For now, active funds remain more popular in China’s stock market that remains dominated by retail investors. The 15 top outperformers among actively-managed mutual funds in China over the past three years a beat benchmarks by an average 15 percentage points, more than double the level in the U.S., according to data compiled by Bloomberg. At the same time, the worst 15 performers in China trailed their benchmarks by an average of just 3.2 percentage points, with the biggest loss at 8.6 percentage points.
Among some of the other China plans that Lin outlined:
-Vanguard will probably have both actively and passively-managed funds in China, he said without elaborating.
-The firm will set up its own direct-selling platform in China when it can sell mutual funds, and work with local distribution partners, Lin said. While Vanguard typically doesn’t pay commissions to distributors, many in the U.S. sell the firm’s products anyway because clients want them.
- Vanguard plans to more than double the headcount of its Shanghai wholly-foreign-owned business this year to over 20, mainly “infrastructure” functions like marketing, human resources, risk control and accounting.
-The firm is still studying ways to put together an investment team.
-While China’s regulators recently vowed to lift the limit that a foreign manager can own in a local mutual fund business to 51 percent, Vanguard’s ownership structure prevents it from taking a stake capped at that level. The firm could potentially own 100 percent of a local mutual fund business when regulators allow that in three years.
— With assistance by Dingmin Zhang
This article was provided by Bloomberg News.