The second-largest asset management company in the world, The Vanguard Group, has ruled out the possibility of re-entering China's fund industry as it seeks to accelerate its global expansion outside its largest market, the United States. Chris McElroy, head of Vanguard's international business, recently stated that the group decided to exit the Chinese market two years ago because its investment products did not "match" the needs of local investors.

McElroy said, "One of our key realizations is that the investment horizon for individual Chinese investors remains short."

"Vanguard's offering...is a great offer for those who save for years or even decades. But there is actually a mismatch in terms of investment horizon, so ultimately, we decided that it didn't make sense to participate in the Chinese market at this time."

McElroy added that this asset manager "ultimately concluded that the current situation is not suitable for Vanguard's development in China, and I believe it will also be the case in the near future."

This fund group, which manages $10 trillion in assets, closed its small office in Shanghai in 2023 and sold 49% of its shares to Ant Group.

Vanguard's refusal to re-enter the Chinese market also highlights the broader challenges that even industry giants face when marketing and selling products in China.

McElroy said, "We are always open to different markets, but there is still much work to be done." He added that Vanguard will continue to monitor developments to consider future opportunities.

Vanguard's goal is to continue expanding in other international markets where it is already present, including the UK, Europe, Canada, Latin America, and Australia. The firm's assets under management outside the US reached $788 billion in 2024, growing more than 70% over four years.

This asset management company was founded by renowned investor Jack Bogle in 1975 and is known for index investing (index funds) and an anti-cyclical investment style. It issued the first index fund tracking the S&P 500 index, available for general public investment. The company provides low-cost "passive" funds that track indices as well as traditional mutual funds sold through financial advisors to clients and directly to consumers via retail investment websites.

In August 2020, Vanguard exited Hong Kong's funds, ETFs, and MPF businesses, retaining only institutional client services. In November 2023, Vanguard began gradually withdrawing from mainland China.

McElroy said, "International operations are becoming increasingly important to the overall corporate strategy and are becoming a more significant part of our growth."

The group is committed to expanding Australia's pension market and aims to rank among the top ten retirement superannuation funds in Australia.

He said that in the UK, Vanguard's direct-to-consumer personal investor website has accumulated nearly 800,000 investors with assets under management reaching $37 billion.

However, just two years later, in 2023, Vanguard exited the UK financial planning market.

McElroy said at the time, "We were working with my leadership team to evaluate all the different markets we were involved in and how we were competing...which markets truly benefit us and which benefits resonate."

Original Source: https://www.toutiao.com/article/7498289907736281612/

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