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Rating:Vanguard Moves Forward with a Money Market Merger Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, August 11, 2009

Vanguard Moves Forward with a Money Market Merger

Reported by Meredith Mazzilli

Vanguard has finished merging two of its money market funds, and in doing so has shuttered the fund with the lower minimum requirement and higher expense ratio. The merger of the Vanguard Treasury Money Market Fund into the Vanguard Admiral Treasury Money Market Fund became complete as of August 11, according to an SEC filing.

The Admiral fund is now closed to all new institutional and retail accounts, and will remain so until further notice. However, existing retail shareholders will be allowed to continue to purchase, exchange or redeem shares.

The Admiral fund is a separate class of lower-expense shares available only to those looking to invest $100,00 or more in the fund, or those who have owned the non-restricted version of the fund for at least ten years and who have a minimum of $50,000 in the account. The minimum initial investment for the Treasury Fund was $3,000. Current shareholders of the Treasury Fund will not be subject to the newly reorganized Admiral fund's minimum.

The SEC filing indicates that once the fund is reopened to investors, shareholders who open new accounts will have to comply with the minimum investment. However, Vanguard spokeswoman Rebecca Cohen told The MFWire that this minimum may not be permanent.

"We would expect that the board will take a hard look at the minimum investment when the fund does reopen," Cohen said.

The newly reorganized fund has an expense ratio of 15 bps, and currently has total net assets of $20.2 billion.

Cohen also noted that there are currently no plans to carry out any similar actions with any other money market funds.

Vanguard's Federal Money Market Fund is also currently closed to new institutional accounts, and is subject to a $10,000 daily investment limit for retail customers.

In other Vanguard news, the firm has filed with the SEC to launch seven new bond index funds and ETFs. Vanguard will offer ETF Shares and Signal shares with expected expense ratios of 15 bps, and Institutional shares which will carry an expense ratio of 9 bps.

The planned launch will raise the total number of Vanguard's bond index funds to 12.  

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