A Vanguard news release said the new funds are designed to function much like an endowment by investing over the long-term to preserve or build capital while generating monthly payments.
According to the company, the funds offer distinct objectives for investors with varying income needs and principal growth goals:
- The Vanguard Managed Payout Growth Focus Fund seeks to make monthly distributions of cash while providing inflation protection and capital appreciation over the long term.
- The Vanguard Managed Payout Growth and Distribution Fund seeks to make monthly distributions of cash while providing inflation protection and capital preservation over the long term.
- The Vanguard Managed Payout Distribution Focus Fund seeks to make monthly distributions of cash while providing capital preservation over the long term.
The company said investors can access to their assets at any time.
The new products are structured as funds-of-funds and may invest in low-cost Vanguard domestic and international stock index funds, bond and REIT index funds, and inflation-protected securities and money market instruments. The funds may also allocate a portion of their assets to commodity-linked and market neutral investments that are expected to add diversification and result in a more consistent return pattern than a traditional balanced portfolio of stocks, bonds, and cash.
The minimum initial investment requirement is $25,000. The funds have no sales commission, and their annual expense ratios are expected to range between 0.57% and 0.58%.
To educate investors interested in the Managed Payout Funds, two new tools are now available on Vanguard.com:
- A payout calculator to help estimate initial monthly payouts based on a specific investment amount or to estimate the investment amount needed to generate a specific initial monthly payout amount.
- A “Which fund is right for me?” tool to help investors choose the Managed Payout Fund most appropriate for their needs and risk tolerance.
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