US fund giant Vanguard Group is shutting its main Shanghai office and exiting from a joint venture with Ant Group, five sources with knowledge of the matter said, moves that will end its six-year presence in the world’s second-largest economy.
A complete exit from China’s 27 trillion yuan ($3.92 trillion) funds market would come about two years after the firm said it would not pursue setting up a fund management unit, a U-turn from previous ambitious expansionary plans in the market.
Ant said the JV and the fund advisory service “are operating as usual”, while Vanguard did not reply immediately to a request for comment.
Vanguard, with $7.1 trillion in assets under management globally, owns a 49% stake in the Ant-controlled JV.
Ant has been notified about the planned withdrawal and is considering acquiring Vanguard’s stake, the sources said, declining to be named because the conversations were private.
The planned exit contrasts with expansions in China by U.S. rivals BlackRock and Fidelity in recent years. In addition, the bank asset management arms of JPMorgan and Morgan Stanley each received approval to take full ownership of their existing China operations earlier this year.
Vanguard is moving to close its Shanghai office, a separate entity from the JV with its own product and technology teams, and to lay off the staff there, according to two of the sources.
The U.S. firm has notified the Shanghai local government, one of the sources said. The Shanghai government did not respond immediately to a request for comment.
Chinese media Caixin first reported Vanguard’s planned exit from China last week.
The Vanguard-Ant JV said in a company statement that it had 3 million investors as of January 2022. Its fund portfolio services rely heavily on automation.
Reuters