America's second-largest mutual fund company, Vanguard Group, with $550 billion under management, is making its debut into Asia with the hiring of Robinson Associates in Singapore on a fee basis to promote it.
Robinson Associates is the independent investment consultancy established last year by Jon Robinson, a 20-year veteran at Watson Wyatt and Mercer Investment Consulting. Robinson is well entrenched in Singapore, having served on the high-profile Economic Review Committee set up by the prime minister.
Vanguard is best known for pioneering index funds under founder John Bogle, who set up the firm in Valley Forge, Pennsylvania. The low-cost product, comprising $190 billion of Vanguard's managed assets, appealed to Robinson, inspiring him to work with the firm. He also liked Vanguard's corporate culture. "They have a strong culture of customer service," he says. "Indeed, they are owned by their customers. That's a culture consistent with my 20 years in consulting."
The initial focus will be to target Asian institutional investors, particularly those in Singapore, where Robinson has strong contacts among the bureaucracy. Robinson says the firm does already have a small clientele, won out of the United States or Vanguard's Sydney office, which is run by managing director Jeremy Duffield.
Vanguard has no plans to lay its own brick and mortar here. Robinson says the firm's staffing and commitment will correspond to the success he is able to achieve.
Although an index provider will be pigeonholed as a passive institutional manager in the mould of Barclays Global Investors or State Street Global Advisors, Robinson contends Vanguard's emphasis on ‘enhanced indexing', particularly in fixed-income portfolios, will help it stand out.
Vanguard may also be positioning itself to dominate the pensions business in Singapore. The ERC's sub-committee on reforming the Central Provident Fund, on which Robinson served, has called for the establishment of a private pension system. Consultants have argued that the only way to provide a wide investment choice to Singaporeans without the current high-cost structure is to carve a role for a single provider, or perhaps a small oligopoly of providers. It is expected the government will try to create a programme this year based on those recommendations that promises enough business to make it attractive.
Vanguard is a major 401(k) pensions provider in the US, with $165 billion in participant-directed defined contribution plans and 17 million shareholder accounts overall. Robinson says Vanguard will be looking at opportunities in Asia to run personal pensions.