(Yicai Global) July 22 -- The investment consultancy joint venture set up by Chinese fintech giant Ant Group and the US’ Vanguard Group, the world’s biggest public mutual fund provider, has served more than 200,000 clients since it began operations on March 26, a person close to Vanguard told Yicai Global yesterday.
Vanguard Investment Consulting Shanghai, which is 51 percent owned by Hangzhou-based Ant Group and the rest by Vanguard’s China arm, began offering low-cost wealth advisory services to the 900 million users of AliPay, the world’s biggest mobile payment platform operated by Ant Group, giving it the opportunity to get as close as possible to China's middle-class investors.
“The average allocation by the new clients at about USD1,575 per investor is higher than we anticipated,” Jim Norris, managing director of Vanguard’s international operations, told the Financial Times on July 19.
Individual investors can subscribe to the service with a minimum investment of just CNY800 (USD114.70). Previously, the best financial advice was only available to wealthy clients.
Through an automated, algorithm-based Robo-Investor service called ‘Let’s Help You Invest’ on the AliPay platform, the system provides customized services based on investors’ investment objectives, time horizon and risk preferences and can tailor an investment strategy for customers with suggestions on how to allocate assets and realistic expectations on investment returns.
"Once subscribed, investors can follow the progress of their portfolio in their accounts and will receive quarterly reports," an industry insider told Yicai Global. The JV charges an annual service fee of 0.5 percent of the customer’s assets, payable quarterly.
However, competition between robo-investors in China is becoming fiercer, driving down service fees. Some organizations are charging just 0.3 percent per annum. Despite the support from its strong Chinese partner, Pennsylvania-based Vanguard will still face challenges in the Chinese market, the insider said.
Editors: Tang Shihua, Kim Taylor