Vanguard is implementing measures to control the asset growth of its USD30 billion Dividend Growth Fund by no longer accepting new accounts.
Existing shareholders may continue to invest without limitation.
“Vanguard is proactively taking steps to slow strong cash flows to help ensure that the advisor’s ability to produce competitive long-term results for investors is not compromised,” says Vanguard CEO Bill McNabb (pictured). “We have long been committed to protecting the interests of our funds’ shareholders, and demonstrate this conviction by closing or restricting funds to stem further growth.”
The fund’s performance record versus a relevant dividend benchmark and peer funds has resulted in strong cash flows and asset growth. Over the past six months, the fund has received an additional USD3 billion in net cash inflows and, over the past three years, the fund’s assets have nearly doubled.
Vanguard has a long history of acting pre-emptively to restrict cash inflows to maintain funds’ assets at reasonable levels. In addition to the Dividend Growth Fund, several other funds are closed or have restrictions. Vanguard Capital Opportunity Fund, PRIMECAP Fund, and PRIMECAP Core Fund are closed to new investor accounts, except for specified retail clients. Vanguard Convertible Securities Fund and Vanguard Wellington Fund continue to be closed to some new institutional accounts.
Introduced in May 1992, the Dividend Growth Fund is designed to provide investors with some income while offering exposure to dividend-focused companies across all industries. The fund focuses on high-quality companies that have both the ability and the commitment to grow their dividends. The fund is managed by Donald J. Kilbride, senior managing director, Wellington Management.
Founded in 1928 and based in Boston, MA, Wellington Management provides advisory services to 21 Vanguard mandates, representing more than USD337 billion in assets.
