes use of actively managed funds, Ant and Vanguard’s service makes use of index funds, the report added.

Firms with the fund advisory licence in China

Date received Firm Nature of business
October 2019 E Fund Management Fund management firms
China Southern Asset Management
China Wealth Management (a subsidiary of China Asset Management)
Harvest Wealth Management (a subsidiary of Harvest Fund Management)
Zhoung Ou Qian Gun Gun (a subsidiary of Zhong Ou Fund Management)
December 2019 Ant Financial Online distributors
Teng An Fund
January 2020 Industrial and Commercial Bank of China Banks
China Merchants Bank
China Construction Bank
Ping An Bank
March 2020 Guotai Junan Securities Securities firms
Galaxy Securites
Huatai Securities
ShenwanHongyuan Group
China International Capital Corporation
Guolian Securities
China Securities

Part of the Mark Allen Group.