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Vanguard Cites Diminished Demand in Re-Opening Funds

Existing bear market conditions and reduced flows have prompted the Vanguard Group of Malvern, Pa. to re-open the Vanguard Capital Opportunity Fund and the Vanguard Primecap Fund to new investors, the company announced last week.

"In light of the current market climate and more subdued investor sentiment and activity, we believe that we can prudently re-open the two funds and remove the investment limitations for existing shareholders," said John J. Brennan, chairman and CEO of Vanguard, in a statement.

The Vanguard Capital Opportunity Fund is now open to new investors, according to Vanguard. It was closed to new investors a little over a year ago in order to limit the amount of cash that was flowing into the fund. Vanguard also placed a $25,000 minimum investment requirement on the fund for the exiting shareholders, according to the company.

The Vanguard Primecap Fund, which will re-open April 23, was closed to new investors in 1998. A $25,000 investment minimum was also imposed at that time for its existing shareholders, according to Vanguard. The company closed the fund because it wanted to control its growth.

The investment minimum for new investors in the Primecap Fund will be $25,000 and it will include a redemption fee of one percent on all redemptions made within five years of the initial purchase.

Assets in the Primecap Fund dropped in the past year from more than $23 billion to $19.1 billion, and from $5.6 billion to $4.6 billion as of April 9 for the Capital Opportunity Fund, according to Morningstar of Chicago.