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Tencent to sell mutual funds to ‘WeChat’ users

Tencent to sell mutual funds to ‘WeChat’ users

Chinese internet giant Tencent has been granted licence to sell mutual funds on its social media platform – a move indicating that the firm is expanding into the fund distribution business.

The license was presented to its subsidiary, Tengan Funds Sales (Shenzhen), by the China Securities Regulatory Commission.

Previously, Tencent was only able to act as a platform for asset managers and third-party fund distributors to sell their products through its online wealth managing platform, qian.qq.com.

Now the firm can act directly as a fund distribution partner on behalf of asset managers and sell funds to investors.

The permit also enables the tech giant to reach out to the 980 million users on its popular instant messaging application – WeChat - who can buy mutual funds on the application without exiting it.

This announcement not only signals Tencent’s entry into financial services, but it also challenges the businesses of traditional mutual fund distributions channels, such as private banks.

Qian Wang, Asia Pacific managing director and chief economist at The Vanguard Group told Citywire Asia that there will be more technology firms that will get into the trend of selling funds directly to investors.

‘In Vanguard, we say that we are now facing the millennium generation and what they are going to do and what their shopping habits are. They like going online to buy everything, including mutual funds. So I’m not surprised about this move at all and this will be a trend in the future,’ she said.

Wang is recommending investors to adopt a global core-satellite portfolio, which is used to combine actively managed funds with index funds in a single portfolio. 

It will help long-term investors capture the beta of the market, and therefore, investors will not suffer permanent losses, she said.

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