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Vanguard ties up with Ant Financial

The world's second largest asset manager has set up a financial services joint venture with Alibaba affiliate Ant Financial, according to public records.

The joint venture was registered with an initial investment of 20m yuan ($2.9m), focusing on services including investment consulting, according to the mainland website Tianyancha, which contains public records and is approved by China’s central bank.

Huang Hao, the president of Alibaba affiliate Zhejiang MY Bank, is the venture’s legal representative.

Ant Financial will control the company with a 51% stake, while the Vanguard subsidiary will hold the rest of the new enterprise.

The venture will be located in the Shanghai Free Trade Zone.

Ant Financial, a fintech company, was founded in 2014. It operates Yu’ebao, the world’s largest money market fund with 1.13trn yuan ($163bn) in assets.

Vanguard, with $5.2trn in global assets, is one of the world’s top providers of passive investment products, though one-third of those assets is from actively-managed products.

However, it has been very low key in Asia, particularly compared to rival firm i-Shares. For example, Vanguard has six ETFs registered for retail sale in Hong Kong compared to i-Shares 12 products, according to FE data.

In May 2017, Vanguard opened a wholly foreign-owned enterprise (WFOE) structure in China. It has 20 staff members, but none are involved in investment management. Additionally, the firm has not applied for a private fund management licence, which would enable the launch of an onshore fund.

Part of the Mark Allen Group.