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Money Management

Vanguard to liquidate $962.5 million convertibles fund in March

Vanguard Group has closed a $962.5 million convertibles fund to new investors ahead of its planned liquidation, said a news release Thursday.

The Vanguard Convertible Securities Fund will be liquidated in late March, and shareholders of the fund are being notified with the opportunity to move into another Vanguard fund or redeem shares prior to the liquidation date, the news release said.

"After careful review of the fund's investment rationale and client usage, Vanguard determined that investors could achieve similar risk-return exposures and long-term returns by investing in a diversified, balanced portfolio of global stock and bond funds," the release said.

Launched in 1986, the Vanguard Convertible Securities Fund primarily targeted institutional investors such as pension funds, endowments, and corporate and non-profit retirement plans. But the fund "has not gained broad acceptance among these investors and remains one of the smallest offerings in terms of net assets among Vanguard's stock and balanced offerings," the release said.

Oaktree Capital Management (OAK), the subadviser for the fund, will oversee the liquidation.

Separately, effective Dec. 31, managing director and co-portfolio manager on the fund, Abe Ofer, retired from Oaktree, according to a company filing with the Securities and Exchange Commission. Remaining co-portfolio managers Stuart Spangler, Andrew Watts, Jean-Pierre Latrille and Petar Raketic, will continue with the Vanguard Convertible Securities Fund, the filing said.

A Vanguard spokeswoman said in an email Thursday that Mr. Ofer's retirement "is unrelated to the liquidation of the fund," and that the firm "will be working directly with institutional investors to determine the best course of action for their assets and plans," due to the fund's closure.

The liquidation comes as Vanguard continues to review its global fund and exchange-traded fund lineup, introducing new ESG ETFs and merging other equity funds along the way, the release said.

Last month, Vanguard announced plans to merge its $15.1 billion Vanguard Morgan Growth Fund into its $10.2 billion Vanguard U.S. Growth Fund. The merger is scheduled to be completed early this year.

Separately, last year, Vanguard liquidated its U.K.-domiciled Vanguard Ultra-Short-Term Bond Fund. It also liquidated its Vanguard Ohio Tax-Exempt Money Market Fund in 2017, the release said.