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Vanguard abruptly closed its $39.5 billion Treasury Money Market Fund to new investors after the end of trading on Thursday. Existing shareholders of the fund, however, can continue to purchase new shares without limits.
Vanguard said it made the move to protect existing shareholders from high levels of cash flow that could potentially accelerate declines in the fund's yield. It explained that increasing new flows into the fund combined with extremely low Treasury yields could have the effect of reducing the fund's yield.
The fund's seven-day yield was 0.64% as of Wednesday's market close, down from 1.51% a month earlier, just before the Federal Reserve slashed interest rates from 1.25% to near zero (a range of zero to 0.25%), according to Daniel Wiener, editor of The Independent Adviser for Vanguard Investors.
He noted that new flows to the Vanguard Treasury Money Market Fund (VUSXX) jumped from about $600 million in February to $7.4 billion in March.
