Digital asset allocation (DAA), a way of managing financial assets based on advanced technologies including big data and artificial intelligence, is expected to gain momentum in China, according to a report jointly released by the PBOC School of Finance, Tsinghua University, Tsinghua Financial Review and digital financial services provider Xuanji Group on Sunday.
DAA system can calculate and deliver investment portfolios to match users' demand and preferences, and modify it as the market environment changes, Zheng Yudong, the CEO of Xuanji, said on Sunday during a press conference to release the report.
There are sound grounds for the development of DAA technologies, according to experts.
One reason is the narrowing rate of return on social investment amid China's sluggish economic growth, Wang Zhongming, the vice chairman of the National Council for Social Security Fund, told the press briefing.
"The traditional method of asset management relied on such instruments as bonds, on which the risk was close to zero, and that used to yield lucrative returns," Wang said, "But in recent years, to guarantee a good return on investment, Chinese investors need to take more risk."
Using DAA-based systems can quantify possible financial risks and avoid human error, said Zheng.
In 2015, China's high net worth families totaled 4 million, which translated into market demand of at least 100,000 private financial planners, a number that far exceeds the ranks of industry professionals, said Zhang Yue, a partner at Boston Consulting Group. "That figure shows that the market for DAA has ample potential."
But the DAA's target consumers, the middle- and upper-class households with ample assets, may be less willing to adopt to the technology compared with the young generation, experts warned.
