Mak­ing to­mor­row’s ‘War­ren Buf­fets’

HK peo­ple with as lit­tle as $800 can now in­vest their as­sets world­wide us­ing an app. Yun­feng Fi­nan­cial CEO tells that help­ing the less well off to man­age their wealth is just the start of their fin­tech blue­print.

China Daily (Hong Kong) - - HK | BUSINESS - Con­tact the writer at tingduan@chi­nadai­lyhk.com

For­get about hav­ing to be a War­ren Buf­fet or George Soros to boast that your wealth is be­ing well looked af­ter and piled up by spe­cial­ist fi­nan­cial aces around the world — the pre­rog­a­tive can now be en­joyed by any­one in Hong Kong or on the Chi­nese main­land with a pal­try $800 to spare.

The Alibaba Group of mag­nate Jack Ma Yun has never ceased to be an ar­dent player in the great fi­nan­cial tech rev­o­lu­tion grip­ping the uni­verse, with Yun­feng Fi­nan­cial Group, backed by the main­land be­he­moth, rac­ing to the ser­vice of the less af­flu­ent by launch­ing Hong Kong’s first 2.0 global robo-ad­viser mo­bile app adopt­ing tech­nol­ogy to of­fer tailor-made wealth man­age­ment ser­vices.

“We just want to sup­ple­ment the tra­di­tional fi­nance ser vices rather than be­ing a dis­rupter in the in­dus­try,” says Li Ting, Yun­feng’s chief ex­ec­u­tive of­fi­cer, whose cre­den­tials in­clude a 14-year stint at renowned global as­set man­age­ment group State Street Global Ad­vi­sors.

She has cast an ab­so­lute vote of con­fi­dence in the as­set al­lo­ca­tion busi­ness, point­ing out that two prime fac­tors in the past two years have re­shaped the global in­vest­ment scene, cast­ing a pos­i­tive light on the sec­tor — the yuan’s high volatil­ity, along with de­clin­ing yields of trust prod­ucts on the main­land — which have made peo­ple sense the grav­ity of di­ver­si­fy­ing their in­vest­ments fol­low­ing the stock mar­ket col­lapse in 2015.

Pre­vi­ously, Li notes, mostly in­sti­tu­tions and high-net­worth in­di­vid­u­als would pre­fer to park and in­vest their as­sets over­seas, but the less well off have now be­gun to think like­wise for the sake of their chil­dren’s ed­u­ca­tion or on other grounds.

Yu n f e n g F i n a n c i a l h a s teamed up with 13 top-tier as­set man­agers world­wide, of­fer­ing an ar­ray of 343 funds that are eas­ily traded on the “Youyu” robo-ad­viser mo­bile plat­form to help less wealthy in­vestors al­lo­cate and in­vest their as­sets — a ser­vice that banks and fi­nan­cial in­stit u t i o n s h av e t r a d i t i o n a l l y shunned in fa­vor of the rich.

E v e r y o n e ’s in­vest­ment de­mand varies, Li be­lieves, and the core con­cept of the robo-ad­viser falls on ser­vice.

The on­line app aims to of­fer tailor-made wealth man­age­ment fa­cil­i­ties to clients with in­sti­tu­tional ser­vices stan­dard, and could also be like a cam­era’s fool mode al­low­ing in­vestors to use the plat­form eas­ily, ac­cord­ing to Li.

“What we’ve started is the 2.0 ver­sion of robo-ad­viser, dif­fer­ent from the 1.0 ver­sion and other on­line fund su­per­mar­kets. We not only pro­vide the ser­vice that is in­cluded in the 1.0 ver­sion, but also ac­tive mu­tual funds other than ETF (ex­change traded fund) prod­ucts for in­vestors’ as­set al­lo­ca­tion and un­der­ly­ing as­set with al­pha (ac­tive re­turn), which means we care about both as­set al­lo­ca­tion and the se­lec­tion of as­set man­agers through multi-di­men­sional rat­ings.”

Com­pa­nies, es­pe­cially over­seas fund dis­trib­u­tors, barely pos­sess the abil­ity to make multi-di­men­sional rat­ings, which is Yun­feng’s core com­pet­i­tive­ness, Li ex­plains to China Daily.

Room for im­prove­ment

“In­vestors also en­joy free­dom to choose funds on our plat­form, which is be­yond the func­tion of the 1.0 ver­sion.”

The ap­pli­ca­tion could be im­proved in terms of up­grad­ing prod­ucts and com­par­i­son of funds, as well as change of as­set man­agers. The vi­tal thing at the mo­ment is that it has enough flex­i­bil­ity for fu­ture im­prove­ment.

