Vanguard will merge its $6.7 billion Vanguard Treasury Money Market Fund into its lower-cost $21.8 billion Vanguard Admiral Treasury Money Market Fund, while closing the $12 billion Vanguard Federal Money Market Fund to new investors, Vanguard announced Tuesday.
Spokeswoman Rebecca Cohen said Vanguard is moving to ensure it can continue to deliver competitive yields to those funds shareholders at a time when strong safe-haven demand for short-term government paper has driven yields sharply lower.
With the merger expected around August, investors in the Vanguard Treasury Money Market Fund, which has a 28-basis-point fee, can enjoy the lower 15 bps fee of the Vanguard Admiral Treasury Money Market Fund. Both funds were closed to new investors in January, Ms. Cohen said.
Closing the Vanguard Federal Money Market Fund to new investors will help sustain the yield enjoyed by the funds current investors, since new money going into the fund today would mean buying lower-yielding short-term government paper than the portfolio currently holds, she said.
Ms. Cohen said the $121 billion Vanguard Prime Money Market Fund, which can invest in corporate paper as well as government paper, remains open to new investors.