The world’s second-largest asset manager will also end operations in Japan, the company said.
Vanguard released a statement to the Hong Kong Stock Exchange on Wednesday, saying it would “seek to implement an orderly exit from its exchange-traded fund business in Hong Kong,” adding that it was considering appointing a new manager. ‘investment to take back the products, or the termination of these listed funds.
“We regularly review our international activities,” said a company official. “This review has now led us to the conclusion to terminate our operations in Hong Kong, which primarily serve institutional clients, and not individual investors who are our primary strategic focus.”
The official pointed out that Vanguard still sees potential for growth in Hong Kong, but added, “Unfortunately, from a distribution perspective, the current industry dynamics are better suited to institutional investors and currently do not support l scale necessary for us to harness the economic engine. behind our unique, low-cost, individual investor-focused model. ”
As part of the company’s departure from the Hong Kong market where it is currently headquartered in Asia, Vanguard plans to transfer its pension portfolio from the Hong Kong Compulsory Provident Fund to another fund management company, said a manager based in Shanghai. Vanguard listed its first ETF in Hong Kong in May 2013.
Scott Conking, Vanguard’s new Asia manager, made the announcement to regional employees at a public meeting on Wednesday, according to several sources familiar with the matter who said they also announced the shutdown of Vanguard operations in Japan.
Mr Conking, who was only appointed to the post in March, also told some Hong Kong-based staff that they would have to move to his Shanghai office, which would become the company’s new regional headquarters. , while other staff were told they had to leave. the company.
Vanguard, which held $ 5.7 billion in global assets at the end of April, shut down its Singapore office in 2018 while also cutting a fifth of its staff at the Hong Kong office.
With the closure of its Hong Kong and Japanese offices, Vanguard will only have Asia-Pacific presences in Shanghai, Beijing and Melbourne in Australia. However, its representative office in Beijing could also be affected by changes to its regional business, two sources said.
The company’s move to Shanghai will be seen as a blow to Hong Kong, where the introduction of China’s National Security Law has raised concerns in the business community, especially among US companies, and raised fears. that some companies are considering leaving.
Vanguard has invested resources in its growth and development plans in China, while its activities in wider Asia have struggled to translate its low-fee, zero-commission model into some of the regional fund management markets of retail in Asia, where the big banks are calling for asset management. companies.
Number of clients Vanguard has gained for its Chinese fund advisory joint venture since March
Vanguard launched Bang Ni Tou, its digital fund advisory platform in China, in March. The joint venture, with financial technology giant Ant, has already attracted 200,000 clients who have invested $ 315 million.
Vanguard also confirmed that the company will cease all of its onshore presence and operations in Japan, and will no longer actively market or distribute existing or new products in the market.
Earlier this year, Vanguard agreed to sell all of its shares in its Japanese investment joint venture, Monex-Saison-Vanguard Investment Partners, which was formed in 2015.
* Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignitesasia.com.