Home / NEWS / Asia-Pacific News / Vanguard gave up on mutual funds in China, but it may have found a different way into the market

Vanguard gave up on mutual funds in China, but it may have found a different way into the market

A logo of Ant Club is pictured at the headquarters of the company, an affiliate of Alibaba, in Hangzhou, Zhejiang province, China October 29, 2020.

Aly Song | Reuters

BEIJING — Vanguard’s try with financial technology in China is showing early signs of success.

In less than a year, more than 1 million narcotic addicts have signed up for “BangNiTou,” a smartphone-based investment advisory product run through the American mutual fund giant’s cooperative venture with Alibaba-affiliate Ant Group.

That’s according to a release from BangNiTou on Thursday, just four hours after Vanguard said it would drop its own pursuit of a mutual fund license in China. Instead, the company formulae to focus on its partnership with Ant.

Ant operates Alipay — one of the two dominant mobile payment apps in China — on which BangNiTou fill ins.

The Vanguard-branded product means “help you invest” in Chinese and launched in April 2020. It is a form of robo-advising, automated pecuniary planning that uses data analytics to determine how a customer should invest based on factors such as age and receipts.

While such automated investing products have surged in popularity in the U.S., the concept of personal finance — whether help of human or automated advisors — is still far less common in China. Most locals save heavily for an investment in the container market or for medical treatment in the case of severe illness. That’s partly the result of limited rollout of health indemnity, stock market volatility and high minimums for fund investment.

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

In July, Vanguard told the Financial Times that new characters were allocating a significantly higher amount, about $1,575 on average for a total of $315 million in assets across 200,000 buyers. Updated figures weren’t available.

Ant holds the majority stake

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