HONG KONG Oct 17 Vanguard, the world's
second-biggest asset manager, cut the total expense ratio on all
its Hong Kong-listed exchange traded funds, effective on Monday,
as competition heats up in the passive asset management space.
The move follows similar steps taken by companies such as
Charles Schwab Corp and Blackrock in the United
States that have cut fees recently ahead of a new Labor
Department rule governing retirement products.
While the cuts on Vanguard's stable of exchange-traded funds
offered in the Hong Kong market is a sliver of the overall
market, the move points to an increasing focus on costs by asset
"We believe in the low cost approach and think this will
ultimately benefit the growth of the ETF market in Hong Kong,"
said James Martielli, head of portfolio review, Asia at a media
After the cuts, the expense ratio for all of Vanguard's
funds will fall to 0.22 percent, compared to 0.67 percent for
the broader industry, according to a company presentation.
While Hong Kong has seen rising interest in such products in
recent years in the backdrop of volatile markets and relatively
higher fees, its growth has lagged its Western counterparts.
As of September 2015, Hong Kong had about 131 ETFs with a
market capitalization of $340 billion offered by 25 issuers,
according to a Financial Services Development Council report
released last year.
Vanguard's five ETFs have a combined market capitalisation
of HK$648 million ($83.53 million) compared with HK$28 billion
of the ishares FTSE A50 China ETF.
Its Asian business amounts to about $130 billion. Globally,
it has $3.8 trillion under management.
($1 = 7.7576 Hong Kong dollars)
(Reporting by Saikat Chatterjee; Editing by Kim Coghill)