Li says robo-ad­vis­ers in the United States, in­clud­ing Wealth­front and Bet­ter­ment, are still un­der the 1.0 ver­sion as they of­fer stan­dard­ized ser­vices with low man­age­ment fees, and have reached the bot­tle­neck in growth; while many other com­pa­nies which de­fine them­selves as roboad­vis­ers are ac­tu­ally only us­ing ma­chines to do quan­ti­ta­tive in­vest­ment strate­gies.

Ac­cord­ing to Li, the 1.0 ver­sion of robo-ad­viser is fo­cus­ing on iden­ti­fy­ing in­vestors’ risk tol­er­ance and pro­vid­ing each of them with a di­ver­si­fied bal­anced fund based on their risk pref­er­ence.

The com­pany will con­tinue to co­op­er­ate with com­pa­nies in Hong Kong and do pro­mo­tional work. Li says the feed­back from their ex­ist­ing part­ners is good, and the ini­tial re­sults will be as­sessed at the end of this year.

Ac­cord­ing to Li, the roboad­viser’s busi­ness model is to get the com­mis­sion from fund sales, which are far less than that of tra­di­tional funds.

Re­call­ing her ex­pe­ri­ence at State Street, Li says she had seen the de­mand for global as­set al­lo­ca­tion by Asian in­sti­tu­tional in­vestors rise tremen­dously from zero to al­most ev­ery in­sti­tu­tional in­vestor hav­ing their own bas­ket of global as­sets.

The next di­rec­tion would be for Asian com­pa­nies go­ing through in­vest­ments and merg­ers and ac­qui­si­tions to be­come real in­ter­na­tional com­pa­nies, and Yun­feng wants to be a part of that process.

Com­pre­hen­sive ser­vices

The global as­set al­lo­ca­tion of in­di­vid­ual in­vestors is just the be­gin­ning, says Li, be­liev­ing that for­eign in­sti­tu­tions will not be able to bet­ter serve Asia’s re­tail in­vestors.

Strat­egy-wise, Yun­feng will po­si­tion it­self as a com­pre­hen­sive fi­nan­cial ser­vices provider in cor­po­rate fi­nance, fo­cus­ing on merg­ers and ac­qui­si­tions of com­pa­nies, and em­ployee stock own­er­ship plans for listed com­pa­nies and those

CAP­I­TAL IDEAS: PETER LIANG

plan­ning to go public, as well as bro­ker­age and wealth man­age­ment ser­vices.

Com­pared with Ant Fi­nan­cial, which is also backed by Alibaba Group, Li says Yun­feng pro­vides fi­nan­cial ser­vices through tech­nol­ogy mostly to less wealthy peo­ple, while the for­mer is a “tech-fin” com­pany that con­cen­trates on tech­nol­ogy-re­lated busi­nesses.

On fi­nan­cial in­no­va­tion, Li says the new busi­ness model is cre­ated by Chi­nese peo­ple amid the tech­nolog y and in­no­va­tion boom, rather than im­i­tat­ing the ma­ture busi­ness mod­els in the US, and this is a big dif­fer­ence com­pared with the sit­u­a­tion 10 years ago.

How­ever, the US fi­nan­cial mar­ket is more ma­ture and the de­gree of its cov­er­age of fi­nan­cial ser­vices is much higher, but the tra­di­tional fi­nan­cial mar­ket has not been over­turned by fin­tech com­pa­nies yet as the lat­ter make up only a small part of the mar­ket.

Li praised the hard­work­ing and ded­i­cated at­ti­tude of the Chi­nese peo­ple that has con­trib­uted to the tech­nol­ogy fever on the main­land, com­ple­mented by a huge and qual­ity la­bor force, as well as a vast mar­ket and ad­e­quate cap­i­tal and the gov­ern­ment’s en­cour­age­ment, although the fast pace of fin­tech de­vel­op­ment has given rise to prob­lems, in­clud­ing in­sta­bil­ity.

She re­calls that 12 years ago, when she first came to work in Hong Kong, she felt the su­per con­ve­nience of the Oc­to­pus card, but there’s still no big change in terms of pay­ment meth­ods at present. On the main­land, pay­ment for goods and ser­vices has been made su­per con­ve­nient.

Although Hong Kong, which had gone through ma­jor fi­nan­cial crises in the past two decades, has been more con­ser­va­tive in in­tro­duc­ing fi­nan­cial reg­u­la­tions in the past 10 years, she would like to see the fi­nan­cial reg­u­la­tor re­defin­ing the city’s strate­gic po­si­tion to re­main as an in­ter­na­tional fi­nan­cial hub.

Li thinks Hong Kong presents enor­mous op­por­tu­ni­ties ahead and could play a big­ger role in the re­gion, adding that Yun­feng may co­op­er­ate with com­pa­nies along the Belt and Road Ini­tia­tive coun­tries and re­gions.

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