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Rating:Two Vanguard Funds Swallow Some Institutional Brethren Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, September 22, 2009

Two Vanguard Funds Swallow Some Institutional Brethren

Reported by Adam Kommel

Vanguard plans to merge two institutional funds into their respective retail counterparts, a press release revealed Monday.

The $3.7 billion Vanguard Institutional Total Bond Market Index Fund will be merged into the $61.3 billion Vanguard Total Bond Market Index Fund. A new share class, with a $100 million minimum investment, will be offered to satisfy institutional clients.

Similarly, the $5 billion Vanguard Institutional Developed Markets Index Fund will merge into the $2.8 billion Vanguard Developed Markets Index Fund. The new institutional share class will required a minimum initial investment of $5 million.

“Combining these portfolios will accomplish two objectives,” stated Gus Sauter, Vanguard’s chief investment officer. "First, it will streamline our index product line-up. Second, it will result in greater efficiencies in the administration and investment management of the merged funds, which, in time, could lead to more precise tracking of the target benchmarks and lower expense ratios.”

The bond fund merger is pending approval of shareholders in February, while the developed markets merger is already scheduled for January 2010.

The Valley Forge, Pennsylvania-based giant also said Monday that its bond index funds would adopt float adjusted benchmarks. 

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