Vanguard Eases Index Transfer Rules

January 17, 2002 (PLANSPONSOR.com) - Mutual fund company The Vanguard Group is making things easier for investors to redistribute money out of an index fund.

Vanguard Chairman John J. Brennan announced Thursday that investors will be allowed two  outbound transfer transactions from index funds per rolling 12-month period, initiated by phone or online, starting in mid-March.

The only period when phone or online transfers will still be blocked will be between 2:30 p.m. and 4:00 p.m. Eastern time on business days, Vanguard said. There is no limit on transfers into an index fund.

The new policy represents an easing of Vanguard’s prior practice of requiring that all non-retirement index fund account transfers be submitted in writing. The new transfer policy from fund to fund will apply to non-retirement accounts and to most retirement accounts, including traditional IRAs and Roth IRAs, Vanguard said in a press release.

In addition to Vanguard’s stock and balanced index funds, the transfer ability will apply to most Vanguard international funds with the intent of curbing market- timing activity within these funds. Investors who quickly buy and sell securities in an effort to beat market fluctuations are often accused of market timing.

Under the current policy, shareholders of actively managed international funds may make telephone and online exchanges up until 4:00 p.m. Eastern time.

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