The increasing cost of insurance coverage has forced Vanguard to drop an investment mandate on six of its municipal bond funds requiring them to hold a percentage of insured municipal bond issues. As a result, the firm is changing the funds' names, dropping the word "insured."

The decision was based on the decreasing number of municipal bonds being issued with insurance coverage as well as "the rising cost of this insurance," the company said. While the move will have no impact on the funds' investment objectives of providing tax-free income, it will increase the funds' risk. "However, the funds will continue to adhere to Vanguard's high standards of credit quality, investing no less than 75% of assets in high-grade municipal bonds, and a maximum of 5% of assets in lower-rated or unrated securities," the company said.

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