Vanguard loses US$590m stock mandate from Taiwan funds

[TAIPEI] Vanguard Group lost a mandate to run at least US$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, according to a Bureau of Labor Funds' October update posted on its website Dec 1.

The Vanguard funds returned about 13 per cent since inception in August 2016, about half the benchmark's 26 per cent 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 returned about US$21 billion in managed assets to Chinese government clients, Bloomberg reported in October, handing a potential windfall to competitors including BlackRock.

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 US$700 million as of Oct 31, with four-year returns roughly matching the benchmark's rise, according to the statements.

BLOOMBERG