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https://bloomberg.com/news/articles/2023-03-21/vanguard-plans-to-shutter-business-in-china-exit-ant-jv?srnd=premium-europe&leadSource=uverify%20wallA complete retreat would follow Vanguard’s surprise move two years ago to scrap plans for a mutual-fund management license in China to focus on the BangNiTou tie-up with Ant that was launched in 2020.
Fidelity and Neuberger Berman Group have recently joined BlackRock in launching onshore funds through new wholly-owned units, while Manulife Financial Corp., JPMorgan Chase & Co. and Morgan Stanley have gained approvals to buy out local partners to gain full control of existing ventures.
The race for fund advisory is heating up with more players coming in, hurting profitability. Vanguard’s venture, which has been offering only products from competitors, booked a loss in 2021 that was much higher than an internal forecast made after it was set up in 2019, Bloomberg reported last year. Vanguard owns 49% of it.
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"Mary ERDOES, JPM. RISK management in banking is essential. 3 recent bank failures (Silvergate, SVB, Signature) were partly from weaknesses in risk controls. The banking system as a whole is in much better shape now than during the GFC 2008-09 – the loan/deposit ratios are low; the capital ratios are high. There is much higher regulatory scrutiny for the systemically important banks (SIBs) than for smaller banks and may be new regulations can address that. Chances for US RECESSION are high (65%) and JPM is prepared; some sectors of the economy such as housing may be in recession already. FED’s path to +2% average inflation won’t be easy or smooth. After the disaster last year, the 60-40 portfolios look attractive for these volatile markets. ALTERNATIVE investments are fine for those who can take higher risks, but don’t overdo those as some university endowments have done. DIVERSIFICATION is useful but keep in mind that diversified mixes evolve; problems arise when investors get stuck on some fixed diversification mixes. HOME-COUNTRY biases are strong in the US but are everywhere. The ESG is in flux, and it is important to provide the asset managers the leeway on ESG. JPM is using AI for security and fraud prevention.
CHINA is challenging but important; even if you are not in China, it will affect your investments. After 100+ years in China, and lots of efforts there, JPM can now own 100% of its joint-ventures and it has big expansion plans targeted for the Chinese population. But JPM stays away from the politics of the US-China relations. JPM sent a delegation to UKRAINE in February because JPM is #1 debt issuer for Ukraine; it gave Ukraine 2-yr payment deferrals after the war started; it will also be involved heavily in post-war reconstruction and redevelopment (and some thought that JPM was pulling a stunt with its Ukraine trip)."
However. Given that the shareholders are the "owners," we might wonder what we are to gain by expanding to a country where business execs disappear for weeks at a time, if not altogether. And that's just one example.