Alibaba's Yuebao is now the world's top money market fund with 1.2 trillion yuan (170 billion US dollars) of assets in the first quarter this year. However, growth in interest rates hasn't been expanding along with the size of the fund.
Data from Alibaba shows registered users of Yuebao reached 300 million as of the beginning of this year, and Yuebao's total assets now exceed the size of the money market fund run by JP Morgan.
The annual return Yuebao is now paying is only around 3.9 percent, however, notably less than it has paid historically.
Still, as the returns are both stable and better than those offered by commercial banks, many investors are sticking with it.
Other factors leading to the popularity of Yuebao are that it is easy for users to manage, and that it has a low investment threshold with only one yuan.
An increasingly important point, however, is that the annual interest Yuebao pays is nowhere near as high as when it was launched.
The current interest rate on a Yuebao investment is down by almost 40 percent from its 2014 peak. Some customers are becoming skeptical.
However, the lower interest rates don't necessarily mean that a Yuebao investment has no risks.
The main risks of money market funds come from interest rates and the liquidity risk. Once money market funds go into deficit, investors will want to cash out. Similar cases happened in 2008 financial crisis.
In fact, the overall size of China's money market funds is falling.
Total assets of money market funds in China was 3.9 trillion yuan in the first quarter this year, down by 7 percent quarter-on-quarter.