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Interesting that this should come from Vanguard which has one of the
most restrictive stock fund trading policies. With the exception of
retirement accounts, all exchange and redemption requests must be
submitted in letter form by mail. This has (IMO) has made Vanguard stock
funds unsuitable for market timing accounts other than retirement funds.
Further, I find it strange that Vanguard would attempt to enter an area
which is already dominated by indexed based depositary shares such as
SPY, QQQ, and others.
Earl
----- Original Message -----
From: "Ira Tunik" <ist@xxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Monday, May 15, 2000 7:57 AM
Subject: [RT] Trading in Funds
> I guess there is an impact on the funds from those that trade them.
> Vanguard Might have the solution. Long article. Delete if not
> interested.
>
> Vanguard to Introduce Exchange Traded
> Index Shares
>
>
> May 15, 2000
>
>
>
>
> New Share Classes of Five Equity Index Funds to
> be Listed
>
> On the American Stock Exchange
>
> VALLEY FORGE, Pa., May 12 /PRNewswire/ --
> The Vanguard Group has filed with the U.S.
> Securities and Exchange Commission (SEC) an
> amendment to the registration statement for its
> nine U.S. stock index funds. The amendment
> seeks to add a new class of exchange-traded
> shares to five of the funds.
>
> The new share class, to be called VIPER shares
> (for Vanguard Index Participation Equity
> Receipts), will be listed on the American Stock
> Exchange and will trade at market-determined
> prices throughout each trading day. The
> following funds have filed to register a VIPER
> class of exchange-traded shares:
>
> Vanguard 500 Index Fund Vanguard Growth
> Index Fund
>
> Vanguard Total Stock Market Index Fund
> Vanguard Value Index Fund
>
> Vanguard Small-Cap Index Fund
>
> In conjunction with the amendment of the
> registration statement, Vanguard has pending
> with the SEC an application seeking exemptive
> relief under the Investment Company Act of
> 1940 that would permit the funds to issue an
> exchange-traded class of shares. Although the
> application seeks relief on behalf of all nine
> Vanguard U.S. stock index funds, Vanguard
> intends initially to offer VIPER shares only for the
> five funds identified above. While Vanguard has
> been working with the SEC staff on the VIPER
> shares offering since May 1999, the Commission
> still must approve Vanguard's application and
> declare the amendment to the registration
> statement effective before VIPER shares can be
> offered.
>
> VIPER shares differ from conventional mutual
> fund shares in that they will trade continuously
> at market prices as determined by supply and
> demand on the American Stock Exchange, rather
> than at the calculated net asset value of the
> fund determined at the end of the trading day.
> Given this trading flexibility, VIPER shares are
> expected to appeal primarily to short-term
> investors.
>
> The addition of the VIPER shares is expected to
> have no immediate impact on existing fund
> shareholders. Vanguard believes though that,
> over time, existing fund shareholders will benefit
> from a reduction of the deleterious effects of
> short-term investors who are likely to be
> attracted to the VIPER shares and away from
> the traditional shares.
>
> In accordance with SEC regulations, further
> information about VIPER shares will be made
> available only after the shares become effective.
> The expense ratios for the VIPER shares have
> yet to be determined.
>
> The Vanguard Group, headquartered in Valley
> Forge, Pennsylvania, is the nation's second
> largest mutual fund firm and a leading provider of
> company sponsored retirement plan services.
> Vanguard serves 14 million shareholder accounts
> and manages more than $540 billion, including
> more than $170 billion in participant-directed
> defined contribution plans. Vanguard offers 106
> funds to U.S. investors and 33 additional funds in
> international markets.
>
> A registration statement for VIPER shares has
> been filed with the Securities and Exchange
> Commission but has not yet become effective.
> These securities may not be sold nor may offers
> to buy be accepted prior to the time the
> registration statement becomes effective. This
> communication shall not constitute an offer to
> sell or the solicitation of an offer to buy, nor
> shall there be any sale of these securities in any
> state in which such an offer, solicitation, or sale
> would be unlawful prior to registration or
> qualification under the securities laws of any
> such state.
>
> CONTACT: Brian S. Mattes, Principal,
> 610-669-6219, or John S. Woerth, Principal,
> 610-669-6219, or John E. Demming,
> Communications Manager, 610-669-5457, all of
> The Vanguard Group.
>
> SOURCE The Vanguard Group
>
> CONTACT: Brian S. Mattes, Principal,
> 610-669-6219, or John S. Woerth, Principal,
> 610-669-6219, or John E. Demming,
> Communications Manager, 610-669-5457, all of
> The Vanguard Group
>
> Web site: http://www.vanguard.com
>
>
>
>
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