Vanguard has closed its USD39.5 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 will be able to continue making purchases with no limits.
An increase in demand for high-quality government money market funds, combined with extremely low yields on US Treasury securities, could the effect of reducing the fund’s yield, says Vanguard, as new cash flow is invested in lower-yielding securities.
Vanguard has closed the fund in order 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 USD414 billion low-cost line-up 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.