“Despite our efforts, at both a company and an industry level, to educate investors about the perils of performance-chasing, we continue to be concerned about this behavior,” said Vanguard CEO Bill McNabb. “Closing the fund for a cooling-off period protects existing shareholders from higher transaction costs from short-term-oriented investors [and] protects prospective investors from themselves, as high-performing funds will almost certainly drop off at some point.”
Vanguard has temporarily closed a total of eight other funds, the High-Yield Corporate Fund for six months in 2003, the Health Care Fund for 10 months in 1999 and three stock funds this past August, the Vanguard PRIMECAP Core Fund, PRIMECAP Fund and Capital Opportunity Fund. Earlier this year, Vanguard set a cooling-off period for the Admiral Treasury Money Market Fund, Convertible Securities Fund and Federal Money Market Fund.
