Vanguard Group will close its Hong Kong office and its sales and client service office in Tokyo over the coming six to 24 months, the firm said Wednesday.
The move follows a decision made earlier this year to focus the company’s international business on its core individual investor client segment.
Vanguard, in an emailed statement, said the latest regular review of the company’s international operations “has led us to the conclusion to wind down our Hong Kong operation, which primarily services institutional clients.” Vanguard Group said Wednesday that following a decision this year to focus on the company’s core individual investor client segment, the company will close both its Hong Kong office and its sales and client service office in Tokyo over the coming six to 24 months.
The statement said from a distribution standpoint, Hong Kong was better suited to serving institutional investors than pursuing Vanguard’s “low-cost, individual investor-oriented model.”
“We have therefore taken the decision to gradually cease our 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,” the statement said.
The process of shutting down in Hong Kong should take between six and 24 months, the statement said.
A separate statement provided by a London-based spokesman said the closures will result in layoffs. The changes “regrettably impact our local crew members, a number of whom will be made redundant while others will remain with us for a period of time as we continue to service clients and systematically cease our Hong Kong onshore activities. All crew members asked to leave Vanguard as a result of this decision will receive extended financial support and outplacement assistance to ease their transition to new roles. We are grateful for their support.”
In a separate email, a Malvern, Pa.-based Vanguard spokeswoman said the company likewise decided to “cease our onshore presence and operation in Japan,” where the company has a sales and service office in Tokyo focused on institutional clients.
The spokeswoman said while the company will no longer actively market or distribute its products in Japan, it will continue to serve its existing clients there and is “working collaboratively with them on these plans.” She declined to say how much institutional money Vanguard is managing in Japan.
The spokeswoman said the decision to narrow the company’s focus to individual investors overseas doesn’t extend to its home market in the U.S. where “we also serve ‘pure’ institutions and will continue to do so.”
But overseas, Vanguard will focus on individual investors and the advisers who serve them, with “market dynamics” becoming more favorable in recent years “for us to scale our services,” the spokeswoman said.
She noted Vanguard launched “direct to investor” businesses in the U.K. and Australia recently, while its joint venture with China’s Ant Group has garnered “several hundred thousand clients in just four months of operating.”