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Vanguard reopens Dividend Growth Fund

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Vanguard is reopening the USD36.6 billion Vanguard Dividend Growth Fund (VDIGX) to all investors, effective immediately.

Vanguard closed the fund to most new accounts in July 2016, seeking to protect the interests of existing shareholders by reducing cash flow after a period of rapid growth. Cash flow has subsequently subsided and market conditions have changed since the fund’s closing.
 
“After careful analysis of the fund’s current cash flows and asset level, and following consultation with the fund’s advisor, we’re confident that there is ample capacity to reopen the Fund,” says Matthew Brancato, head of Vanguard’s Portfolio Review Department, who noted that the reopening should not be construed by investors as a “buy signal” for the fund or dividend stocks in general. 
 
Introduced in May 1992, the actively managed Vanguard 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 potentially grow their dividends over time. Reopening the Fund will have no impact on its investment objectives, strategies, and policies, and Wellington Management Company LLP remains the fund’s investment advisor.
 
Vanguard also announced plans to broaden access for sophisticated investors to two actively managed alternative investment funds, Vanguard Alternative Strategies Fund (VASFX) and Vanguard Market Neutral Fund (VMNFX). The minimum initial investment requirement for retail investors for both funds will be reduced from $250,000 to $50,000, which is the same as the newly launched Vanguard Commodity Strategy Fund (VCMDX). Vanguard’s three alternative investment funds, managed by the firm’s Quantitative Equity Group, will share a standard minimum.
 
Concurrently, Vanguard Alternative Strategies Fund will be opened to financial advisors, institutional investors, and Vanguard Flagship and Vanguard Personal Advisor Services clients. The fund is currently available only to institutional investors enrolled in Vanguard Institutional Advisory Services and as an underlying holding of Vanguard Managed Payout Fund. These changes will go into effect in the fourth quarter of 2019.
 
Brancato notes the importance of responsibly managing access to the alternative investments and their suitability for select investors: “Vanguard’s alternative funds – Alternative Strategies, Market Neutral, and Commodity Strategy – give sophisticated individual investors, advisors, and institutional clients the opportunity for additional diversification, reduced volatility, and better risk-adjusted returns. However, given their complexity, distinctive characteristics, and risks, they are not appropriate for most individual investors and will not be offered to them broadly.”

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