Vanguard to Liquidate a Mutual Fund for First Time Since 2020

(Bloomberg) — Asset manager Vanguard Group plans to shutter a US mutual fund for the first time since the throes of the pandemic.

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The $98 million Vanguard Alternative Strategies Fund (ticker VASFX) will be liquidated in the second quarter of 2023, according to a press release Tuesday. The fund, which launched in 2015, “has not gained broad acceptance among investors,” Vanguard said.

The liquidation marks the first time that Malvern, Pennsylvania-based Vanguard has shuttered a mutual fund since winding up the NJ Municipal Money Market Fund and PA Municipal Money Market Fund in 2020, a spokesperson confirmed over email. The move follows a brutal year for asset managers as the Federal Reserve’s historically aggressive tightening campaign pummeled both stocks and bonds, driving investors to yank billions of dollars from mutual funds.

“Liquidations are part of the fund life cycle, and they tend to increase in tough markets,” said Eric Balchunas, a senior exchange-traded fund analyst at Bloomberg Intelligence. “We expect to see more of this in the coming year.”

Vanguard, which manages $7.6 trillion in assets, also announced Tuesday that it plans to merge the $1.2 billion Vanguard Managed Allocation Fund (VPGDX) into the $17.9 billion Vanguard LifeStrategy Moderate Growth Fund (VSMGX). In November, the firm liquidated the Vanguard U.S. Liquidity Factor ETF (VFLQ), its first-ever US ETF to close.