Recently, multiple fund products have shown "sales suspended" status on third-party platforms such as Ant and Tiantian Fund, while remaining available for subscription through China Merchants Bank's channels with full-rate fees.

Behind this exclusive sales approach lies an intense fund distribution battle between China Merchants Bank and Ant Financial.

For a long time, China Merchants Bank has been the dominant player in fund distribution services.

During China Merchants Bank's 2025 Wealth Partnership Forum held on August 7th this year, senior business executives from leading domestic public funds, insurance companies, and wealth management subsidiaries appeared together, releasing coordinated promotional videos on their respective official video accounts in the same style - a spectacular display of industry support.

China Merchants Bank's influence in the wealth management sector can be described as commanding widespread response.

However, as the industry's second-largest player, China Merchants Bank is facing the risk of being left further behind by the sector's leader.

That leader is Ant Financial.

Recently released second-quarter fund distribution data from the Asset Management Association of China shows that Ant Fund has significantly surpassed China Merchants Bank across three key metrics: equity fund holdings, non-monetary fund holdings, and equity index fund holdings.

As of the first half of the year, China Merchants Bank's equity fund holdings were 40% lower than Ant Fund's, non-monetary fund holdings were 33.5% lower than Ant Fund's, and equity index fund holdings were 81% lower than Ant Fund's.

This analysis attempts to answer two questions: How did Ant overtake China Merchants Bank? In this new round of competition, how will China Merchants Bank and Ant each demonstrate their capabilities and continue the race?

**Ant's "Surprise Attack"**

As China's strongest retail banking institution, China Merchants Bank entered fund sales early. In 2006, it launched the "Five-Star Selection" fund optimization system, creating a rigorous fund selection methodology that became a flagship product in China Merchants Bank's wealth management offerings.

For a considerable period, funds held a lower position in the asset management industry compared to bank wealth management products and trusts, which still offered implicit guarantees at the time. Therefore, China Merchants Bank's wealth management initially focused mainly on selling bank wealth management products and trusts.

After the gradual implementation of new asset management regulations, trusts declined, and bank wealth management products faced adjustment pressures. Public funds secured their position as the leader in asset management, and after 2018, fund sales gradually became China Merchants Bank's largest revenue source in wealth management.

Benefiting from early entry, deep expertise, and significant retail-end scale advantages, China Merchants Bank became the leader in fund distribution for a period.

However, this dominance didn't last long.

As a latecomer, Ant Financial was still exploring how to conduct fund business, initially experiencing more setbacks than successes.

Alibaba's early fund sales began in late 2013 with the Taobao fund store model, where fund companies opened stores on Taobao to sell funds. However, due to poor user experience and other factors, Taobao fund stores never took off and were fully closed in May 2016. Fund sales were then transferred to Ant Jubao, the predecessor of Ant Fortune. In April 2015, Ant Financial Services obtained a fund sales license through the acquisition of Shumi Fund.

However, Ant Financial Services seemed unclear about how to conduct fund sales until 2017, when Ant launched Fortune Account, creating an open platform that allowed fund companies to directly engage and operate users on the Alipay platform through articles, community content, videos, and live streaming, while providing AI tools for operations. This marked the true beginning of Ant's wealth management business.

This also benefited from Alipay's strategic adjustment. During those years, Alipay was gradually losing ground to WeChat in terms of user scale and activity. The emergence of WeChat red packets in late 2014 intensified Jack Ma's anxiety, and the 2016 social circle incident (using borderline content to drive social engagement) highlighted Alipay's distorted actions at the time.

It wasn't until around 2017 that Alipay awakened and adjusted its strategy, no longer competing with WeChat on user scale but instead leveraging Alipay to carry more commercial and financial functions to ensure user frequency. "Fortune Account" was one of these strategic moves.

After implementing "Fortune Account" and other initiatives, Ant gradually became an important fund sales channel. By Q1 2021, when the Fund Industry Association first published third-party institutional distribution scale data, Ant Fortune had already surpassed China Merchants Bank and Tiantian Fund to become the top holder of non-monetary fund assets.

However, at that time, China Merchants Bank still had advantages in selling more challenging equity funds.

In Q1 2021, China Merchants Bank's stock and hybrid fund holdings were 17% higher than Ant Fund's. It was generally believed that with tens of thousands of high-quality wealth managers providing direct customer service offline, China Merchants Bank had greater capability to sell volatile equity funds compared to Ant.

