Technology and big data analysis drive 80-time average growth in fund size at world’s most-used money market fund platform

Technology and big data analysis drive 80-time average growth in fund size at world’s most-used money market fund platform

Ant Financial Services Group, which operates online payments for the world’s largest e-commerce platform, has seen assets under management grow 80 times for the 13 money market funds on its Yu’e Bao online cash management platform.

That has boosted assets for the distribution platform which was originally known for the Yu’e Bao money market fund operated by Tianhong Asset Management. The fund had 1.13 trillion yuan (US$168 billion) in net assets at the end of 2018, making it the world’s largest, according to figures provided by Tianhong, which is 51 per cent owned by Ant Financial, which operates the service Alipay. Alibaba Group Holding, the parent of Ant Financial, also owns South China Morning Post.

Originally set up partly to manage the money transacted through Alibaba’s e-commerce platforms Taobao and Tmall Marketplace, Yu’e Bao started with just one money market fund launched by Tianhong Asset Management in 2013.

With the phenomenal growth at Yu’e Bao, tracking the boom in online shopping and smartphone-enabled e-payments across all aspects of daily life in China, Ant Financial moved to expand its offering of money market funds. The e-payment platform has since last May added more funds on to Yu’e Bao, growing it into a platform for managing spare cash within the Alipay mobile application, with 20 funds in total.

Yu’e Bao distributes funds by third-party managers other than Tianhong, which is 51-per cent owned by Ant Financial.

Technology was the main engine driving the performance of its funds, Ant Financial said. Alibaba, the largest e-commerce platform on earth, has also developed a computational capability that can handle 325,000 transactions and 256,000 payments every second, as of 2017.

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Those computational infrastructure and big data analysis are being brought to bear on managing Ant Financial’s funds. Liquidity prediction and management technology help fund managers plan and execute their investment strategies better.

HuaAn Ririxin Currency A was the fastest-growing fund in the six months following its integration onto AliPay’s platform, up by 418 times since May 2018. The fund’s net asset management stood at 136.2 billion yuan at the end of 2018, according to Eastmoney, a website that track funds’ performance.

HuaAn’s seven-day annualised return was 2.545 per cent on Monday, according to Eastmoney’s data. The fund is managed by HuaAn Funds, a manager that is also active in other open-ended mutual funds and exchange-traded funds.

The second-fastest growing fund was Jingshun Changcheng Jingyi Currency A fund, managed by Invesco Great Wall, with its net asset jumping 216 times since its integration into Yu’e Bao to 74.32 billion yuan. Its seven-day annualised return was 2.538 per cent, Eastmoney said.

Tianhong Yu’e Bao, the very first fund on the platform since 2013, recorded 114 million new users last year.

(The headline of this story has been updated to correct a previous headline which said the world’s largest money market fund returns grew 80 times. It has been amended to clarify it is the world's largest money market fund which has grown 80 times.)

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