Vanguard gave up mutual funds in China, but worked with Ant

BEIJING – Vanguard experiment with financial technology in China shows early signs of success.

In less than a year, more than 1 million users have signed up for “BangNiTou,” a smartphone-based investment advisory product run by the Alibaba-affiliated Ant Mutual fund giant Ant. .

According to a statement from BangNiTou on Thursday, just four days after Vanguard said it would give up pursuing a mutual fund license in China. Instead, the company intends to focus on its partnership with Ant.

Ant operates Alipay – one of the two dominant mobile payment applications in China – on which BangNiTou is located.

The Vanguard product means “help you invest” in Chinese and launched in April 2020. It is a form of automated robotic counseling financial planning that uses data analysis to determine how a client should invest based on factors such as age and income.

While such automated investment products have grown in popularity in the US, the concept of personal finance – either through human or automated advisors – is still much less common in China. Most locals save a lot for an investment in the real estate market or for medical treatment in case of severe illness. This is partly the result of the limited implementation of health insurance, stock market volatility and high minimums for investment in funds.

For BangNiTou, the minimum investment is 800 yuan ($ 123), about 10% of the average monthly salary officially reported in cities.

In July, Vanguard told the Financial Times that new customers allocated a significantly higher amount, averaging about $ 1,575, for a total of $ 315 million in assets for $ 200,000. Updated figures were not available.

“While the number of BangNiTou users has grown rapidly, China’s fund investment consulting market is still in its infancy, with significant potential for further growth,” said Peter Zhang, CEO of Vanguard with Ant. in a statement.

Foreign financial institutions received the long-awaited green light last year to take full ownership of local Chinese companies in futures, mutual fund management and securities. It is not clear what rules might apply in financial or fintech technology.

Vanguard joint venture with Ant was launched at the end of 2019. Ant holds a 51% majority stake, according to Chinese business database Qichacha.

Alibaba supports approximately 1 billion users worldwide. He became an early player in China’s wealth management industry, with his money market fund linked to Alipay, “Yu’e bao”, which had assets under management of about 1.7 trillion yuan, peaking at the beginning. of the year 2018.

Late last year, Chinese authorities abruptly suspended Ant’s plans for what would have been the largest initial public offering to date. Beijing later expanded its regulations on fintech technology and said the industry should be subject to the same rules as banks.