(Yicai Global) March 17 -- Vanguard Group, the world’s second-biggest mutual fund house, is shifting focus in China to a robo-advisory joint venture it has with Jack Ma’s fintech giant Ant Group after abandoning plans to secure a fund management license in the country.

“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,” the Pennsylvania-based firm said on March 15.

The move represents a marked shift in Vanguard’s Asia strategy. China only fully opened up its USD3 trillion mutual fund market last April, and Vanguard was one of the first overseas firms poised to take advantage. New York-based Blackrock was the first permitted to set up a wholly foreign-owned mutual fund entity last August.

Vanguard will now concentrate on Bangnitou, meaning ‘help you invest,’ that it set up with Hangzhou-based Ant in June 2019. The robo-investor offers low-cost, smart financial advice to 900 million individuals on the Chinese mainland through Ant’s mobile payment platform AliPay.

For a minimum investment of CNY800 (USD594), the system uses the Vanguard Global Capital Markets Model to run a risk assessment for each investor and makes portfolio tips. It charges a daily service fee of 0.0014 percent of all assets, equivalent to an annual charge of 0.5 percent. The platform had 200,000 clients as of July.

Still, competition is fierce and advisory fees are declining. Some companies are only charging 0.3 percent per annum and subscription fees are often waived. It remains to be seen if Bangnitou can gain more access to China’s crowded market.

Vanguard relocated its Asia headquarters to the city last year after closing its Japan and Hong Kong offices. In September, it tapped Luo Dengpan, a former securities regulator, as general manager to lead its planned mutual fund unit.

The change in Vanguard’s plans will result in the elimination of nearly half of the positions at its Shanghai office, according to Ignites Asia, a unit of the Financial Times. It has yet to comment on layoffs.

Editor: Kim Taylor