Vanguard Reopens, Makes Changes to Funds

Vanguard Reopens, Makes Changes to Funds

Vanguard is reopening the Strategic Equity Fund (VSEQX), which should be good news to investors. This fund was closed back in April to new investors because it was attracting a tremendous amount of new assets due to strong performance. It may seem odd that a fund company would close a fund because it is performing very well, but rapid expansion in assets can make it difficult for fund managers to maintain the fund’s objectives.

For the same reasons, Vanguard also placed maximum purchase restrictions on two other funds: Vanguard Windsor II (VWNFX) and Vanguard Wellington (VWELX). Although there is no maximum purchase amount, the minimum investment is now $10,000, which holds true for the Strategic Equity Fund as well.

According to Morningstar:

Net cash flows into the fund have cooled since Vanguard took the action, so the family decided to ease the restrictions. At $7 billion for Strategic Equity, $46 billion for Windsor II, and $44 billion for Wellington, asset levels are still extremely large for their respective categories, though. Vanguard said it would continue monitoring the funds’ assets and investors should, too.

What does this mean for the average investor? Well, these are some great funds, so now that some restrictions have been lifted they may be worth a look. Since the funds have still seen rapid growth due to excellent performance, that also means the funds could be closed or more restrictions put back in place.  So,  if you own these funds, or plan on purchasing them, they are worth keeping an eye on.

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

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