Vanguard renounced mutual funds in China but joined forces with Ant

An Ant Group logo is displayed at the company’s headquarters, a subsidiary of Alibaba, in Hangzhou, Zhejiang Province, China on October 29, 2020.

Aly Song | Reuters

BEIJING – Vanguard’s 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 US mutual fund giant’s joint venture with the Alibaba-affiliated Ant Group.

This is according to an announcement from BangNiTou on Thursday, just four days after Vanguard said it would abandon its own pursuit of a mutual fund license in China. Instead, the company plans to focus on its partnership with Ant.

Ant operates Alipay – one of the two dominant mobile payment apps in China – on which BangNiTou sits.

The Vanguard branded product means ‘help you invest’ in Chinese and will be launched in April 2020. It’s a form of robo-advisering, automated 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 increased in the US, the concept of personal finance, whether by human or automated advisers, is still much less common in China. Most residents save a lot for an investment in the housing market or for medical treatment in case of serious illnesses. This is partly due to the limited implementation of health insurance, volatility in the stock market and high minimum funds.

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

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

Ant owns the majority interest

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