Bond fund closed to most new investors

The Vanguard Group in Malvern. The mutual fund giant has been expanding while rivals have cut jobs in 2009, in part because Vanguard works with small, independent advisers to sell its ETFs.
The Vanguard Group in Malvern. The mutual fund giant has been expanding while rivals have cut jobs in 2009, in part because Vanguard works with small, independent advisers to sell its ETFs. (MIKE MERGEN / Bloomberg News)
Posted: May 25, 2012

The Vanguard Group closed its high-yield corporate bond fund to most new investors to curtail a flood of money from investors seeking the relatively high returns of its non-investment-grade bonds.

In the last six months, investors had poured $2 billion into the fund, bringing its total assets to $16.9 billion, Vanguard said.

"In this prolonged low-rate environment, we continue to see investors turn to high-yielding alternatives — including money market fund holders moving to bond funds, U.S. Treasury bond fund holders moving to high-yield corporate funds, and bond fund holders moving to dividend-paying stock funds. And we’ve cautioned investors accordingly about reaching for yield," Vanguard CEO Bill McNabb said in a news release.

Vanguard has previously closed the fund in 2003 for about six months.

– Harold Brubaker

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