Vanguard to pull out of Hong Kong and Hong Kong ETFs

Exchange Square, Hong Kong

Vanguard Group, the world’s largest mutual fund manager, is to ‘wind down’ its Hong Kong operations and exit Hong Kong ETFs.

In a statement to ETF Express, the firm says that the Hong Kong operation primarily serves institutional clients, ‘not the individual investors that are our primary strategic focus’. 

2013 saw the firm open its office in Hong Kong, describing it as an intermediary business designed to expand access to its products to investors. Vanguard’s core proposition sits squarely in the retail domain with low fee offerings.

Vanguard writes that the Hong Kong stock market will remain a critical component for Vanguard’s global diversified funds, with the Hong Kong’s Stock Connect and Bond Connect channels continuing to provide access to the A share and China bond markets.

However, from a distribution 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.”

The firm writes that it will gradually cease its onshore presence in Hong Kong – “and make an orderly exit from our Hong-Kong ETF, Mandatory Provident Fund and Index-Tracking Collective Investment Schemes platforms. Our clients, service providers, the relevant local regulators, and the other entities we rely on have been informed about our decision, which we expect to take six to 24 months to carry out.”

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Beverly Chandler
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