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Investors are picking up financial knowledge online, while fund managers and distribution channels are boosting their digital presence
March 2020, Singapore—Despite market uncertainties, the coronavirus outbreak has brought about opportunities for a new wave of digital disruption in China, as more investors turn to online means of making investment decisions.
While COVID-19 has posed some challenges to fund sales and caused some firms to delay their fund initial public offerings (IPOs), more have started conducting online seminars aggressively. These have received huge interest, and resulted in a number of blockbuster fund launches. At the time of writing, since the start of the year, a total of at least 40 new funds were sold out in just one day.
With more people staying at home, they are relying—more heavily than before—on the internet to make investment decisions. Moreover, Chinese fund investors are getting younger, and prefer to transact using their mobile devices. According to surveys conducted by the Asset Management Association of China (AMAC), 36.5% of individual mutual fund investors in China were below 30 years old in 2018, almost double that in 2013. About 71% used mobile devices as their main investment tools in 2018, compared to only 21% of that in 2014.
Fund managers have been digitalizing their marketing and sales strategies over the years to meet the needs of younger investors, from improving their websites to partnering with third-party online platforms and producing more mobile content. At the time of writing, more than 50 asset managers and securities firms, including four foreign managers, have built “Wealth Accounts” on the Ant Fortune app to actively engage with retail investors. Companies are also working hard to build their profiles on digital platforms which are not strictly financial. For example, managers like Bosera and Yinhua, as well as distributors like Howbuy and Lufax, have built their audio channels on Himalaya, a popular podcast app in China.
The epidemic has also been a catalyst to the growth of digital channels. This expansion has not been limited to third-party online platforms, but also includes digital platforms of traditional channels, such as banks and brokers. Banks have always been the key contributors to fund launches, and after facing competition from tech giants for many years, they are adapting faster than before. Some big banks have shown their capabilities in providing an almost-full-range of functionalities to customers remotely, while some smaller banks have started selling deposit products via third-party online platforms to reach out to more clients.
“As they come up with strategies for investor education as well as fund marketing and sales in China, managers need take note of the latest developments, and look for penetration points in digital networks,” said Ken Yap, Managing Director, Asia, at Cerulli Associates. “Rather than being a temporary outcome of the coronavirus outbreak, the ‘digitalized human touch’ could have a long-term impact on the industry.”
NOTES TO EDITORS:
These findings and more are from the inaugural The Cerulli Edge—China Edition, 1Q 2020 issue.
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