Vanguard Closes Door on Opportunity Fund

The Vanguard Capital Opportunity fund closed to new investors Monday amid first-quarter cash flows that are on pace to almost double the fund’s net inflows for all of 1999. It will remain closed for at least six months, at which point Vanguard officials say they will reevaluate the situation.

Vanguard said it closed Capital Opportunity because it was worried that short-term traders were piling in, threatening the fund’s performance. Year-to-date, Capital Opportunity, which recently held nearly half its assets in technology stocks, has generated total returns of more than 30%. That’s coming off a year in which the fund soared 97.8%.

As a result, Capital Opportunity has seen its assets swell from $2.4 billion at the start of the year to about $5.6 billion today. This despite the fact that Vanguard recently tried to slow investor demand by raising the fund’s minimum initial investment from $3,000 to $25,000.

While new investors won’t be able to get into the fund, existing shareholders can still put in up to $25,000 a year.