Over the following three years, Ant Fortune's non-monetary fund holdings continued to grow relative to China Merchants Bank, though it remained behind China Merchants Bank in equity funds. China Merchants Bank maintained its distribution advantage in higher-fee, more profitable equity funds.

By the first half of 2024, the Association adjusted its distribution statistics, breaking down data into equity funds, non-monetary funds, and equity index funds. In H1 2024, Ant Fortune not only led China Merchants Bank in non-monetary funds and equity index funds but also achieved a reversal in equity fund holdings, where it had previously lagged, surpassing China Merchants Bank by 48%. By the first half of this year, Ant Fund's equity fund holdings were 67% higher than China Merchants Bank's, with the gap widening further.

Ant's advantage over China Merchants Bank stems primarily from the difference in customer base scale.

Ant Fortune has a clear advantage in user volume, backed by Alipay's 1 billion total users, over 700 million monthly active users, and 300 million daily active users. Even compared to major domestic internet platforms, this represents super-scale traffic, and while it may not match WeChat, it far exceeds any bank. Ant Fund users number 215 million, though many are Yu'e Bao users.

In comparison, China Merchants Bank, as the strongest retail bank, has over 200 million individual customers, with around 84 million monthly active users on its app. From a traffic conversion funnel perspective, the base level is smaller than Ant's.

China Merchants Bank's advantage lies in a higher proportion of high-net-worth individuals and strong private banking services, even reflecting domestic high-net-worth wealth trends to some extent. Since 2024, China Merchants Bank has stopped disclosing private banking AUM data. However, funds represent only part of high-net-worth individuals' asset allocation, insufficient to offset the fund holding scale gap caused by China Merchants Bank's smaller customer base compared to Ant.

Secondly, online channels represented by Ant Fortune and Tiantian Fund emphasize low fees, with 10% subscription fees maintained for a long time. China Merchants Bank only announced at its July 2024 Wealth Partnership Forum that it would comprehensively implement subscription fees starting at 10%, covering all channels online and offline, all fund categories, and all fee types including subscription and application fees - a relatively slow response.

Online channels don't maintain large-scale wealth management service teams. While China Merchants Bank's offline wealth management service team is an advantage for business expansion, it also maintains higher sales costs. If subscription and application fee rates are reduced to match internet rates, this affects both the income and enthusiasm of offline wealth management teams for fund sales, making this step difficult for China Merchants Bank.

Additionally, China Merchants Bank has advantages in professional wealth management capabilities.

Professional wealth management capabilities are also crucial, including fund selection and advisory abilities, which are vital for serving customers well.

However, these industry know-how elements don't constitute insurmountable barriers. Ant Fortune can easily overcome them through learning and hiring professionals. For example, Wang Jingjin, Investment Research Director of the Wealth Business Group responsible for Ant Fortune's fund screening service "Gold Selection," was previously a fund manager in the Asset Allocation and Fund Investment Department at Penghua Fund.

Moreover, during 2022-2024, fund holding experiences were generally poor with widespread losses. While China Merchants Bank has fund research capabilities, whether buying equity funds through China Merchants Bank or Ant, most investments resulted in losses. Even carefully selected funds couldn't escape losses from A-share market adjustments.

Therefore, A-share market conditions to some extent undermined China Merchants Bank's professional advantages.

**China Merchants Bank's Counter-Strategies**

Facing Ant's scale leadership, China Merchants Bank's wealth management division is implementing counter-strategies.

At the personnel level, in early August, Vice President Wang Xiaoqing, who was responsible for wealth management business, left her position to serve as General Manager at shareholder Merchants Financial Holding.

Who will take over wealth management responsibilities as vice president remains unclear.

Unlike China Merchants Bank executives who typically have banking backgrounds, Wang Xiaoqing was an asset management industry veteran. She previously worked at PICC Asset Management and joined China Merchants Fund as General Manager in 2020. During her tenure, non-monetary fund scale rose to industry 5th place, China Merchants Fund's best historical performance. This success led to promotions within the China Merchants Bank system, including Chairman of China Merchants Fund, President of China Merchants Bank Shenzhen Branch, and Vice President of China Merchants Bank. Particularly in May's executive adjustments, she was promoted to Executive Director, becoming the top-ranked Vice President.

