Vanguard closes 2 funds to new institutional investors
By Rick Baert | March 1, 2013 11:34 am
Vanguard Group has closed the $68 billion Vanguard Wellington Fund and the $39 billion Vanguard Intermediate-Term Tax-Exempt Fund to new accounts from institutional investors or financial advisers, the mutual fund manager announced Thursday.
Vanguard Wellington Fund has grown 33% over the last five years through both cash flow and market appreciation, Linda Wolohan, Vanguard spokeswoman, said in an e-mail.
Assets in the Intermediate-Term Tax-Exempt Fund have more than doubled over the past five years, and in the last three years, the fund had received more than half of all cash flow into Vanguard municipal bond funds, with 60% of that cash flow in the past year alone, Ms. Wolohan said.
“Reducing cash flow is necessary to preserve each investment adviser's ability to produce competitive long-term returns for current shareholders,” Ms. Wolohan said.
The Vanguard Wellington Fund is Vanguard's oldest mutual fund, started in 1929, according to the release. Wellington Management has subadvised the fund since inception. The intermediate-term fund is Vanguard's largest municipal bond fund and is managed by Vanguard's fixed-income group.
Vanguard said it would monitor cash flows in both funds, and could either restrict inflows further or reopen the funds.
Retail investors will be able to establish new accounts with both funds.