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Alibaba’s online mutual fund Yuebao is actually shrinking

Alibaba’s mutual fund Yuebao garnered a lot of attention when it first launched last summer, and at first, it grew extremely fast. But by this July, it had begun to stagnate, and now according to the latest numbers, investment in Yuebao is actually dropping.

Back in July, Yuebao held RMB 574 billion (US$92 billion) in assets, making it the fourth-largest money market fund in the world. But this past Friday, Tianhong Asset Management Co. (which manages Yuebao’s funds and which is also owned by Alibaba) announced Yuebao’s latest numbers: RMB 534 billion (US$87 billion). That suggests that users have pulled almost US$5 billion out of Yuebao since July. Tianhong also had some happier numbers to share: Yuebao now has 149 million users, and it has earned a total of around RMB 20 billion (US$3.2 billion) in profits, which works out to a profit of RMB 133 (US$21) per user. That’s not too shabby for a mutual fund that has no minimum investment amount.

The overall drop in assets shouldn’t come as a big surprise, as the fund’s yield has dropped a bit from its initial highs of over 6 percent. Yield fell below 5 percent for the first time in May, and according to the Yuebao website, as of this writing it currently sits at just 4.1 percent. Yuebao has also been limited by government restrictions that emerged around March, which made it harder for customers to shift funds to online rivals, imposed transfer limits, banned new types of payments such as QR codes, and halted the launch of virtual credit cards. Alibaba chairman Jack Ma publicly slammed the central bank and big four for abusing their ‘monopoly’.

Of course, with total assets of US$87 billion, Yuebao is still one of the biggest mutual funds in the world despite its recent dip. Whether it can retain that title in the long run, though, remains to be seen.

We have contacted Alibaba for comment on this story, and will update if we hear back.