Vanguard Group on Thursday announced it closed its $16.9 billion High-Yield Corporate fund to new accounts, effective immediately, in the wake of $2 billion of net inflows over the past six months.
In a news release, Vanguard CEO F. William McNabb III noted that a persistent low-interest-rate environment has prompted growing investor flows into higher-yielding fixed-income funds. “The flows into the High-Yield Corporate fund have been particularly acute,” so Vanguard decided to act proactively to ensure that the fund's subadviser, Wellington Management, can continue to manage the fund effectively, Mr. McNabb said.
The Vanguard fund is the third-largest high-yield bond fund, following offerings from American Funds and Pacific Investment Management Co., according to spokesman Bryan Thomas.
American Funds' American High Income Trust has $18.6 billion in assets, and PIMCO's High Yield fund has $17.4 billion, according to Morningstar data.
Vanguard's latest move marks the second time it has closed the fund; it had been closed in June 2003 following net inflows of $1.4 billion in the first five months of that year. It was reopened in December 2003.
Existing fund shareholders can add to their investments in the fund.