Vanguard said it will reopen its Treasury money market mutual fund to all investors, citing improved market conditions. The biggest US mutual fund company, based in Valley Forge, Pennsylvania, closed the $9.1 billion fund in January 2009 in an effort to shield existing fund holders from high levels of cash flow that could potentially dilute its yield.
The move to close the Treasury money fund followed the Federal Reserve's decision in December 2008 to lower short-term interest rates to near zero at the height of the global financial crisis. Last month, the US central bank raised its target range on short-term rates to 0.25-0.50 percent from zero to 0.25 percent, citing an improving domestic labor market. The reopening of Vanguard's Treasury money fund came more than six months after it reopened its $4.8 billion federal money market fund to all investors. Vanguard's Treasury money fund invests primarily in US government debt, while its federal money funds invests mainly in short-term securities issued by federal agencies including Fannie Mae and Freddie Mac.