VWELX Closed To Brokerage Firms

By Sun on Jul 31, 2006 in Mutual fund, Investing
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I owned Vanguard Wellington Fund in my IRA account with Scottrade since 2001 and I am very happy with the fund’s performance. The only problem I have is Scottrade.

I have both my taxable account and retirement account with Scottrade for more than five years, and they used to be very good: low fee, online fund transfer, local branch offices. Though I am not a day-trader by any means, the $7 commission Scottrade charged for real-time market order was the lowest when I opened my account. For mutual fund investment, they didn’t charge any extra fees for NTF funds. For several years, I was able to contribute only $50 a month into those funds that usually require a minimum of $100.

However, things are getting worse since about one and a half years ago when they started to charge fees for even some most popular funds, such as Vanguard funds, and Dodge & Cox funds. To minimize the expenses of the funds I already own, I set up the automatic investment plan for $2.00 per trade and only make contributions on a quarterly basis, which adds another 1% on top of the fees charged by the fund company.

After I made my third quarter purchase on July 25th, I noticed that my scheduled purchase of VWELX didn’t occur. So I called Scottrade this morning to ask why and was told that the fund was closed to investors, existing and new.

Closed? I never heard the news that it is closed. To confirm, I called Vanguard and learned that the fund is closed to investors who own the fund through a brokerage firm. However, new investment is still possible by going to Vanguard directly.

Maybe it’s time to move my IRA account to Vanguard. Four out of five funds in the account are Vanguard funds after all.

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