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Are Vanguard Funds Open-Ended?

Are Vanguard Funds Open-Ended?

If you have ever invested in mutual funds chances are that you have come across Vanguard. I have always wondered about what sets their funds apart from some other popular options, and one of the first questions I considered is whether their funds are open-ended?

All Vanguard mutual funds are open-ended. This includes mutual funds like VTSAX but does not apply to exchange-traded funds (ETFs) – such as VTI, VOO, and VIG. Currently, Vanguard does not operate any closed-end funds.

To give a certain clarification to my final conclusion on Vanguard funds, I will be demystifying the “open-ended” concept as related to mutual funds and what benefits Vanguard’s open-ended funds offer.

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Why Vanguard funds are open-ended

Vanguard offers various fund investment options: exchange-traded funds and mutual funds, which allow investors to diversify their portfolio at a minimal premium. One of the most attractive features of Vanguard’s funds is their liquidity.

  • Liquidity: The biggest upside of an open-ended fund such as Vanguard’s is that you as the investor will always be able to redeem the underlying cash value of your shares. Since Vanguard continuously issues new shares in its open-ended funds they never run into any liquidity problems.
  • Continous issuance of shares: As opposed to their closed-end counterparts where the number of shares is limited and has to be traded on the open market, Vanguard will indefinitely continue to issue new shares for their open-ended fund. This means the fund’s net asset value (NAV) also continuously increases.
  • Direct purchase: Another benefit of investing in open-ended funds with Vanguard is that you are purchasing shares directly from the issuer. This stands in stark contrast to ETFs where shares are traded on exchanges.

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Which Vanguard funds are open-ended?

Vanguard’s open-ended funds are funds that offer unlimited participation of investors. This means the overall pool of funds can grow continuously as the number of investors grows.

Open-ended Vanguard funds include:


You can find a complete list of Vanguard’s mutual funds and ETFs right here.

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Perhaps the most distinguishing element of an open-ended mutual fund is in the nature of its fund liquidity. Investors can request the equivalent value of their share of the total pool at any time without incurring a devaluation or penalty.

When an investor redeems their share, they do so directly with Vanguard. The net asset value per share of each investor (at the end of the trading day) is then calculated and used to decide the equivalent cash given to the withdrawing investor.

This puts the responsibility of liquidity on the fund manager and makes open-ended funds very attractive to investors with relatively long-term investment goals.

What makes Vanguard funds open-ended?

There are specific legal obligations involved in the registration and operation of such funds. In the United States, funds are generally registered under the “1940 Investment Company Act”. I found a copy of this act on the U.S. securities and exchange commission (SEC) website: COMPS-1879.pdf (

This Act regulates the organization of companies, including mutual funds, that engage primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the investing public.”

During the registration process, the type of fund operated by the registering body determines their necessary registration forms.

  • Formal Registration: Open-ended mutual funds are registered through a Form N-1A document, prior to filing a notification of registration via a Form N-8A.
  • Registration Fee & Funding: Also, the registering fund pays a registration fee to the SEC in respect of the fund registration within 90 days after the fiscal year has ended. The amount paid is dependent on the total fund shares issued or withdrawn throughout the ended fiscal year.
  • Liquidity Requirement: Open-ended funds are further defined by their liquidity risk management requirement of SEC’s rule 22-e4 which enforces certain restrictions on the management of funds to prevent any acquisition of assets that may put the fund’s net liquid assets below 15% of its total portfolio.

These requirements protect the expectation of investors to redeem their shares at any time (at the calculated NAV/share) without losing value.

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Does Vanguard have closed-end funds?

Although Vanguard does not operate any closed-end funds they have on rare occasions closed certain funds to further investments. One of these was Vanguard’s Treasury Money Market Fund which was closed in early 2020.

This was done to protect investors in the fund from an unprecedented influx of cash in the light of the Coronavirus pandemic and to ensure the stability of the fund’s yield.

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Other mutual funds such as VTSMX are also closed to new investors but not because they are closed-end funds. Rather Vanguard occasionally transitions funds to new investment vehicles due to major restructuring issues and to reduce fees. (VTSMX is now available as VTSAX).

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So far, we have considered Vanguard mutual funds and the attributes that make them an open-ended investment.

While the approach employed here may be relatively exhaustive, I always recommend doing your own research and deciding on the group or company you may wish to entrust your investments.

Open-ended mutual funds are great financial vehicles for secure, long-term, and flexible financial commitments, however, every investment should be considered individually with the security of capital as the number one priority.

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