VALLEY FORGE, Pa., June 16, 2015 /PRNewswire/ -- Vanguard today announced plans for its money market mutual fund lineup that will enable individual and institutional investors to continue to have access to cash management vehicles at a stable $1 net asset value (NAV).
The moves are in response to rules adopted by the Securities and Exchange Commission (SEC) in 2014, the last compliance date for which is in October 2016.
"We are pleased to preserve Vanguard's money market funds as a stable-price cash management option for our individual and institutional clients," said Vanguard CEO Bill McNabb. "Our retail clients will continue to have the choice to invest in our taxable and tax-exempt money market funds, and all investors, including institutional clients, will be able to invest in our newly reopened Federal Money Market Fund."
Preserving access for individuals
Vanguard plans to designate its $133.4 billion Prime Money Market Fund and its six tax-exempt funds (one national and five state municipal money funds) as "retail funds," meaning that individual investors will continue to have access to these funds at a stable $1 NAV.
In addition, Vanguard announced two name changes, effective December 2015:
- Institutional Shares of Vanguard Prime Money Market Fund (ticker symbol: VMRXX) will be renamed Admiral Shares.
- Vanguard Admiral Treasury Money Market Fund (ticker symbol: VUSXX) will be renamed Vanguard Treasury Money Market Fund.
An option for institutional investors
Vanguard is reopening its $2.8 billion Federal Money Market Fund immediately. All investors, including institutional investors, will now have access to a money fund with a stable $1 NAV that will not be subject to new liquidity-fee or redemption-gate requirements.
Under the new rules, the SEC has defined U.S. government money funds as those that invest at least 99.5% (formerly 80%) of their total assets in cash, government securities, and/or repurchase agreements that are collateralized solely by government securities or cash. Such funds are excluded from the floating NAV requirements, as well as the new fee and gate requirements.
The Federal Money Market Fund and the $9.6 billion Treasury Money Market Fund currently invest more than 99.5% of their total assets in U.S. government securities or repurchase agreements, and plans to operate in accordance with the new definition of a government money market fund. The Treasury Money Market Fund will remain closed to new investors.
Money funds continue to play an important role for Vanguard clients, providing a high-quality, liquid investment (the funds invest in highly rated short-term investments) in periods of both stability and uncertainty in financial markets. Vanguard has managed money funds for 40 years as an integral part of its product lineup, and currently holds more than $174 billion in both taxable and tax-exempt money market funds.
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world's largest investment management companies. As of May 31, 2015, Vanguard managed more than $3.1 trillion in U.S. mutual fund assets, including more than $475 billion in ETF assets. The firm offers 159 funds to U.S. investors and more than 120 additional funds in non-U.S. markets. For more information, visit vanguard.com.
All asset figures are as of May 31, except where noted.
For more information about Vanguard funds, visit vanguard.com or call 800-662-7447 to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
All investing is subject to risk, including the possible loss of the money you invest.
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.
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