"You're planning to launch a dynamic online financial management tool!" Hao Jianguo exclaimed in surprise upon seeing Little Swift's proposal. He had been unaware of this plan until Little Swift presented it, realizing that the Black man had conceived of such a formidable strategy.
Simply put, Little Swift aimed to create a US version of Yu'e Bao ten years ahead of its time.
According to Little Swift's plan, starting from the fourth issue of the fund next month, the Western Mustang Fund would completely abandon all offline sales channels, with all funds to be sold exclusively online.
This wasn't a major hurdle, as the Western Mustang Fund had already launched an online wallet software during the third issue, allowing users to enter a lottery online to gain the right to purchase Western Mustang Fund shares.
This time, only minor modifications to the software's functionality would be needed.
However, Little Swift's ambition was far greater. He first intended to rename the online wallet software to the more grandiose "Western Mustang Finance" and then comprehensively redesign and optimize the software, consolidating all fund purchases onto this platform.
Following this, came the most crucial step: Little Swift intended to completely revolutionize the operational model of the first three fund issues.
The first three fund issues followed a traditional fund model: users purchased funds, the funds were managed for a year, and upon maturity, profits were calculated and distributed to users, with the fund retaining a commission, forming a complete closed loop.
This time, however, Little Swift was set to disrupt everything.
Firstly, the profit calculation model would change. Previously, profits were calculated annually; now, Little Swift planned to shift to daily calculations.
According to Little Swift's plan, after 12 AM each night, a computer program would automatically calculate the fund's total current assets. It would then compare this to the users' initial investment, providing a yield percentage and the settled capital.
In simpler terms, if a user invested $10,000 in Western Mustang Finance on Day 1, and Western Mustang Finance had raised a total of $10 billion, after a day's operation, having invested in oil, the oil price increased by 2%, turning $10 billion into $10.2 billion.
Then, on Day 2, all users would see that the day's yield was 2%, and their personal investment of $10,000 would have grown to $10,200.
These figures would be calculated and displayed in real-time on the software every morning for users to view.
If this were the only feature, it would be a straightforward addition with few complications. However, the problem lay in Little Swift's subsequent proposal to allow customers to enjoy a seamless trading experience anytime, anywhere.
Therefore, he also insisted on changing the previous annual settlement rule to daily trading.
This meant that as long as a user had installed the Western Mustang Finance software, they could choose to cash out if they saw a high yield from the previous day, or cut their losses if the fund had performed poorly.
Alternatively, even if they just wanted to engage in speculative trading, it would be perfectly fine, as users could withdraw their funds at any time.
Of course, considering the real-time fluctuations in fund yields, even if a withdrawal request was submitted on a given day, settlement would only occur after the day's trading session concluded, at the end-of-day settlement.
For instance, if a user saw a 1.2% yield at noon and decided to sell their fund shares, they would click the sell button. However, the settlement would not immediately occur at the 1.2% yield. Instead, it would be settled based on the final yield calculated at midnight after the day concluded.
This was because the 1.2% yield was merely the previous day's settlement result. If a market crash occurred on the second day, even if the current day's yield hadn't been finalized, the massive losses would be self-evident. If the settlement were still based on the previous day's profit, it would be incredibly unfair. Therefore, settlement had to be based on the current day's yield.
Naturally, if selling was permitted, then buying would also be allowed.
The amount of fund shares sold by users would be refreshed in real-time, allowing those who hadn't managed to buy shares or wished to increase their holdings to seize this opportunity and purchase more fund units.
However, the purchase price would be based on the previous day's settlement price. This was because, unlike selling, purchasing required promptly receiving the user's funds.
If one still found this complicated, to put it simply, Mr. Huang had brought Yu'e Bao to the United States ten years in advance. All users could freely buy and sell Western Mustang Finance fund products through the Western Mustang Finance software at any time.
While Yu'e Bao might not be novel from a present-day perspective, and similar funds had already emerged domestically, in 2005, this was undoubtedly a cutting-edge and adventurous financial product.
Some might wonder why Mr. Huang wasn't already dealing with something similar, considering he had taken over "Zhuanqian Bao" from Brother Ma when operating Jiangnan Mall.