However, since 2023, both China Merchants Bank's wealth management and China Merchants Fund have not performed well.

China Merchants Bank overall has been affected by the broader environment, with wealth management income declining for consecutive years and fund distribution being overtaken by Ant Fortune. China Merchants Fund has been significantly impacted by salary restrictions and other factors, experiencing fund manager departures and seeing its non-monetary ranking slide from industry 5th back to 10th place.

In August this year, Wang Xiaoqing left China Merchants Bank for the General Manager position at Merchants Financial Holding. Moving from China Merchants Bank Vice President to a top position at a shareholder unit represents further career development. However, Merchants Financial Holding itself doesn't have specific operational business, mainly managing equity in Merchants Group's financial institutions, so Wang Xiaoqing's actual authority may have decreased.

The decline in wealth management business cannot be entirely attributed to Wang Xiaoqing. After all, A-shares have undergone major adjustments in recent years, and the entire wealth management industry faces significant challenges, with almost all banks experiencing declining wealth management fee income.

However, during her tenure, Wang Xiaoqing indeed didn't find effective breakthrough solutions.

For example, while funds were difficult to sell over the past three years, bond funds and index funds showed significant scale growth. However, due to lower fees and income compared to equity products, China Merchants Bank didn't significantly increase resource allocation. Until 2024, bond fund holding scale growth wasn't significant, and index funds remain at relatively small scales.

Additionally, while China Merchants Bank wealth management, China Merchants Fund, and China Merchants Bank Wealth Management are leading companies in their respective fields with direct business connections, they haven't formed good synergy:

- China Merchants Fund has decent active equity managers, but China Merchants Bank hasn't strongly promoted them. - China Merchants Fund doesn't rank high in index fund scale, and China Merchants Bank's holdings are also low. They could strengthen index fund positioning through issuing off-exchange funds and other means, but China Merchants Bank hasn't shown corresponding actions. - In building index fund scale, Ant's Tianhong Fund has issued numerous off-exchange connection fund products, which were later used to purchase related ETFs issued by Tianhong Fund, achieving good business coordination.

In fund distribution, facing Ant Fortune's overwhelming lead, China Merchants Bank's strategy over the past year has focused on consolidating its traditional advantages in high-net-worth customers and stable products while passively responding to industry fee reduction trends.

Specific approaches include:

**First, strengthening IPO advantages.**

Funds generally conduct IPOs through bank channels and continuous marketing through internet channels after product establishment. Banks' IPO advantages currently seem irreplaceable by internet channels.

This year, leveraging the stock market recovery, China Merchants Bank successfully distributed several funds that ended fundraising early or even "daily limit funds," even those managed by relatively unknown managers. This demonstrates China Merchants Bank's solid distribution capabilities.

With good stock market performance this year, fund sales have recovered. Multiple instances of early fundraising closures and "daily limit funds" have occurred, including:

On September 8th, the HSCB HK Value Return Hybrid managed by Yu Yi sold out on its first day, ending fundraising nearly three weeks early; on September 2nd, the China Merchants Balanced Selection Hybrid managed by Wu Xiao raised over 5 billion yuan in one day; on August 5th, the JPMorgan Steady Three-Month Holding Hybrid Fund of Funds (FOF) managed by Wu Chunjie attracted 2.752 billion yuan in single-day funding, ending fundraising early.

Previously in June, the Orient Red Prosperous Steady Allocation 6-Month Holding A FOF product managed by Chen Wenyang achieved initial fundraising scale of 6.573 billion yuan, completing fundraising in just 7 days, making it June's largest fund by issuance scale.

All these were IPO'd through China Merchants Bank channels. China Merchants Bank continues strengthening this advantage to maintain its influence in the fund industry. The IPO section also occupies a prominent position on China Merchants Bank app's wealth page.

Beyond new fund IPOs, China Merchants Bank, along with other banks, has conducted secondary IPOs of already-issued funds this year - targeted marketing for funds with good performance but limited market recognition and small scale.

**Why do banks dominate IPOs?**

Banks' dominant position in fund IPOs is based on several core advantages:

1. High-net-worth customers and capital strength: Banks, especially China Merchants Bank, have numerous high-net-worth customers with large investment amounts, helping new funds quickly achieve fundraising goals and even create "blockbusters." For fund companies, ensuring successful new fund issuance is the primary task, and banks' capabilities in this area are currently difficult for internet platforms to fully replace.

