Vanguard to target retail investors in China

The Vanguard Group, which had $4.2trn in assets under management as of 3 March this year, will set up in the Shanghai Free Trade Zone under China’s Wholly Foreign-Owned Enterprise (WFOE) scheme as Vanguard Investment Management (Shanghai) Ltd.

The new operation will be located in the Shanghai World Financial Center and plans to carry out investment management, investment consulting, client liaising and servicing, marketing, investment research, investor education and business development.

Charles Lin will be Vanguard’s head of China and managing director, while the general manager is Clare Zhao, Vanguard’s current head of China institutional business.

“This new milestone solidifies our commitment to China,” said F. William McNabb III, chairman and chief executive of Vanguard.

“Bringing our unique and proven investment approach to the millions of investors in China is an important initiative for Vanguard’s international business,” said McNabb.

Vanguard has been serving institutional clients in China, including insurance, banking, asset managers and other financial institutions, for several years, and in 2014 set up a representative office in Beijing.

Vanguard is known in the industry for its low investment costs. It has reduced the asset-weighted average expense ratio of its US funds from 0.68% in 1975 to 0.12% today – less than one-fifth of the US industry asset-weighted average of 0.62%.

The company has also taken its low-cost strategy to international markets including Australia, Japan, Europe, Canada, Singapore, and Hong Kong.

Earlier this month it launched a new direct-to-consumer investment service in the UK which will charge an annual account fee of just 0.15% a year, capped at £375 (€441, $483).