That was indeed true. However, "Zhuanqian Bao" was visibly fraught with financial risks. After discussions between Mr. Huang and the relevant authorities, it was decided to reduce "Zhuanqian Bao's" interest rate to the level of low-risk financial products. Furthermore, it would not engage in subprime lending, borrowing money to lend, or complex securitization that could inflate $100 million into $10 billion, creating a terrifying financial bomb.
Instead, it would be a simple derivative financial tool for purchasing government bonds or other stable financial products, maximizing "Zhuanqian Bao's" stability and preventing situations where all funds could be lost in the blink of an eye.
To use an analogy, it was akin to transforming a nuclear bomb capable of instantaneous explosion into a nuclear power plant capable of sustained electricity generation.
However, the Western Mustang Finance that Mr. Huang was establishing in the United States was different. Although the model appeared similar, Western Mustang Finance dealt in futures markets and played with the stock market, leading to vastly different risks and volatilities.
It was entirely possible for a future crude oil product, for example, to instantly turn a user's balance into negative territory, or for purchasers to lose half or even more of their assets in an instant. This was a product rife with risk.
Moreover, there were no restrictions on buying or withdrawing. Without risk control measures, it was very easy for panic-induced runs to occur.
To cope with customer runs, the fund would be forced to sell a large portion of its holdings in the market, which would inevitably lead to a market collapse. In short, it was a product with immense risk.
"No wonder your product is so difficult to get approved. The risk is simply too great! You have overly optimistic expectations if you think those financial review committees will pass such a plan," Hao Jianguo said with a grim expression after reviewing the entire proposal.
"I admit that this plan does have high-risk elements, but we do have measures in place to maintain stability," Little Swift replied. "The fund will maintain a reserve of approximately 10% of its assets. This reserve is specifically designated for processing customer refunds. When users sell their fund shares, the money is directly withdrawn from this reserve, rather than immediately selling financial products on the market."
"And based on our estimations, the total number of users selling their shares daily should not exceed 0.1% of the total user base. Therefore, with this 10% reserve, our product is absolutely safe and its risks are controllable!"
"Is there really no risk?" Hao Jianguo retorted. "What if a financial crisis occurs? Can your 10% reserve still hold up?"
"Even typical financial crises are not a major concern!" Little Swift replied dismissively.
"Then what about unusual financial crises? What about world-class financial crises? For example, the Great Depression of the 1930s, the financial crisis of the 1970s, or the dot-com bubble just five years ago? Can it withstand crises of that magnitude?" Hao Jianguo pressed.
"It cannot," Little Swift replied with a shake of his head. "But if a crisis of that magnitude truly occurs, whether we face a run or not becomes irrelevant. The entire market will collapse, and our collapse will be less conspicuous. At that point, everyone is going down together, and who will care about us!"
"..." Hao Jianguo opened his mouth. He had to admit that Little Swift's words held considerable truth.
"Furthermore!" Little Swift licked his lips and continued, "If we succeed with this product, then even if a world-class financial crisis strikes, it will have nothing to do with us. We will simply focus on making money!!"
"What do you mean by that?" Hao Jianguo's eyes lit up with curiosity.
"Firstly, by allowing customers to freely deposit or withdraw funds in real-time, we are shifting the risk management onto the users. The losses they incur are self-inflicted and have nothing to do with us, so we are not obligated to cover the fund's losses!"
"Secondly, our fee structure has changed. Previously, we took a commission from the profits. However, now we will collect a fund management and operational fee daily, with a basic fee of 0.01% per day."
"Regardless of whether we make a profit or a loss that day, we will still collect the daily basic fund management fee of 0.01%."
"If the scale reaches hundreds of billions, that would mean a pure income of $10 million per day, totaling $3.65 billion in pure income annually. This is a guaranteed profit, a sure thing!" Little Swift said with a smile.
"That's not much," Hao Jianguo grumbled. "Didn't our previous funds earn billions or even tens of billions?"
"That was luck. Who can guarantee they will make money every year?" Little Swift retorted, rolling his eyes. "But if we adopt this model, regardless of whether we lose or make money over the year, we are guaranteed billions in profit. Isn't that more reassuring than relying on the chance of earning tens of billions?"
"Moreover," Little Swift narrowed his eyes and concluded, "the most important way this product makes money is not even the daily fund management fees!"