2. Professional wealth advisory services: Bank customer managers and wealth managers can provide face-to-face, personalized consultation services. For new funds, especially IPO funds lacking historical performance references, this "human service" is crucial. Customer managers can explain products, match risks, assist decision-making, and even guide other wealth management funds to transfer, which is very effective for attracting conservative or large-amount investors.

3. Deep cooperation and resource exchange: Fund companies and banks typically have long-term, deep cooperative relationships involving custody, distribution, fund clearing, and other aspects. Choosing banks for IPOs is part of this deep cooperation.

Internet channels aren't unimportant but typically play supplementary roles in IPOs. Their advantages are low fees, convenient operations, and transparent information, very suitable for small-amount, dispersed long-tail customers and investors with strong independent operation capabilities. Therefore, internet platforms are better at ongoing marketing of existing funds and serving investors accustomed to online wealth management who pursue convenience and low costs.

China Merchants Bank's dominance in fund IPOs means that during issuance periods, products can only be purchased through its channels, providing richer asset allocation choices compared to competitors. Especially in bull markets where fund NAV appreciation probability is high, securing IPO access becomes more important.

Moreover, through IPOs, demonstrating strong channel capabilities helps maintain higher fee levels. Currently, China Merchants Bank can still maintain 1.2% subscription fee rates for IPO equity products. Subsequent products launched on internet channels typically have 0.15% application fee rates.

Additionally, based on these IPO advantages, fund companies wanting deep cooperation with China Merchants Bank for new fund issuance are sometimes required not to list the same products on internet platforms, indirectly strengthening banks' IPO positions.

While such "choose one or the other" situations may change with regulatory and market developments, they reflect banks' efforts to maintain their advantageous positions.

Of course, Ant Fortune and other internet channels can also counter-react, such as limiting online traffic for fund companies cooperating with banks on "choose one or the other" arrangements. Therefore, fund companies often need to weigh pros and cons.

**Second, strengthening asset allocation capabilities to improve customer profitability probability and ratios.** Customer experience was poor from 2022-2024. On the surface, this appeared due to declining fund performance, but from a major asset perspective, bond markets, gold, and other assets performed well during that period. So the core of poor experience was actually the lack of major asset allocation services for customers.

Wang Xiaoqing stated in May this year that investors have frequently reported poor investment experiences in various settings in recent years, with multiple contributing factors, but the absence of wealth advisors and asset allocation services to some extent was an important factor. Wealth advisors and asset allocation help customers reduce investment risk by reasonably allocating funds to different assets to form portfolios under certain expected returns; or improve customer expectations under certain risk levels.

In specific actions, in 2022, China Merchants Bank upgraded its "TREE Asset Allocation Service System," dividing investment assets into steady investment and aggressive investment. Based on customer wealth stages, risk preferences, and market conditions, allocation ratios are adjusted. China Merchants Bank carefully selects wealth management, funds, gold, and other products for sale to build asset allocation portfolios, thereby improving customer profitability probability.

Based on channel influence, China Merchants Bank extends its reach into fund companies' product design concepts, implementing asset allocation concepts through customization and other means. China Merchants Bank chose FOF products as its breakthrough point, particularly low-volatility "fixed income+" FOFs that combine small amounts of equity assets, because FOF products are inherently asset allocation-type products that allocate across different fund categories to achieve risk-return ratios expected during product design.

China Merchants Bank launched the "TREE Long-Term Profit Plan" in 2024, strictly screening FOF products meeting low-volatility characteristics, promoting them vigorously through channels, and supplementing with China Merchants Bank's advisory services, thereby creating multiple blockbusters and single-handedly driving FOF fund scale growth.

Data shows that as of August 18th, FOF fundraising scale in 2025 totaled 33.714 billion shares, already exceeding full-year 2023 and 2024 levels (21.862 billion shares and 12.367 billion shares respectively). In terms of scale, FOF scale reached 165.7 billion yuan by the end of the first half, growing 24.42% from the beginning of the year.

