We have Ada here, she is the head of international sales and strategy of Roofstock.
Chair: Good afternoon, everyone. Thanks for coming to our Forum, it’s Friday afternoon so thanks. Now let’s get started. First of all, let me introduce my panelist.
We have Ada here, she is the head of international sales and strategy of Roofstock. an online marketplace that invests in leased single-family rental homes in a transparent, low-friction method. Ada joined Roofstock from Goldman Sachs, where she worked with individuals and families to develop wealth and investment strategies as a Private Wealth Advisor. Prior to that, she led HSBC’s Private Bank team in New York that focused on Asian markets, advising clients on investment and lending solutions, with keen attention to cross-border tax and estate issues.
Next, we have Xiaowen, she is co-founder and Head of Investment Management at Meixin Finance, a leading cross-border financial products platform that services wealth managers, independent investment advisors, private funds, and family offices. Before establishing Meixin Finance, Xiaowen was a Director of Equity Derivatives Sales at UBS in Hong Kong and was highly involved in wealth management and asset management sales in China. Prior to that, she also worked at the structured product sales team at Deutsche Bank. Xiaowen has been heavily involved in wealth management and asset management sales in China.
Then we have Ray Sturm, CEO and Founder of Alphaflow, the first platform to give investors a global overview of their entire P2P portfolio. Prior to launching AlphaFlow, he founded RealtyShares, one of the industry’s top platforms for real estate investing. His early career in finance included investment banking at Bear Stearns, Lazard Frères and CCMP Capital and serving as Director of Business Development for SmartDrive Systems. Ray has a BBA-Finance from the University of Notre Dame and a JD/MBA from the University of Chicago.
Next we have Trevor from Lending Home, Lending home is the largest originator of the Bridge loan in this country. These loans are usually used to fix the flapped apartment. Usually these works were outsourced by local small lenders but now Country Club deal, handshake deals really these type of industries can be successful disrupted. He used to work in Fintech field.
Lastly, we have Gene coming far away from LA, thanks for coming. VP of Operations and Asset Management at RealtyMogul, an online marketplace for real estate investing, connecting borrowers and sponsors to individual and institutional investors. Gene previously managed a portfolio of assets for an entrepreneurial real estate investment company based in Southern California and operated his own insurance agency. He is a licensed California Attorney, Real Estate Broker, and Insurance Agent. He earned his Bachelor’s Degree from UCLA and is currently a Level II Candidate in the Chartered Financial Analyst program.
Welcome my guest. Thank you for joining us. First of all, I’d like to introduce the MarketX to you. so MarketX is a cross-border platform to connect investors in Asia with alternative investing products in U.S. Today we would discuss why alternateve investment in China, who is new to these area and the solutions or strategy to do the investment. How is the investing trend in China that would affect skims here. So we would start this forum with our speakers.
Topic 1: Who and why usually invest alternatives?
Ray: The idea of alternative investing is new, only get started in these two years. In involved more sophisticated investment objects besides bonds and stocks. When everyone is putting their money in stock market, people would find it’s harder and harder to get returns. Alternatives means you should pay attention to more general products besides the stock.
Chair: How do you like the difference for people to invest in equity and stock between a few years back and now?
Ada: I think the biggest difference is the access. Back to ten years ago, people have fewer access to alternative investment but now with all the technology, it’s easier and cheaper for people to buy it.
Topic 2: As most of you guys have been working in Wall Street but now we are all in the online lending space, how do you like the best strategy of alternative investing?
Ray: I would give it a shot. So there is no big difference with other investing that you are looking for lower fees, experienced managers, no matter in real estates or stocks or other products. As well see most of the company or online lending platform has high fees that drives the returns down and ultimately would lose customers.
Trevor: Just added to Ray’s view that experienced manager is the key. With development of fin tech and aggregate data today, most data cannot easily be accessed through technology by investors to analyze the risk and returns but you need an experienced manager who knows the market can give legitimate solution to make highest profit.
Topic 3: Most of you are familiar with cross-border investing and you know that most Asian investors here are looking into Real Estates. What else alternatives do you think they should look into?
Xiaowen: Yes, it’s true that U.S is the number one choice when it comes to cross-border investment for Chinese. The beginning of Meixin, we focus on Real estates too. But now since we move our business model from B to C, we surprisingly find that most Chinese investors are interested in more than just Real Estates but fixed income, hedge fund. Their knowledge is not enough so they trust big names. Chinese investors seems more interested in PE for their urge for stable income.
Cathryn: Talking about equity. I could also share some my experience. Before funding The MarketX, I was working in JP. Morgan in HongKong, dealing with pre-IPO companies at that time like Alibaba and Twitter. The awkward thing is that most share is sold out before even most investors started to consult that I had to apologize to my clients. So I wanted to connect US base pre-IPO companies with investors to offer them more investing choice. And you really need to analyze the company and the market scientifically. So I would like to open the question here that How do you like the Fintech could help the alternative investing and the landscape here?
Gene: With the Fintech, this market is really becoming efficient and most procedures became legally online too that making this market to realize its value sooner
Ada: I just wanted to add that access is do important, but transparency and due diligence is also important. The answer is always easy that you have transparency in due diligence, so technology is really making the transparency more vivid.
