Passive investing giant Vanguard has put its plan to acquire a fund management company (FMC) licence in China on hold.
According to a statement issued by the US firm, it will instead focus on its joint venture (JV) with China’s Ant Group rather than going it alone.
“At this stage, Vanguard believes it can provide more value to investors through the JV advisory service than by offering a select number of funds in what is already a crowded mutual fund market,” the company said.
“We greatly appreciated the opportunity to tender an application for an FMC licence and are glad to see China welcoming international global asset managers to participate directly in the retail funds market servicing Chinese investors,” added the statement.
The decision comes less than a year after Vanguard moved its Asia headquarters and announced plans to close its Hong Kong and Japan operations.
Vanguard will maintain a team in Shanghai that will be focused on supporting the Ant Group JV as well as policy and market research and business development.
China’s €3 trillion (US$3.9 trillion) mutual fund sector has attracted heavy interest from global fund managers since the 2020 decision to deregulate and allow overseas firms to establish wholly owned onshore fund management operations.
BlackRock, JP Morgan Asset Management and Fidelity are among the names to have made applications.
However, the market remains heavily populated by domestic firms.
Vanguard’s JV with Ant Group was announced in December 2019. In April 2020, the two launched an investment advisory service, available to the 900 million users of the Chinese firm’s Alipay app.
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