China Merchants Bank's "TREE Long-Term Profit Plan" played an indispensable role in FOF's rise. The largest fund issued in June this year was a product customized for the "TREE Long-Term Profit Plan" - the Orient Red Prosperous Steady Allocation FOF product managed by Chen Wenyang, with a scale of 6.573 billion yuan. The product is clearly designed as a steady risk strategy fund, conducting long-term asset allocation with a steady investment style, allocating major asset risk budgets based on core assets' risk-return characteristics.

For equity products, China Merchants Bank has a related product screening framework called the "Morning Star Plan," divided into "stability-seeking" and "profit-seeking" series based on customer preferences.

The "stability-seeking" series requires controlling drawdowns, smoothing volatility, and pursuing steady long-term returns. Taking Zhang Ronghe from Cathay Fund as an example, who was selected for this plan and is currently issuing a new fund, since starting to manage the public fund product Cathay SOE Reform in June 2023, as of September 19th this year, the annualized return was 9.14%, not particularly high, with a maximum drawdown of 18%, which is quite good by industry standards. The profit-seeking series doesn't require such strict drawdown control, focusing more on consistently outperforming benchmarks and forming medium-to-long-term excess returns.

Of course, having edge isn't enough for selection; products must also be able to balance offense and defense, with balanced allocation and risk control amid volatility. A "profit-seeking" product currently recommended on China Merchants Bank's app is the Huaxia Smart Victory Selection D quantitative stock selection product managed by Sun Meng from Huaxia Fund. Sun Meng's flagship product, Huaxia Smart Victory Pioneer, has achieved an annualized return of 11.67% since management began in late December 2021, with a maximum drawdown of 25.29%, also considered quite good performance.

Additionally, China Merchants Bank is also focusing on bond fund sales, strengthening weak areas.

Based on distribution data estimates, China Merchants Bank's bond fund holdings were around 270 billion yuan at the end of 2023, while Ant's bond fund holdings were approximately 810 billion yuan. By 2024, although China Merchants Bank was comprehensively overtaken, its bond fund holdings continued growing. By Q2 this year, China Merchants Bank's bond fund scale grew to around 550 billion yuan, while Ant's bond fund scale was around 750 billion yuan. China Merchants Bank's scale increased significantly, possibly due to strengthened sales of related products.

Whether looking at significantly growing bond funds, low-volatility FOF products, or "stability-seeking" and "profit-seeking" series equity products, China Merchants Bank's current product recommendations focus on stability, controllable risk, and stable long-term returns.

This also reflects China Merchants Bank's wealth management's current direction in customer segment operations - serving its most advantageous high-net-worth customer segment well. This group already possesses certain wealth and focuses more on wealth preservation and appreciation, with greater aversion to risk and drawdowns.

China Merchants Bank cannot compete with Ant Fortune in long-tail customer numbers, but it has more advantages in serving high-net-worth customers. Many high-net-worth customers are already China Merchants Bank private banking clients, and China Merchants Bank has professional wealth managers to serve these high-net-worth individuals, making this a relatively promising competitive area.

Professional offline wealth management teams are currently a double-edged sword for China Merchants Bank: on one hand, this is China Merchants Bank's important differentiated competitive advantage in serving high-net-worth customer segments; but on the other hand, maintaining such teams requires costs and needs higher output to sustain, so offline wealth management teams tend to sell higher-fee products like insurance and active equity funds, potentially missing opportunities such as bond funds and index funds that have grown rapidly in scale over the past three years.

**Ant Continues Focusing on High-Risk Preference Customer Segments**

Bank channel customers typically have a higher proportion of relatively conservative risk preference customers, tending more toward stable products. Internet channel investors are larger in number with more diverse risk preferences, but overall are more willing to engage with equity assets and high-risk, high-return products, with more frequent subscription and redemption operations.

Therefore, internet platforms including Ant Fortune and Tiantian Fund often provide customers with more elastic products, including various index funds and industry theme funds.

In Ant Fortune's fund hot-selling section, products are often those with high gains over the past year. This includes the Yongying Smart Selection series industry theme funds that have grown significantly this year, all issued through Ant and other online channels without promotion through bank channels.

Based on these customer segment characteristics, a major operational move by Ant this year was adding "Index+" product series in core positions, providing customers with index fund products (including ordinary off-exchange index funds, ETF connection funds, etc.) and index enhancement products, thereby consolidating its own advantages.

