https://www.wsj.com/articles/vanguard-scales-back-in-asia-11598444146?mod=hp_lead_pos4 HONG KONG—Vanguard Group, the index-tracking giant, is scaling back in Asia, as it plans to close its operations in Hong Kong and Japan. The closures will leave Vanguard, which managed more than $5.9 trillion in assets at the end of May, with regional offices in mainland China and in Australia. It closed its Singapore office in 2018. The company said in a statement Wednesday that it would wind down its Hong Kong operation, “which primarily serves institutional clients, and not the individual investors that are our primary strategic focus.” It said this would take six months to two years, and would lead to job cuts. “Our future focus in Asia is on Mainland China and our primary office in Asia will be in Shanghai,” a spokeswoman said in an email.
Vanguard said it would make an orderly exit from its investment platforms in Hong Kong, which include six locally listed exchange-traded funds. It also operates retirement funds, known as mandatory provident funds, and index-tracking collective investment schemes. “This is not to suggest that we don’t see growth potential in Hong Kong—quite the contrary,” Vanguard said. It said it would keep using Hong Kong’s Connect programs to access onshore stocks and bonds, and the local stock market would remain a key component of its global diversified funds. Vanguard established a presence in Hong Kong in 2011. Malvern, Pa.-based Vanguard also plans to end its onshore presence and operation in Japan, it added, without giving a reason. The planned closures were earlier reported by Ignites Asia. In Asia, passive investing of the kind pioneered by Vanguard remains relatively novel and many individual investors in China and elsewhere prefer stock picking, in the hope of securing higher returns. As a result, ETFs are often much smaller than equivalents in the U.S. Vanguard’s Hong Kong-listed S&P 500 ETF had net assets of 1.548 billion Hong Kong dollars ($199.7 million), according to a July 31 fact sheet—tiny compared with the size of its U.S. S&P 500 ETF, which had $154.7 billion in net assets. In 2017, Vanguard was among the first foreign asset managers to set up independent onshore operations in Shanghai. While other large global money managers including BlackRock Inc. and Neuberger Berman have set up private investment funds and applied to manage mutual funds in China, Vanguard has gone down a different path. The company formed a joint venture with China’s largest financial technology startup, Ant Group Co., and rolled out a robo-advisory service targeted at hundreds of millions of individual investors on Ant’s popular mobile-payments platform earlier this year. A spokeswoman at Vanguard said the closure of Hong Kong operations would have no impact on the company’s partnership with Ant. “It is business as usual and we are pleased with the early success of the venture,” she said. For a small fee, it helps users build investment portfolios by selecting from thousands of domestic mutual funds managed by various asset managers and sold on Ant’s platform. Around 200,000 users had invested a total of 2.2 billion yuan ($319 million) within a hundred days of its April launch, Ant said in a regulatory filing this week. In March, Vanguard named company veteran Scott Conking as head of Vanguard Asia, making him the permanent replacement for former Hong Kong-based executive Charles Lin. Write to Stella Yifan Xie at [email protected]
HONG KONG—Vanguard Group, the index-tracking giant, is scaling back in Asia, as it plans to close its operations in Hong Kong and Japan. The closures will leave Vanguard, which managed more than $5.9 trillion in assets at the end of May, with regional offices in mainland China and in Australia. It closed its Singapore office in 2018.
The company said in a statement Wednesday that it would wind down its Hong Kong operation, “which primarily serves institutional clients, and not the individual investors that are our primary strategic focus.” It said this would take six months to two years, and would lead to job cuts.
“Our future focus in Asia is on Mainland China and our primary office in Asia will be in Shanghai,” a spokeswoman said in an email.
Vanguard said it would make an orderly exit from its investment platforms in Hong Kong, which include six locally listed exchange-traded funds. It also operates retirement funds, known as mandatory provident funds, and index-tracking collective investment schemes.
“This is not to suggest that we don’t see growth potential in Hong Kong—quite the contrary,” Vanguard said. It said it would keep using Hong Kong’s Connect programs to access onshore stocks and bonds, and the local stock market would remain a key component of its global diversified funds. Vanguard established a presence in Hong Kong in 2011.
Malvern, Pa.-based Vanguard also plans to end its onshore presence and operation in Japan, it added, without giving a reason. The planned closures were earlier reported by Ignites Asia.
In Asia, passive investing of the kind pioneered by Vanguard remains relatively novel and many individual investors in China and elsewhere prefer stock picking, in the hope of securing higher returns. As a result, ETFs are often much smaller than equivalents in the U.S.
Vanguard’s Hong Kong-listed S&P 500 ETF had net assets of 1.548 billion Hong Kong dollars ($199.7 million), according to a July 31 fact sheet—tiny compared with the size of its U.S. S&P 500 ETF, which had $154.7 billion in net assets.
In 2017, Vanguard was among the first foreign asset managers to set up independent onshore operations in Shanghai. While other large global money managers including BlackRock Inc. and Neuberger Berman have set up private investment funds and applied to manage mutual funds in China, Vanguard has gone down a different path.
The company formed a joint venture with China’s largest financial technology startup, Ant Group Co., and rolled out a robo-advisory service targeted at hundreds of millions of individual investors on Ant’s popular mobile-payments platform earlier this year. A spokeswoman at Vanguard said the closure of Hong Kong operations would have no impact on the company’s partnership with Ant. “It is business as usual and we are pleased with the early success of the venture,” she said. For a small fee, it helps users build investment portfolios by selecting from thousands of domestic mutual funds managed by various asset managers and sold on Ant’s platform. Around 200,000 users had invested a total of 2.2 billion yuan ($319 million) within a hundred days of its April launch, Ant said in a regulatory filing this week.
In March, Vanguard named company veteran Scott Conking as head of Vanguard Asia, making him the permanent replacement for former Hong Kong-based executive Charles Lin.
Write to Stella Yifan Xie at [email protected]