Vanguard Shuts Off $16.9B High-Yield Fund

Well, this is a problem most fund firms would love to have. Vanguard is closing its High-Yield Corporate Fund to most new accounts, effectively immediately, citing a need to curtail strong cash inflows. The fund, which currently holds $16.9 billion in net assets, has experienced cash flow totaling $2 billion over the past six months.

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“The flows into the High-Yield Corporate Fund have been particularly acute, so we are taking these proactive steps to preserve the ability of the advisor to manage the fund effectively and protect the interests of existing shareholders,” stated Vanguard CEO Bill McNabb.

The fund's investment advisor is Wellington Management Company LLP, which has managed the fund since its inception in 1978.

This marks the second time that Vanguard has closed the fund. In June 2003, the fund was closed after receiving $1.4 billion in net cash flow in the first five months of the year. It was reopened in December 2003 after investor interest and cash flow had subsided.