Slowing Growth Prompts Tianhong Yu'e Bao to Cancel Buy-In Limit
Zhang Yushuo
/SOURCE : yicai
Slowing Growth Prompts Tianhong Yu'e Bao to Cancel Buy-In Limit

(Yicai Global) April 10 -- Tianhong Asset Management will cancel the upper limit for holdings and single-day investment limit in personal trading accounts for its Tianhong Yu'e Bao Money Market Fund from today because its excessive growth has now stopped.

Tianhong Yu'e Bao buyers will be no longer restricted by the CNY20,000 (USD2,980) single-day subscription limit and the CNY100,000 cap for holdings, the firm announced yesterday.

Tianjin-based Tianhong Asset Management lowered the upper limits for buy-ins and holdings of its Tianhong Yu'e Bao (yu'e bao means 'leftover treasure') three times in May 2017 to reduce stress from the excessive growth of a single fund. The firm reduced the holdings in single personal accounts to a maximum of CNY100,000 from CNY1 million (USD148,905), and set a CNY20,000 upper limit for investment on a single day.

Tianhong Asset Management set a cap for daily total subscription for Tianhong Yu'e Bao in February last year, which meant no new investment applications could be accepted when that cap is reached, and the daily pay-in amount varied with the investment and redemption status, with the time limit for the cap adjusted periodically based on the operation of Ali Yu'e Bao, which began to cooperate with multiple fund managers in May.

Tianhong Yu'e Bao has since been declining in scale due to the lowered upper limit for holdings and has thus brought in other money funds and lowered its returns.

Tianhong Yu'e Bao had amassed CNY1.1 trillion (USD168.3 billion) as of late last year, a drop of CNY447.1 billion or 28.3 percent from its CNY1.6 trillion peak in 2017, per the firm's 2018 annual report, which states the fund achieved CNY51 billion in returns, or CNY139 million per day, for 588 million users.

Alipay's Yu'e Bao was founded in June 2013 as a balance value-added and current fund management service under the Alipay service of the Ant Financial arm of Hangzhou-based tech titan Alibaba Group Holding. With its small-sum, dispersed features, Ali Yu'e Bao has become a popular wealth management product nationwide that boasts more than 600 million users.

Ali Yu'e Bao has brought in over 10 other money funds aside from Tianhong Yu'e Bao. Another mobile payment giant, Shenzhen-based Tencent Holdings, initiated a wealth management platform named Licaitong to compete with Ali Yu'e Bao, so Tianhong Yu'e Bao will not necessarily see a vast inflow of funds even with the canceled subscription limit.

Ali Yu'e Bao started diversification in May. Money funds managed by 13 firms had appeared on it by the end of the fourth quarter and 20 firms have as of now.

Editor: Ben Armour

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Keywords: Yu’e Bao , Alipay , Investment , Tianhong Asset Management