Vanguard Closes Popular Dividend Growth Fund to New Investors

yieldInvestors have an insatiable appetite for yield these days, and in a true sign of the times, Vanguard just closed its largest dividend-focused mutual fund to new investors.

The asset manager said via press release:

Vanguard is implementing measures to control asset growth of its $30 billion Dividend Growth Fund. Effective immediately, the fund will no longer accept new accounts; existing shareholders may continue to invest without limitation.

“Vanguard is proactively taking steps to slow strong cash flows to help ensure that the advisor’s ability to produce competitive long-term results for investors is not compromised,” said Vanguard CEO Bill McNabb. “We have long been committed to protecting the interests of our funds’ shareholders, and demonstrate this conviction by closing or restricting funds to stem further growth.”

With government bonds around the world offering miniscule (or in many cases negative) rates, investors have been flocking to yield-focused funds in droves. Some analysts wonder if a bubble in high-yielding assets is forming, with everything from high-yield stocks to junk bonds and emerging market bonds seeing such huge demand.

Just because you can’t buy Vanguard’s now-closed fund, yield-hungry investors don’t need to fret, however. You can still access the Vanguard Dividend Appreciation ETF (NYSE:VIG), which is the largest dividend-focused ETF in the world, and offers similar exposure to that of the VDIGX. The VIG boasts over $22 billion in assets under management, and has gained nearly 9.5% year-to-date.


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