VALLEY FORGE, Pa., Jan. 5, 2017 /PRNewswire/ -- Vanguard is expanding its industry-leading target-date series with a new option designed for the next generation of investors.(1 )Vanguard Target Retirement 2065 Fund will provide the youngest millennial investors with a low-cost, fully-diversified option to begin saving for retirement as they enter the workforce.
Vanguard Target Retirement Funds (TRFs) provide a professionally-managed portfolio comprising broadly-diversified, low-cost Vanguard index funds that offer diversification, inflation protection, risk control, and growth potential. Vanguard investment experts combine both behavioral research and capital markets data to create a glide path strategy that automatically rebalances risk within the portfolio as an investor gets closer to retirement by incrementally decreasing exposure to equities and increasing exposure to fixed-income investments.
Target-date strategies have grown dramatically from $116 billion to $763 billion in the past 10 years, particularly in the institutional defined contribution (DC) market.(2)
"As DC plans evolved over the past 30 years, it became clear that many workers often lack the time, willingness, or ability to be their own investment manager. Moreover, retirement savers need guidance on asset allocation in an increasingly challenging and complex market environment," said Martha King, managing director of Vanguard's Institutional Investor Group. "Our research has shown that TRFs have dramatically reduced extreme allocations--either too much cash or too much stock--that can expose investors to undue risk."
A leader in the DC market, Vanguard also serves as the largest provider of target-date funds with $449 billion assets under management.(3 )Vanguard estimates that $6 out of every $10 invested in target-date strategies in the U.S. goes to an index-based Vanguard TRF.(4 )More than 90% of Vanguard's 5,900 DC plan sponsors offer TRFs, and nearly all of Vanguard's more than 4 million participants have access to these funds.
The 2065 option will be available to individual investors with a $1,000 minimum initial investment, and to institutional investors with a $100 million minimum investment. Both funds are expected to carry industry-leading low expense ratios of approximately 0.16% and 0.10%, respectively.(5)
The new 2065 Funds are expected to launch at the beginning of the third quarter in 2017, with the following asset allocation:
Target Retirement 2065 Fund
Underlying Index Fund Initial Allocation
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Vanguard Total Stock Market
Index Fund 54.0%
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Vanguard Total Bond Market II
Index Fund 7.0%
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Vanguard Total International
Stock Index Fund 36.0%
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Vanguard Total International
Bond Index Fund 3.0%
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Vanguard Target Retirement 2010 Fund Is Retiring
Vanguard TRFs are designed to reach their most conservative asset allocation seven years after their stated target dates. The asset allocation of Vanguard Target Retirement 2010 Fund is nearing 70% bonds and 30% stocks, mirroring that of the Vanguard Retirement Income Fund. As such, the 2010 Fund has reached the end of its lifecycle and will close to new investors effective immediately. The two funds will merge in mid-summer 2017.
Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.
About Vanguard
Vanguard is one of the world's largest investment management companies. As of December 31, 2016, Vanguard managed more than $3.9 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 350 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.
All figures as of December 31, 2016, unless otherwise noted.
All investing is subject to risks, including possible loss of principal. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Diversification does not ensure a profit or protect against a loss.
A registration statement relating to these securities 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 offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
For more information about Vanguard funds and ETFs, visit vanguard.com or call 800-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Copies of the final prospectus can be obtained from Vanguard. Please note that a preliminary prospectus is subject to change.
Vanguard Marketing Corporation, Distributor.
(1) Source: Pensions & Investments, based on largest number of target-date assets under management.
(2) Source: Morningstar
(3) Source: Morningstar
(4) Source: Vanguard, Morningstar
(5) Source: Lipper
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SOURCE Vanguard
