Vanguard Group is adopting a binary approach for its Asia-Pacific business, walking away from tens of billions of dollars of segregated mandates from retirement plans and official institutions to focus on serving retail investors, first and foremost in China.
The move will effectively narrow Vanguard's footprint in the region to China — with its headquarters shifting to Shanghai from Hong Kong — and Australia, where the firm's A$160 billion ($114.5 billion) business accounts for roughly two-thirds of its Asia-Pacific assets under management.
Vanguard will shut down its business in Hong Kong and close its sales and client service office in Tokyo as well over the coming year or two.
When the firm announced new leadership for the region in a March 19 news release — appointing 36-year veteran Scott Conking as head of Vanguard Asia — it gave no hints of the changes that would be unveiled months later. The release cited the opening of the Tokyo office in 2000 as the start of the firm's operations in Asia-Pacific, and went on to highlight two decades of expansion "serving institutional clients in mainland China, Hong Kong and across Asia."
Mr. Conking, in an Oct. 16 interview, depicted the recent changes to Vanguard's Asia-Pacific strategy as a return to the company's heritage of helping individual investors make smart, rewarding investment decisions.
Roughly eight years ago, Vanguard decided the pursuit of segregated mandates — something the firm hasn't done elsewhere around the globe — offered opportunities "for us to get a toehold in Asia," and on that score, the strategy was successful, Mr. Conking said.