Data shows that as of the first half of this year, Ant Fortune's equity index fund holdings reached 391 billion yuan, far higher than second-place CITIC Securities' 122 billion yuan, while China Merchants Bank only had 73.5 billion yuan. Promoting "Index+" essentially further consolidates the area of greatest leading advantage.

China Merchants Bank seems to be in a "giving up treatment" state regarding index products, currently showing no obvious promotional actions. For example, from online channels like Ant and Tiantian Fund to fund companies like E Fund, Huaxia, and Harvest, mini-programs and other convenient index fund investment tools have been launched over the past year to assist investment and strengthen C-end customer acquisition, while China Merchants Bank hasn't.

Additionally, Ant Fortune continues leveraging its relative advantages in digitalization. At September's Bund Conference, it announced the launch of AI investment research assistants, AI operation assistants, and AI content creation assistants, serving fund investors and fund companies operating on the platform and other financial institutions, thereby enhancing usage stickiness for institutions and fund investors.

Beyond this, Ant Fortune hasn't made major changes. Its fund selection product "Gold Selection," launched in 2020, has undergone multiple iterations and currently covers active equity funds, index funds, bond funds, and other tracks. Data released by Ant Fortune shows that as of September 12th, "Gold Selection" equity funds achieved an average year-to-date return of 29.75%, outperforming the CSI Equity Fund Index.

Regarding IPO funds, Ant lacks advantages compared to China Merchants Bank, so the platform currently emphasizes Class C products of IPO funds.

These products have no subscription fees, mainly charging management service fees based on holding periods, suitable for customer segments with shorter holding periods. Additionally, in new fund types, ETF connection funds and index enhancement funds are mainly featured, with relatively fewer active equity funds.

**One Attacks, One Defends**

In summary, in the current two-strong competition pattern in fund distribution, China Merchants Bank is currently returning to high-net-worth customer segments, promoting low-volatility FOF and steady equity assets, enhancing customer holding experience through asset allocation, while continuing to strengthen its IPO advantages to maintain industry position.

Ant Fortune focuses on index funds, continuing to strengthen advantages in this segment where it has achieved tremendous leading advantages.

Additionally, compared to China Merchants Bank, products hot-selling on Ant's platform are more offense-oriented with stronger product elasticity. These are all operational moves based on each platform's mainstream customer segment characteristics.

However, looking at their competitive trends, it appears difficult for China Merchants Bank to achieve a reversal over Ant Fortune in the short term:

Ant Fortune, leveraging Alipay, has a massive long-tail user base, high online operational efficiency, and low marginal customer acquisition costs. Its service model is lighter and more easily reaches and serves massive users.

China Merchants Bank's advantages lie in high-net-worth customers and offline professional advisory services, but as fee reduction becomes a trend in fund sales channels, maintaining China Merchants Bank's offline advisory team becomes challenging.

On September 5th, the CSRC revised the "Management Regulations on Open-End Securities Investment Fund Sales Fees," comprehensively reducing fund subscription, application, redemption, and sales service fees. Stock fund subscription and application fee caps were reduced from 1.2% and 1.5% to 0.8%; hybrid fund subscription and application fee caps were reduced from 1.2% and 1.5% to 0.5%; bond fund subscription and application fee caps were reduced from 0.6% and 0.8% to 0.3%.

Stock and hybrid fund sales service fee caps were reduced from 0.6%/year to 0.4%/year; index and bond fund sales service fee caps were reduced from 0.4%/year to 0.2%/year.

This will further impact sales channels' revenue generation capabilities, with greater impact on China Merchants Bank, which has offline teams and higher operational costs.

Of course, if China Merchants Bank can deeply empower its offline professional advisory capabilities, transform them into online service advantages, and fully utilize high-net-worth customer trust to develop deeply in complex asset allocation, high-end wealth management, pension finance, and other areas, continuing to consolidate advantages in absolute return and other steady products while improving allocation capabilities in equity assets (especially through advisory services) and improving customer holding experience, it still has hope to defend and expand its advantageous markets.

In the future, their competition is more likely to see both sides developing deeply in their respective advantage areas - China Merchants Bank focusing on high-net-worth and complex wealth management, Ant Fortune dominating mass markets and online services, with the pattern becoming more fixed.

*The above analysis and discussion are for reference only and do not constitute any investment advice.