American money manager the Vanguard Group has halted plans to launch a mutual-fund business in China.
The firm said it was pausing months of preparations to sell its funds to Chinese consumers – despite efforts to seek Beijing’s approval for the business – blaming "crowded" market and marking a shift in its Asia strategy.
Vanguard, one of the world's biggest mutual fund companies, said in a statement on Monday it will instead focus on opportunities in the $3 trillion Chinese mutual funds market through an existing advisory joint venture with Ant Group.
Its decision is in contrast to other Wall Street firms, which are continuing a push to get Beijing’s approval to sell their own funds to Chinese consumers.
"At this stage, Vanguard believes it can provide more value to investors through the JV advisory service than by offering a select number of funds in what is already a fairly crowded mutual fund market," it said.
Vanguard, which has assets of about $7.2 trillion, said in August it will close its Hong Kong and Japan operations as it shifts its Asian headquarters to Shanghai. It left Singapore a few years ago.
The money manager said in October it will close most of its business managing money for institutional investors and large pension funds in Australia and New Zealand, and focus on serving retail clients.
Since China fully deregulated its giant mutual funds sector in April last year, global asset managers including BlackRock Inc and Fidelity have applied to set up wholly owned mutual fund units in the country. The sector, though, already has about 150 players and is dominated by domestic companies.
The fund manager said it would maintain a team in Shanghai focused on joint venture support, policy and market research, and business development, and that it maintained its long-term commitment to the China market.
"China...presents a significant opportunity for Vanguard to provide our advisory services and expertise to individual investors," said Scott Conking, head of Vanguard Asia.
- Reporting by Reuters