Ant Group's Yu'ebao lowers its fee first time in 10 years

Yu'ebao, the massive money market fund under Ant Group's Alipay, has announced a cut to its custodian fee for the first time since its launch a decade ago, largely due to the declining yields and regulatory requirements.

The fund manager Tianhong Asset Management stated that the custodian fee for the Tianhong Yu'ebao money market fund would be reduced from 0.08 percent to 0.07 percent per annum, a decrease of 0.01 percent. 

This marks the first adjustment to the fee since the fund's inception as Tianhong Zenglibao in 2013, which was renamed in 2015. 

Its management fee (0.30 percent) and sales service fee (0.25 percent) remain unchanged for now.

As one of the world’s largest money market funds with assets of 793.22 billion yuan as of the end of June, the fund's accrued custodian fees amounted to 315 million yuan in the first half of this year alone.

The cut comes amid intense competition in a low-interest-rate environment. Most money market funds currently offer meager returns, with Yu'ebao's 7-day annualized yield hovering around 1.02 percent after falling below 1.5 percent earlier this year.

Furthermore, the China Securities Regulatory Commission has been guiding the industry to lower fees for large-scale funds. A recent draft rule proposed by the CSRC also suggests capping the annual sales service fee for money market funds at 0.15 percent.