Vanguard has closed its $39.5 billion Treasury Money Market Fund (VUSXX) to new shareholder accounts.
The company is seeking to protect existing Fund shareholders from high levels of cash flow that could potentially accelerate reductions to the Fund’s yield. Existing shareholders of the Fund can continue to make purchases with no limits.
Vanguard believes that money market funds provide significant value to investors as a stable and convenient cash equivalent instrument. However, an increase in demand for high-quality government money market funds, combined with extremely low yields on U.S. Treasury securities, may have the effect of reducing the Fund’s yield, as new cash flow is invested in lower-yielding securities.
Vanguard is taking this prudent step to temper cash flows and will continue to monitor the Fund and employ additional measures if needed. Vanguard has taken similar pre-emptive measures during prolonged low-interest-rate environments.
Prospective investors will continue to have access to other portfolios in Vanguard’s $414 billion low-cost lineup of money market funds, including Vanguard Prime Money Market Fund, Vanguard Federal Money Market Fund, and Vanguard’s national and state-specific tax-exempt money market funds.
Vanguard continues to manage its money market funds very conservatively, focusing only on the highest-quality short-term money market instruments.
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