Vanguard Group on Wednesday announced that it will cease operations at its Hong Kong and Tokyo offices to focus on individual investors in faster-growing regions of Asia.
Citing unsupportive industry dynamics, the closure over the next six to 12 months will result in a number of job losses for the American asset management group, Vanguard said.
The company said that from a distribution perspective, its Hong Kong business mainly serves institutional customers and not the "individual investors" that are its main focus. Thus, Vanguard said it has decided to end its onshore presence in the bustling financial hub and withdraw from its exchange-traded fund and other index and stock-related investment activities.
In a stock filing, the Pennsylvania-headquartered index provider said its decision is geared toward realigning its investment in the region towards enterprises that are more closely attuned with its primary goals to achieve a long-term policy for growth.
Vanguard has sent notifications to owners of the group's six Hong Kong ETFs prior to its closure announcement that it will leave the business gradually and appoint a manager to oversee each ETF for inactivation.
A representative of the company confirmed that Vanguard would also end its operations in Japan, and move to Shanghai. The changes will cut 70 job posts in Hong Kong and Tokyo, an emailed statement disclosed.
A separate statement issued by a London-based spokesperson said the closures will result in redundancies while others will keep their jobs until further notice and as the company undergoes a transition. A number of positions will be shifted to Shanghai, and Vanguard said it will prioritize China in its Asia pivot, sources who requested anonymity said as the matter is private.
Vanguard is the world's second-largest asset management organization next to BlackRock. It launched a fully foreign-controlled and owned enterprise in China in May 2017. The following year, the fund giant shut down its business in Singapore. For years, it has made Hong Kong its main headquarters in Asia. Based on the latest market estimates, Vanguard has around $5 trillion in assets.
