Buying "closed" mutual funds with a different Vanguard account

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MorningstarFan
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Buying "closed" mutual funds with a different Vanguard account

Post by MorningstarFan » Tue Dec 27, 2016 9:36 pm

Hi all,

Here is my situation - I invested in DHMIX (Diamond Hill Small-Mid Cap Fund) before the fund is closed to new investors with my Vanguard taxable (non-retirement) account. However, I also have a Roth IRA Vanguard account and I wish to purchase the same fund in that account. Now, I am being recognized as a "new" investor and not allowed to invest.

Here is my question: when a fund is closed to new investors, does that mean the same person under different account number is considered as a new investor? I assumed it is based on the name of the shareholder. Also, is there another way for me to invest in Roth IRA instead?

Thank you all for the help!
Last edited by MorningstarFan on Tue Dec 27, 2016 10:02 pm, edited 1 time in total.

Geologist
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Re: Buying "closed" mutual funds with a different Vanguard account

Post by Geologist » Tue Dec 27, 2016 9:58 pm

I (and many others on this site) don't know what the tickers mean. It would help a lot if you gave the name of the mutual fund in addition to the ticker. I'm guessing from the ticker that this is a non-Vanguard fund and probably this fund doesn't consider different accounts (taxable and tax-sheltered) to be the same, so you are not eligible to buy into a closed fund in the new account.

If "is there another way for me to invest in Roth IRA instead?" means can you invest your Roth IRA in some other fund, then the answer is yes.

MorningstarFan
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Re: Buying "closed" mutual funds with a different Vanguard account

Post by MorningstarFan » Tue Dec 27, 2016 10:06 pm

Geologist wrote:I (and many others on this site) don't know what the tickers mean. It would help a lot if you gave the name of the mutual fund in addition to the ticker. I'm guessing from the ticker that this is a non-Vanguard fund and probably this fund doesn't consider different accounts (taxable and tax-sheltered) to be the same, so you are not eligible to buy into a closed fund in the new account.
I have updated the original post to include the name of the mutual fund. DHMIX is Diamond Hill Small-Mid Cap fund. Yes, because it is a non-vanguard mutual fund. I have to purchase it through Vanguard FundAccess.
Geologist wrote: If "is there another way for me to invest in Roth IRA instead?" means can you invest your Roth IRA in some other fund, then the answer is yes.
My question is a bit more specific. The fund is currently closed to new investors. However, I own the fund in a non-retirement Vanguard account before it was closed. However, my Vanguard Roth IRA account will not allow me to invest.

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TheGreyingDuke
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Re: Buying "closed" mutual funds with a different Vanguard account

Post by TheGreyingDuke » Tue Dec 27, 2016 10:09 pm

How about transferring one share from the account where it is held to the one where you want to hold it? Then go ahead a buy some more?
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells

Geologist
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Re: Buying "closed" mutual funds with a different Vanguard account

Post by Geologist » Tue Dec 27, 2016 10:12 pm

TheGreyingDuke wrote:How about transferring one share from the account where it is held to the one where you want to hold it? Then go ahead a buy some more?
The issue with this plan (which is often permissible) is that contributions to an IRA must be in cash. The OP cannot transfer a share from a taxable account to the IRA. This would only work if the OP already owned the fund in a tax-sheltered account such as another IRA.

MorningstarFan
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Re: Buying "closed" mutual funds with a different Vanguard account

Post by MorningstarFan » Tue Dec 27, 2016 10:13 pm

TheGreyingDuke wrote:How about transferring one share from the account where it is held to the one where you want to hold it? Then go ahead a buy some more?
Yes, I am thinking something like that. However, can I be able to do so when transferring from taxable account to Roth IRA account? Wouldn't that be considered as a part of annual contribution? How would that work?

Geologist
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Re: Buying "closed" mutual funds with a different Vanguard account

Post by Geologist » Tue Dec 27, 2016 10:24 pm

MorningstarFan wrote:
TheGreyingDuke wrote:How about transferring one share from the account where it is held to the one where you want to hold it? Then go ahead a buy some more?
Yes, I am thinking something like that. However, can I be able to do so when transferring from taxable account to Roth IRA account? Wouldn't that be considered as a part of annual contribution? How would that work?
As I posted more or less when you were posting, you can only contribute cash to your IRA, so you can't transfer any securities from a taxable account into an IRA as part of an annual contribution. (This assumes that the closed mutual fund allows transfers of shares into new accounts. They don't have to, but commonly do. This is why I termed it "often permissible" in my earlier post.)

MorningstarFan
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Re: Buying "closed" mutual funds with a different Vanguard account

Post by MorningstarFan » Wed Dec 28, 2016 12:47 am

Thanks Geologist for the explanation. One last question - would you contact Vanguard or the Mutual Fund company instead? The mutual fund does not offer direct investments, so I chose Vanguard as my brokerage account.

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