April 16, 2019 / 12:53 PM / 8 months ago

Tianhong, controlled by Jack Ma's Ant Financial, seeks diversification outside China

SHANGHAI (Reuters) - China’s Tianhong Asset Management Co, controlled by Jack Ma’s Ant Financial Group, is stepping up the expansion of its cross-border business as regulatory curbs check the growth of its giant Yu’e Bao fund at home, a senior executive said on Tuesday.

Tianhong, which this month launched its first mutual fund targeting Hong Kong stocks, aims to roll out its maiden mutual fund product under the QDII outbound investment scheme this year, said Liu Dong, head of Tianhong’s international business.

The Qualified Domestic Institutional Investor program (QDII) allows accredited entities in mainland China to invest outside their home market.

In addition to expanding its investments overseas, Tianhong is also acting as a sales agent in mainland China for a growing number of overseas funds, most recently Value Partners Group’s flagship Value Partners Classic Fund.

“Compared with other industry players, our international business started late. But we’re catching up,” Liu said, adding the company is also beefing up its research and investment capabilities.

Tianhong’s international business currently totals just 3 billion yuan ($447.20 million). That compares with 1.13 trillion yuan of assets under management in its Yu’e Bao money market fund at the end of 2018.

According to Reuters’ calculations, Yu’e Bao accounted for 84 percent of the 1.34 trillion yuan of mutual fund assets Tianhong managed at the end of last year.

Tianhong, 51 percent owned by Ant Financial, is attempting to reduce its reliance on the Yu’e Bao fund, whose staggering growth invited regulatory curbs due to concerns over liquidity risks.

Launched in 2013, Yu’e Bao has grown to be the world’s largest money market fund, but in 2017, Tianhong started to take measures to control the pace of its growth. As a result, Yu’e Bao’s net assets shrank by 28 percent last year.

“We hope that our clients can gradually realize that investing in capital markets is not about simply putting money in money market funds. We hope some of them can gradually take more risks,” Liu said.

Reporting by Samuel Shen and Andrew Galbraith; Editing by Jan Harvey

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