Vanguard Gives up on Hong Kong Market
Posted on 08/29/2020
The Vanguard Group Inc., known in the U.S. as a low-cost index fund manager, plans to delist all eight of its Hong Kong-registered funds (six are ETFs) within two years. Vanguard has plans to end operation in Hong Kong and move its Asian headquarters mainland to Shanghai. “Unfortunately, from a distribution business standpoint, the current industry dynamics are better suited to institutional investors and do not currently support the scale needed for us to operate the economic engine behind our unique, low-cost, individual investor-orientated model,” Vanguard says in a statement on August 26, 2020.
Vanguard has been operational in Hong Kong since 2013 and employs roughly 50 people in the city.
The Hong Kong ETF market is highly competitive even for Vanguard. In late 2019, Vanguard’s Asia CEO Charles Lin resigned.
Giving up on Chinese Sovereign Wealth Funds
Vanguard agreed to close out US$ 21 billion in managed assets from public fund clients in mainland China. Part of this includes US$ 10 billion from SAFE Investment Company and US$ 10 billion from the China Investment Corporation (CIC). Amundi and Blackrock are being considered as replacements to manage part of those funds managed by Vanguard. CIC migrated the Vanguard funds into its own index investment platform.