According to a news release, the new Vanguard Target Retirement Funds, which are expected to be available in the fourth quarter, comprise up to four Vanguard stock index and bond funds in a range of asset mixes developed for investors in their 20s through 70s-plus.
The new funds and their allocation of stocks, bonds, and money market instruments, include:
- Target Retirement 2045 Fund – 90%, 10%
- Target Retirement 2035 Fund – 80%, 20%
- Target Retirement 2025 Fund – 60%, 40%
- Target Retirement 2015 Fund – 50%, 50%
- Target Retirement 2005 Fund – 35% , 65%
- Target Retirement Income Fund – 20%, 75%, 5%.
An investor will select the Vanguard Target Retirement Fund that best matches his or her expected retirement year. Over time, each fund will be reallocated to gradually reduce the level of risk as the retirement date approaches, according to the announcement.
Vanguard will not levy an additional layer of charges for managing the funds. Vanguard Target Retirement Funds will pay a share of the expenses of the underlying funds. In aggregate, these indirect expense ratios will range from an estimated 0.21% to 0.23% of net assets, which amounts to one-third to one-quarter the expense ratios charged by comparable targeted maturity funds, Vanguard said.
The minimum initial investment for Vanguard Target Retirement Funds is $3,000; $1,000 for IRAs. Shares will be offered on a no-load basis, without redemption and 12b-1 fees, Vanguard said.