Fund Given New Benchmark, Investment Minimum and Redemption Fee

The Vanguard Group is making several changes to its Vanguard Selected Value Fund, including a change to the fund's benchmark index, an increase in its minimum investment from $3,000 to $25,000 and a new 1% redemption fee, the company announced today.

The fund will use the Russell Midcap Value Index as its benchmark instead of the Russell Midcap Index beginning Aug. 1. The firm decided to switch the fund's benchmark because the fund has historically been managed as a traditional value fund, the company said.

The Russell Midcap Index measures the performance of the 800 smallest companies included in the Russell 1000 Index while the Russell Midcap Value Index measures the performance of midcap companies with lower price-to-book ratios and forecasted growth values.

In addition, the fund's investment minimum will increase from $3,000 to $25,000 beginning July 23 in order to slow the flow of assets into the fund. The fund's recent performance may be driving a significant inflow of assets from short-term investors, the company said. Moreover, continued asset growth at the current rate could hamper the fund's ability to invest.

Existing shareholders will not be affected by the new minimum investment requirements.

Vanguard will also impose a 1% redemption fee on shares purchased after Aug. 6, 2001 and redeemed within five years of purchase. The move is intended to discourage short-term trading in the fund, the company said.

The fund's year-to-date return is 17.6% and it had $664 million in assets under management as of July 20, according to fund tracker Morningstar.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.