Teng An Fund, a wholly-owned subsidiary of Tencent, has launched its fund advisory business in the mainland, according to local media reports.
Investors are able to access the Tencent’s service, which it calls “Invest Together”, via Wechat, the firm’s social media application, according to a report by China Securities Journal.
The service currently has two portfolios available, which are the “Zhong Ou Super Equity All Star” portfolio, with an annual fee of 0.75%, and the “Southern Stable Income” portfolio, with an annual fee of 0.5%.
Our sister publication Fund Selector Asia contacted Teng An Fund for more information, but it was not able to provide more details in time for publication.
Granted licence
The move comes after the firm received its fund advisory licence in December, which allows managers and distributors to tailor investment options for clients based on their financial status and financial management needs and restricts fees to no more than 5% of investors’ net asset value.
In October, the China Securities Regulatory Commission (CSRC) launched a pilot scheme to test the investment advisory business in publicly-offered mutual fund investments, in a move to slowly shift away from the traditional transaction-based model to a fee-based model of selling fund products.
Since the pilot started, 19 firms have been granted the licence.
Difficulty
However, given that the advisory model is new in China, it will be challenging for scheme participants to convince investors to pay for advice.
“It would take time for the advisory scheme in China to go mainstream,” a Cerulli spokeswoman told FSA previously.
“Licensed players need to differentiate themselves to prove that the services are truly value-add. High net worth individuals could be more open to the new scheme, followed by the middle class or mass affluent who are willing to pay for knowledge, and finally, the general retail,” she added.
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