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World’s biggest money market fund reigns in max investment

Alibaba-distributed fund Yuebao has lowered the maximum individual investment for the second time as China’s regulator tightens rules for money market funds.



The investment cap for the Yuebao fund, which is managed by Tianhong Asset Management, was set at RMB 100,000 ($14,985.76), the firm said yesterday in a statement, noting that current investors with more than the said limit are not affected.

The firm said that it set the limit have a more balanced and stable operation and to “safeguard the fundamental interests of investors”.

The investment cap was first cut in May and the limit was set at RMB 250,000 from RMB 1m, according to a statement at the time. 

Yuebao, which is tied in to Alibaba’s online payment platform Alipay, is the world’s largest money market fund with RMB 1.43trn ($210bn) of assets under management, making Tianhong AM the biggest fund management firm in China.

Launched in 2013, Yuebao quickly gained popularity, amassing around RMB 100bn in assets from 30 million investors just six months after it was rolled out. 

Tighter regulation

Tianhong’s investment caps come at a time when China’s financial regulator is seeking tighter rules for money market funds. In March, the China Securities Regulatory Commission (CSRC) drafted a consultation paper to further strengthen regulation on the liquidity management of money market funds, according to a Fitch Ratings report.

One of those rules require that the net assets of all money market funds managed by a single fund house must not exceed 200 times of the firm’s provisions for risk, Li Yiming, Shenzhen-based manager research at Morningstar China, told FSA

“The money market fund managed by Tianhong has also grown to more than 20% of the whole money market product market in China, which would inhere significant risk to the market overall, and this is not something that the regulator would love to see,” she added.

Having around 325 million accounts on Alipay, Yuebao accounts for 28% of China’s RMB 5.1trn money market fund industry, according to the Fitch Ratings report.

The second largest manager of money market funds in China is ICBC Credit Suisse with RMB 340bn in AUM. It has two funds that accounted for 7.6% of the MMF market at the end of March.

Such domination of the market by three products raises concerns about liquidity risk in the event of significant redemptions, the report said.


Part of the Mark Allen Group.