MALVERN, Pa. -- After a rush of $564 million in net new cash in January to its Health Care Fund, The Vanguard Group of Investment Cos. has instituted a redemption fee policy and a closure period of six to 12 months. Strong inflows continued in February. The fund had $10 billion under management and more than 429,000 shareholders.
Chairman John J. Brennan said in a statement the fund is being closed because Vanguard fears that many retail investors who came into the fund to chase hot performance will redeem if performance cools.
The fund closed to new investors Feb. 25. Existing shareholders may contribute an additional $25,000 per account and regular contributions through automatic investment or retirement plans will be permitted. New employees of defined contribution plan sponsors that offer the fund as an option will be allowed into the fund. A 1% fee will be assessed beginning April 1 on shares redeemed within five years of purchase. The previous policy had a one-year minimum holding period.
E*TRADE launches first mutual fund
PALO ALTO, Calif. -- E*TRADE Group Inc. launched its first mutual fund, the E*TRADE S&P 500 Index Fund. It is the first mutual fund offered only over the Internet and is available only to E*TRADE online customers. It is subadvised by Barclays Global Fund Advisors, San Francisco, managed by E*TRADE Asset Management Inc. and distributed by E*TRADE Securities Inc. Most communication with investors is conducted electronically. The total expense is 32 basis points. Information is available at www.etrade.com, where E*TRADE will introduce other funds as they are developed.
NSCC reduces mutual fund processing fees
NEW YORK -- The National Securities Clearing Corp. reduced some of its most common equity clearance and settlement fees and charges for mutual fund processing, resulting in a projected savings to the securities industry of almost $20 million annually, according to the NSCC. The new fee schedule will be retroactive to Jan. 1, and will be reflected in February billing statements to NSCC participants.
The move follows a fee cut last year of $42 million, the largest single reduction in the NSCC's history. Over the past five years, the NSCC has implemented price reductions worth more than $250 million for participants, according to the NSCC.
The NSCC handles clearance and settlement for trades at all U.S. stock exchanges and the over-the-counter market, as well as most corporate and municipal bond trades, unit investment trust transactions and mutual fund transactions not sold directly by a mutual fund family.
Schwab sees growth in retirement assets
SAN FRANCISCO -- Huge growth in retirement plan business helped push the 1998 earnings of Charles Schwab Corp. to 29% on 19% revenue growth.
More than 90 new financial advisers signed up to use the SchwabPlan retirement plan service last year. Corporate retirement plan assets administered by Schwab rose 45% to $20 billion as of Dec. 31. Revenue generated by Schwab's institutional division, which includes services to financial advisers and retirement plans, rose 35% last year.
Schwab's proprietary funds did well last year: Net purchases of the SchwabFunds more than doubled to $21 billion. Customer assets within the SchwabFunds rose 47% to $82 billion by the end of the year.
Scudder Kemper Investments launches new Web site
BOSTON -- Scudder Kemper Investments introduced a new Web site, www.scudder.com, which uses artificial intelligence applications such as Natural Language Interpretation technology. The technology allows users to pose questions as if they were speaking with customer service representatives. The system then answers questions specifically or links users to sites where the answers are available.
The site also lets users create an online personal investment organizer to track all investments and performance. A consolidated view is available by performance or asset class.
8 funds added to Fidelity Advisor
BOSTON -- Fidelity Investments Institutional Services Co. added eight funds to the Fidelity Advisor family, bringing the total funds available to financial intermediaries to 36.
Added were three domestic equity funds: the Fidelity Advisor Asset Allocation Fund, managed by Richard Habermann; the Dividend Growth Fund, managed by Charles Mangum; and the Retirement Growth Fund, managed by Fergus Shiel. Also added were five international equity funds: the Fidelity Adviser Diversified International Fund, managed by Greg Fraser; the Europe Capital Appreciation Fund, managed by Kevin McCarey; the Japan Fund, managed by Brenda Reed; the Latin America Fund, managed by Patti Satterthwaite; and the Global Equity Fund, managed by Mr. Habermann.