China fintech firm Ant Financial and US asset manager Vanguard have set up an investment advisory joint venture targeted at the China retail market.
The joint-venture, in which Vanguard has a 49% stake, will provide “a customised service for investors based on their risk preference and investment objective”.
After receiving investors’ full authorisation, the advisory service will help investors buy/sell mutual funds and adjust their positions to achieve their investment goals, a Vanguard spokeswoman told our sister publication Fund Selector Asia.
The entity, called Xianfeng Linghang Tougu (Shanghai) Investment Consultancy Company, has been approved by the China Securities Regulatory Commission to offer an investment advisory service to China’s retail market, with a minimum investment of RMB800 (£86, $113, €102).
The announcement comes six months after the joint venture appeared in an online national registry.
Dedicated to China
The Pennsylvania-based firm, which has $5.9trn (£4.4trn, €5.3trn) in assets under management, is a specialist provider of index-linked products, including passive mutual funds and ETFs, although up to a third of its AUM is now active funds.
It launched a wholly foreign-owned enterprise (WFOE) in China in May 2017, but it has not yet launched an onshore fund.
“Since opening our Shanghai office in 2017, we have been dedicated to bringing Vanguard’s way of investing to Chinese investors,” said Vanguard chief executive Tim Buckley.
“This venture marries Vanguard’s […] investment philosophy and approach with Ant’s digital platform and technology,” he added.
Distribution
The JV could potentially boost Vanguard’s direct access to onshore investment flows.
For instance, Atlanta-based Invesco saw assets managed by its local joint-venture, Invesco Great Wall, quadruple to $31.5bn this year after one its funds was added to Ant’s platform in 2018.
However, it is unclear whether the joint venture will be a conduit for the distribution of Vanguard funds.
“Ant Financial will provide the technology platform and operate the fund dealing system. Vanguard, as investment manager, will provide investment-related services including investment strategy advice, asset allocation and product selection,” said the spokeswoman.
“There are currently 5,700 mutual funds from different providers available on the [Ant] platform (out of 5,971 in the market), including equity, fixed income and money market funds.”
Lack access
Peter Zhang, chief executive of the joint venture, added: “Today, millions of Chinese investors lack access to professional investment advisory services. Through this partnership, we will reduce complexity and significantly lower the threshold for individual investors to access high-quality wealth management advice in China,”
The joint venture is the latest move by Vanguard to increase its presence in China, where it has lagged other firms, such as Blackrock iShares, a rival provider of passive products including ETFs.
In a newly-created role, Yan Pu was recently appointed head of Vanguard Group’s investment management group in China.
She is “responsible for building and leading Vanguard’s China-based investment team in providing investment solutions for clients in China”.
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