Jul 01, 2013 05:07 PM

Net Users Flock to Yu E Bao Despite Regulatory Hurdle


(Beijing) – Alipay's online fund investment service, Yu E Bao, continues to enjoy rapid growth in its number of users despite the appearance of regulatory hurdles.

The service, jointly launched by Alibaba Group's online payment unit and Tian Hong Asset Management Co. on June 13, had 2.5 million registered users by June 30, Alipay and Tian Hong reported.

Also on that date, the annual return for investors was 6.192 percent. That for one-year bank deposits was about 3.25 percent.

However, on June 21, the China Securities Regulatory Commission said the service violates fund management rules because part of it had not been registered with regulators.

The commission has required Alipay to submit extra documents for registration or risk punishment. Both Tian Hong and Alipay have said the service will continue to operate and they will meet regulatory requirements as soon as possible.

The Yu E Bao service allows individuals to buy money market funds or other financial products using idle cash in their Alipay accounts. Users can also spend their funds in Yu E Bao accounts on online shopping. The service had 1 million users one week after launching.

As of June 30, the total balance of Yu E Bao accounts was 5.7 billion yuan.

Thanks to the fast growth, Tian Hong's Zenglibao, a currency fund product designed for Yu E Bao users, has become the country's largest fund in term of the number of users.

A source close to the service said Yu E Bao has seen funds increase by 280 million yuan per day, much higher than the expected 60 million yuan. The average investment amount was 1,912.7 yuan, compared to more than 70,000 yuan per person for traditional fund products.

Tian Hong said funds from Yu E Bao users are mainly invested in treasury bonds, bank deposit agreement and other low-risk products.

On July 1, Alipay said Yu E Bao could be accessed on mobile phones.

You've accessed an article available only to subscribers
Share this article
Open WeChat and scan the QR code