Cathryn: Xiaowen I know that you always do online session through wechat. Can you share with us?
Xiaowen: We do investor education online. I think that Fintech is really helping us. When we do that education, we have software like WeChat , we launched product training to wealth-manager in China. There are also a lot of U.S institutions that want to cooperate with us to take advantage with our system to handle the operational work.
Cathryn: Trevor, can you also share how do you use Fintech in Lending Home?
Trevor: Ok, there are three things I see here. The first, taking Lending home as an example is that you in the past need to take money form your own pocket to do fixing, but with Lending Home you can totally lend 1000 from country club investors through Lending home with more access. We don’t have track every document to realize it, it’s on the platform. The second here is that we build up segment that maximum your capital on the platform ; The third is that you could use our platform to leverage your loan, divide it into hundreds of pieces and realize their value.
Topic 4: Why should investors use technology rather than consultant?
Ray: The first thing is must the fees. More than anything.
Ada: you don’t really have to choose only one of it. It might not necessarily to make them contrast. They are completing each other
Xiaowen: I agree.
Gene: Just a example, for manager, you could charge 10% fees but with more access coming with technology, it would be still hard to compete with
Cathryn: It is interesting that most Chinese private banks have never learned about investing stuff. What is your advice to cooperate traditional financial institutions?
Gene: There are a lot of oppoerunities for we have the products that their customer wants but the traditional banks can not provide. But their wealth bas is really huge that can help us.
Topic 5: What do you see the trend in the alternative market and what do you see our potential in international market.
Ray: Most investors in Asia, Europe, Australia would be interested in it.
Ada: It is quite an obvious answer here. As U.S has been quite familiar with alternative investing so we definitely have market here and looking at China, which is trying to catching up with the process quicker and quicker. There is more liquidity.
Topic 6: Most people saw Chinese improvement and witnessed Chinese investors coming here t check the house and hedge funds. Is there anything you have see in the legal process that inhabiting the business between in China and U.S. And how do you solve it?
Trevor: There are relationships we have been in with Chinese investors that they are really passionate but the process is holding them back, like they need to write a check and send it to us after half an month. But I think if we can get the facilitation ready and prepare more in advance, it might accelerate the process.
Ada: I have been in this delimma to that Chinese government is sometimes really strict with the outgoing capital with all kinds of censorship.
Topic 7: Ok, now we move our topic to how do you see the future trend of Fintech?
Gene: It’s very promising that five years in the past I witnessed more and more products started to be listed on the online platform and selling abroad and the platform is still enlarging.
Trevor: The first thing that comes to my mind is that the product would be more exotic.
Ada: And there are still some problems they need to solve. For example, you could easily buy a house online or with cash all at once but it usually take two weeks to process. I mean what happened to these two weeks? These problem should be solved by future technology too.
Ray: I think technology is really helping us to see something that we cannot possibly measure before, and also brings more transparency to us by exposing the process of the the product.
Xiaowen: Comparing China 5 years ago, I can see the gap between China and U.S is narrowed down. They were even asking me is the equity safe? can the profit be guaranteed. But now is better.
Cathryn: Yes, I experienced before. Chinese market is twenty years late than U.S but the developing processs in Finance is really paced up.
Question from audience:
1.How do you address liquidity factors in Alternative investing?
Gene: it is about the portfolio you choose. There are shorter and longer ones.
Cathryn: I always get these questions from Chinese investors about when can these companies get IPO. Professionally We cannot guarantee. So what I have to walk them through the risks in details. We have to educate our customer in advance.
2. What are some checks and balances in place to guard against the pressure to loosen underwriting criteria?
Taking the beginning of the Lending Home as an example. The investors in the early stage would definitely focus on the credit, focusing on your profit. But if you could testify your capability to win a huge market in the future then you can totally stick to your original idea steadily.
3. What are the trends are arounds capital controls of capital trying to leave China, and are there any creative repeatable solutions?
Xiaowen : There is something called QDII, its for institutions who want to sell their own overseas product with their quota listed by the government. Besides this channel, there are grey area that you can play around. I could share with you guys some tips to do business in China. Since there is no law there then you can do what you want. Once there is overwhelmed actions in that grey area, there will be laws and you should stop.
Cathryn: Actually Chinese government is trying to open sources for domestic invetors. On the instiutional side, the government is doing better.
4. What extent …data?
Gene: We build up a platform to collect all data out there and build data structure for our investors that quickly help us to know our customers and to serve them
Trevor: Data is really helping us to censor our lender quickly and achieved efficiency.
Cathryn: We also take data out there and use them to help understand Chinese investors’ view.
5. Is there any means to improve the transparency of the alternative investing?
Gene: you could use the platform to show the transparent process of the transaction to your customer. No matter our fees or our webinars, we are trying so hard to make them available and accessible to our clients. Having transparency is really really the key
Closing: This is a very informative forum and thanks for all sharing. And thanks everyone here for asking so many intelligent questions. It has been the most intelligent session I have been. You can enjoy yourself and then I will definitely make the speaker available for further questions.
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