Vanguard to curtail cash flow of its Intermediate-Term Tax-Exempt Fund

By Tali David

Minneapolis, Feb 28 - Vanguard announced that effective immediately, the Vanguard Intermediate-Term Tax-Exempt Fund will no longer accept new accounts from financial advisors or institutional clients in order to curtail cash flow, according to a press release.

The fund will remain open to these clients for additional purchases. Retail clients may continue to establish new accounts and make additional purchases without limitation, the release said.

The Vanguard Wellington Fund is also subject to the same purchase restrictions.

"Vanguard is proactively taking steps to reduce cash flow into the Wellington and Intermediate-Term Tax-Exempt funds to ensure that their investment advisors can continue to effectively manage the portfolios," chief executive officer Bill McNabb said in the release.

"Our commitment is to protect the interests of the funds' current shareholders, and as we've done in the past, we are demonstrating the conviction to do this by partially closing two of our largest funds."

The $39 billion Vanguard Intermediate-Term Tax-Exempt Fund is Vanguard's largest municipal bond fund and the largest tax-exempt fund in its category.

The fund invests in high-quality municipal bonds and has an average duration of five years, the company said.

Vanguard is a Valley Forge, Pa.-based investment company.

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