Bloomberg: China's Yu'E Bao Shrinks
Bloomberg writes, "World's No. 1 Money-Market Fund Shrinks by $120 Billion in China." The article says, "The world's biggest money-market fund, which once offered annualized returns of nearly 7%, is on track to lose its crown after shrinking by more than $120 billion in just over a year. Known as Yu'E Bao, the Chinese fund operated by an affiliate of Alibaba Group Holding Ltd. had 1.03 trillion yuan in assets under management at the end of June, or an equivalent of $144 billion based on current exchange rates, down from a peak of $270 billion on March 31, 2018. It's on course to fall behind the JPMorgan U.S. Government Money Market Fund, which has been hovering around $150 billion level since 2017, and Fidelity Government Cash Reserves fund, according to figures compiled by Bloomberg." (Crane Data shows the JPM portfolio currently at $149.9 billion and the Fidelity fund, FDRXX, at $147.4B as of 8/31/19.) Bloomberg continues, "Since its inception in 2013, Yu'E Bao has lured more than 600 million Chinese investors. The fund is owned by Alibaba affiliate Ant Financial and is available through the tech giant's Alipay platform.... In response to regulatory pressure, the fund in 2017 cut the maximum amount individuals could invest and took other steps to limit inflows. Ant Financial said in a statement that the Yu'E Bao fund is just one of the 24 money-market funds on Alipay's Yu'E Bao spare cash management platform. Its assets fluctuation doesn't reflect the overall performance of the Yu'E Bao platform, the firm said." The article adds, "Yu'E Bao returns have fallen to an annualized rate of 2.29%, according to latest figures, compared with 6.7% in 2014. Yields from Chinese banks' wealth management products were more than 4% in July, figures from research firm PY Standard show." For more on Chinese MMFs, see these Crane Data News articles: Worldwide MMF Assets Break $6.1 Trillion in Q1'19 on China, US Inflows (7/1/19), ICI's 2019 Fact Book Reviews Money Funds Globally, MMFs vs. Deposits (5/1/19) and China's Yu'e Bao No Longer World's Largest MMF; Repo Cap? Fed Minutes (4/11/19).
