Vanguard Brings Its Low-Cost Revolution to China

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Vanguard has an office in the Shanghai World Financial Center in China.

Vanguard has revolutionized the investment industry in the U.S. with its low-cost funds, and is now bringing the same approach to China, even though it may take years for the strategy to bear fruit, according to a report from Bloomberg.

Vanguard’s groundwork for the expansion has been made easier by China opening its market to foreign asset managers. The Malvern-based investment giant is currently on track to more than double its Shanghai office this year. It may also ask for approval to sell its products to wealthy investors before seeking a foreign-owned mutual fund license, which it should be able to apply for in 2021.

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Charles Lin, Vanguard’s Head of Greater China, said that Vanguard is hoping to have an “obvious cost advantage” compared to local competitors. He said that while it may take some time for Vanguard’s index-tracking funds to take root in China, the appeal of passive investing should grow as the markets become more efficient.

“We hope to be able to quickly build up the size, achieve economies of scale and operational efficiency to lower investment costs as quickly as possible,” said Lin.

Read more about the expansion in China at Bloomberg here, and check out previous VISTA Today coverage of Vanguard here.

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