US asset manager Vanguard plans to close business in China, exit Ant joint venture, sources say

The US$7.1 trillion asset management giant has informed the Chinese government of intentions to close its unit in Shanghai
The company also is planning to exit a robo-advisory joint venture with Jack Ma-backed Ant Group

Banking & finance

Bloomberg

Published: 3:37pm, 21 Mar 2023

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Vanguard Group, the US asset management giant, has decided to close its remaining business in China after a retreat two years ago, according to people familiar with the matter, abandoning a 27 trillion yuan (US$3.9 trillion) fund market that global competitors are embracing.

The Malvern, Pennsylvania-based firm has notified the Chinese government of intentions to close its unit in Shanghai, the people said, requesting not to be named because the matter is private. The company also is planning to exit a robo-advisory joint venture with Jack Ma-backed Ant Group, they added.

The moves will mark a complete exit from China for the US$7.1 trillion giant, which once saw significant potential in the world’s second-largest economy. The reversal stands as a cautionary tale for global peers including BlackRock and Fidelity International, that are still racing to build up local operations as the nation’s recovery and a new pension reform brighten prospects.

Vanguard’s moves will mark a complete exit from China for the US$7.1 trillion asset manager. Photo: Reuters

Vanguard said its Shanghai unit and the joint venture are operating normally. Ant and the joint venture representatives said the same. All three declined to comment further.

The China Securities Regulatory Commission did not immediately reply to a request seeking comment. Caixin reported Vanguard’s plans earlier.

A complete retreat would follow Vanguard’s surprise move two years ago to scrap plans for a mutual-fund management licence in China.

Fidelity and Neuberger Berman Group have recently joined BlackRock in launching onshore funds through new wholly-owned units, while Manulife Financial, JPMorgan Chase and Morgan Stanley have gained approvals to buy out local partners to gain full control of existing ventures.

The race for fund advisory is heating up with more players coming in, hurting profitability. Vanguard’s venture, which has been offering only products from competitors, booked a loss in 2021 that was much higher than an internal forecast made after it was set up in 2019, Bloomberg reported last year. Vanguard owns 49 per cent of it.

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