MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Thursday, February 25, 1999 Vanguard Says "No More" to Health Care Investors Valley-Forge-based Vanguard Funds will be closing the doors on new investors at its bursting-at-the seams Health Care Fund. The recent increase in cash flow has outpaced the company's expectations and convinced management that much of the new money is from momentum fund investors, chasing hot sectors. "We are concerned that much of the recent cash flow into the fund is from investors who are chasing `hot' performance and who intend to redeem their shares when the fund's performance cools, as it no doubt will do at some time," said Vanguard Chairman John J. Brennan in a letter being sent to the fund's shareholders. "This kind of trading activity can harm long-term shareholders because it can drive up fund operating costs, force the fund to realize unwanted capital gains, and disrupt normal investment operations." The new redemption fee policy, which will become effective on April 19, 1999, assesses a 1% fee on shares redeemed within five years of purchase. No fee will be assessed on shares held more than five years. Investors who held shares prior to April 19 will not be assessed the new fee. No new account applications or exchange requests to purchase fund shares will be accepted by the fund after the close of business today. Existing shareholders will be permitted to add up to $25,000 per account, and periodic contributions to the fund through automatic investment or retirement plans may continue at current levels, during the closure period, subject to the new fee policy. The fund has more than 429,000 shareholders and assets of $10 billion. Vanguard has in the past closed four other funds to new accounts. Its most recent closing was Vanguard PRIMECAP Fund in April 1998. Printed from: MFWire.com/story.asp?s=24942 Copyright 1999, InvestmentWires, Inc. All Rights Reserved |