US asset manager Vanguard closes Hong Kong, Japan operations

The Vanguard Group headquarters. Photo: Bloomberg

U.S. asset manager Vanguard Group will close its Hong Kong and Japan operations and cut jobs across both locations as it shifts its Asian headquarters to Shanghai, it said on Wednesday.

The largest mutual fund company, with roughly $6 trillion in assets under management, said in a statement its Hong Kong business mostly served institutional clients and not retail investors, which are its primary focus.

Hong Kong has been home to Vanguard‘s main office in Asia after the index fund giant closed its Singapore operation in 2018. It said the departure from the Asian financial hub would take between six months and two years.

The move comes as U.S.-China relations are strained over issues including trade, territorial disputes and individual freedoms in Hong Kong.

Asked if events in Hong Kong played a role in its decisions, Vanguard spokeswoman Dana Grosser said via email that Vanguard still sees growth potential in the city.

“Hong Kong is an important global financial center, and continues to be an important international capital market for Vanguard,” she wrote. The city’s stock market “will remain as a critical component for Vanguard‘s global diversified funds” while its securities channels will still provide access to Chinese stock and bond markets, she said.

Vanguard is seeking a “Fund Management Company” license to serve retail investors directly in the mainland. It had launched a wholly foreign-owned enterprise (WFOE) in China in May 2017, and announced a China advisory joint venture in December 2019 with the country’s leading fintech company, now known as Ant Group, to provide retail investment advisory services.

Daniel Wiener, who edits a newsletter for Vanguard investors, said its move to Shanghai could help gain favor with the Chinese government. “No doubt it would look more favorably on a company operating directly on homeland soil,” he said via email.

Vanguard said it would exit its Hong Kong ETF (exchange-traded fund), mandatory provident fund and index-tracking investment schemes businesses.

An unspecified number of jobs would be lost as a result of the closure, according to the statement. Affected workers “will receive extended financial support and outplacement assistance,” Vanguard said.

In addition, Vanguard will no longer market or distribute products in Japan, and close operations there. Company representatives declined to say how many jobs would be cut.

For existing investors in Japan, “Vanguard is actively evaluating different options and will share solutions that would be most suited to them in a timely manner,” the company said.

In Hong Kong, Vanguard runs six ETFs that are traded on the city’s stock exchange, according to its website.

The best performing of those was the Total China Index ETF, which had gained 15.5% in terms of net asset valuation returns for the year up until July, the website showed.

Vanguard‘s closure plans were first reported on Wednesday by Ignites Asia, a Financial Times service.

Ant, an affiliate of Alibaba Group Holding Ltd, is targeting a more than $200 billion valuation in a dual listing in Hong Kong and Shanghai and operates Yu’ebao, one of the world’s largest money market funds.

Reuters

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.