Vanguard Loses $590 Million Stock Mandate From Taiwan Funds

(Bloomberg) -- Vanguard Group Inc. lost a mandate to run at least $590 million in Taiwan government pension and insurance assets due to weak performance, dealing a further blow to the world’s second-largest money manager as it reshuffles its Asian operations.

Assets managed by Vanguard under an Asia-Pacific mixed index mandate was redeemed prematurely due to long-term under-performance and “unusual moves” in Asia, according to the Bureau of Labor Funds’ October updates posted on Dec. 1. The Vanguard funds returned about 13% since inception in August 2016, about half the benchmark’s 26% gain, according to the previous month’s statement.

Vanguard has been overhauling its Asia strategy, pulling out of Hong Kong and Japan to focus on individual investors in faster-growing markets. The Valley Forge, Pennsylvania-based firm also returned about $21 billion in managed assets to Chinese government clients, Bloomberg reported in October, handing a potential windfall to competitors including BlackRock Inc.

Vanguard declined to comment in an email. The labor funds bureau declined to elaborate beyond the statement.

With the ouster of Vanguard, New York-based BlackRock is now the main manager for Taiwan’s Asia-Pacific stock mandate, according to the update. It oversaw more than $700 million as of Oct. 31, with four-year returns roughly matching the benchmark’s rise, according to the statements.

Vanguard is falling behind larger rival BlackRock in China as money managers look to take advantage of the government’s financial opening. While it now has an investment advisory joint venture, Vanguard has yet to apply for a key mutual fund management license, based on filings with China regulators. BlackRock won its license in August, and has been granted permission for a wealth-management joint venture.

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With assistance from Bloomberg