Products August 22, 2007

Vanguard to Take over Long/Short Fund

August 22, 2007 (PLANSPONSOR.com) - The Vanguard Group has announced a proposal with Charles Schwab Investment Management to reorganize the Laudus Rosenberg U.S. Large/Mid Capitalization Long/Short Equity Fund into a new Vanguard offering.
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A Vanguard news release said the company expects the new Market Neutral Fund to appeal primarily to institutional investors, particularly endowments and foundations. The fund will require minimum initial investments of $250,000 for Investor Shares and $5 million for Institutional Shares.The two share classes will feature estimated expense ratios of 0.75% and 0.60%, respectively.

The $21-million open-end fund, which is a member of Schwab’s Laudus family of funds, is sub-advised by AXA Rosenberg Investment Management LLC, according to the release. Vanguard Quantitative Equity Group would also manage a portion of the fund.

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Laudus Rosenberg Fund shareholders are expected to be mailed a proxy statement detailing the terms of the proposed reorganization in early October. If approved at a special shareholder meeting scheduled for mid-November, the tax-free reorganization is expected to be completed by year-end 2007, according to Vanguard.

Along with the reorganization proposal, Vanguard has filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for the new Vanguard Market Neutral Fund. The new no-load fund will seek to provide long-term capital appreciation while limiting exposure to general stock market risk by using a long/short market-neutral strategy.  

The new fund will assess a 1% fee on shares redeemed within one year of purchase, which is half the current charge on shares redeemed within 30 days of purchase, Vanguard said.

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