The Vanguard Group will close its $22.5 billion Vanguard Health Care Fund, according to a March 24 report from MarketWatch. The Valley Forge, Pa.-based company said the fund would be open only to existing shareholders and retirement plans.

The move comes at a time when assets in the fund have risen more than 50% over the last two years, thanks to market gains and shareholder demand, despite a hefty, $25,000 initial investment minimum.

Vanguard's actions were prompted by concerns from Wellington Management Company, the fund's adviser, about the fund's future performance in light of the tremendous cash inflow. Ed Owen, who has managed the 103-stock fund for 21 years, has focused on large-cap growth companies such as Pfizer, Eli-Lilly and Cardinal Health.

This is not the first time that Vanguard has closed a fund when asset growth peaked. The company closed Health Care in 1999, for 10 months, and investors who bought in after the reopening were rewarded handsomely.

Over the past five years through March 22, Vanguard Health Care rose 9.7% annually on average, placing it in the top 15% of health-care sector funds, according to Morningstar. The no-load fund's 8.7% gain over the past 12 months ranks above 94% of its peers.

"Each closing is different," said John Demming, a Vanguard spokesman. "We close funds to protect the interests of the fund's long-term shareholders. In this instance with Health Care, we're taking the steps to help preserve Wellington's ability to employ its investment strategy to produce competitive long-term returns."

Christopher Davis, a Morningstar analyst, said the closing was an attempt to prevent the fund from getting too large, which would constrain management.

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