Xiaoming Zhou was an ordinary investment manager with the brilliant idea of starting his own hedge fund, but like most of the others before him, his plan failed. However this failure led him into Tianhong Asset Management, a place where he could have kicked off his own fairy tale.
Tianhong Asset Management Co., Ltd. is a privately owned investment manager. The firm manages open-ended mutual funds for its clients and it invests in the public equity markets of China. Even if Tianhong’s name is not really known, Yu’e Bao, its money market fund, has attracted hundreds of millions of users in China. Its success is due to the huge demand for retail investment that can be unlocked by mobile phones and to its returns that beat those of bank accounts.
Yu’e Bao has incredibly grown since it was launched in 2013 and consequently it has catapulted Tianhong from one of the smallest to the largest fund house in China, overseeing $120.22 billion of assets. Mr Zhou, who joined the company in 2011, is the second-in-command general manager and an influential figure.
“The reason Yu’e Bao saw explosive growth is because at that time there was e- commerce, third-party payment and [the] internet. Mobile internet makes it possible for a product to reach a huge number of users in a very short time, to catch people who might not even have heard of wealth management before.”
Rivals have tried to innovate in order to compete with Yu’e Bao: Tencent, the internet company, and Xiaomi, the world’s third-largest smartphone maker, have both launched similar money market funds that use social media and mobile phones for distribution. Due to the increasing competition, Mr. Zhou is looking for new ways to outperform his competitors.
“All those using Yu’e Bao, they do have other wealth management needs and we need to serve those needs as well,” he says. “After Yu’e Bao we are trying to provide other wealth management products in a very low-cost and user-friendly way to as many users as possible. We are hoping to provide both bond and equity funds to more users in the future.”
At this point it is necessary to introduce the role of Ant Financial, an affiliate of the Chinese e-commerce giant, Alibaba. Before this, we must mention that in the five years since Mr Zhou abandoned his hedge fund to join Tianhong, the company has become the country’s main money manager and accumulated billions of renminbi in assets. As a consequence of this outstanding performance, Ant Financial agreed to buy a controlling stake in Tianhong just months after Yu’e Bao was launched. Ant Fortune, a wealth management app owned by Ant Financial, has recently started to trial a background advice system, where a robo-adviser profiles investors and offers them portfolios that suit their needs, the perfect innovation that could enable Tianhong to build a greater competitive advantage against its rivals. More precisely, the 300m user base and the financial help of Alipay, could make Tianhong the leader of a new age of retail investment in the whole China.
Mattia Degiovanni
Tianhong Asset Management Co., Ltd. is a privately owned investment manager. The firm manages open-ended mutual funds for its clients and it invests in the public equity markets of China. Even if Tianhong’s name is not really known, Yu’e Bao, its money market fund, has attracted hundreds of millions of users in China. Its success is due to the huge demand for retail investment that can be unlocked by mobile phones and to its returns that beat those of bank accounts.
Yu’e Bao has incredibly grown since it was launched in 2013 and consequently it has catapulted Tianhong from one of the smallest to the largest fund house in China, overseeing $120.22 billion of assets. Mr Zhou, who joined the company in 2011, is the second-in-command general manager and an influential figure.
“The reason Yu’e Bao saw explosive growth is because at that time there was e- commerce, third-party payment and [the] internet. Mobile internet makes it possible for a product to reach a huge number of users in a very short time, to catch people who might not even have heard of wealth management before.”
Rivals have tried to innovate in order to compete with Yu’e Bao: Tencent, the internet company, and Xiaomi, the world’s third-largest smartphone maker, have both launched similar money market funds that use social media and mobile phones for distribution. Due to the increasing competition, Mr. Zhou is looking for new ways to outperform his competitors.
“All those using Yu’e Bao, they do have other wealth management needs and we need to serve those needs as well,” he says. “After Yu’e Bao we are trying to provide other wealth management products in a very low-cost and user-friendly way to as many users as possible. We are hoping to provide both bond and equity funds to more users in the future.”
At this point it is necessary to introduce the role of Ant Financial, an affiliate of the Chinese e-commerce giant, Alibaba. Before this, we must mention that in the five years since Mr Zhou abandoned his hedge fund to join Tianhong, the company has become the country’s main money manager and accumulated billions of renminbi in assets. As a consequence of this outstanding performance, Ant Financial agreed to buy a controlling stake in Tianhong just months after Yu’e Bao was launched. Ant Fortune, a wealth management app owned by Ant Financial, has recently started to trial a background advice system, where a robo-adviser profiles investors and offers them portfolios that suit their needs, the perfect innovation that could enable Tianhong to build a greater competitive advantage against its rivals. More precisely, the 300m user base and the financial help of Alipay, could make Tianhong the leader of a new age of retail investment in the whole China.
Mattia Degiovanni