May 11, 2011

Vanguard Lowers Investment Minimums

The fund giants drops the required investment level to $1,000 for many of its funds

Vanguard said Wednesday that it was reducing the minimum investment requirement from $3,000 to $1,000 for the 12 funds in its index-based Target Retirement Fund series.

“Investing early and investing regularly are two of the most important things investors can do to help ensure their retirement readiness. By reducing the investment requirements on our target date funds, we hope to encourage more individuals to participate in the financial markets,” said Vanguard CEO Bill McNabb (left) in a press release.

According to the fund giant, the Vanguard Target Retirement 2050 Fund provides investors with a portfolio of nearly 15,000 domestic and international securities represented by three broad-based index funds: Vanguard Total Stock Market Index Fund, Vanguard Total Bond Market II Index Fund, and Vanguard Total International Stock Index Fund.

Vanguard’s Target Retirement Funds feature weighted expense ratios ranging from 0.16% to 0.19%. Introduced in 2003, Vanguard Target Retirement Funds now have aggregate assets of nearly $88 billion and have had $41 billion in target-date fund cash flow over the past three years.

Vanguard also is standardizing the minimum investment requirement for investor shares of nearly all Vanguard funds at $3,000. Previously, investment requirements varied by fund, and ranged from $3,000–$25,000.

This change reduces the minimum for 15 Vanguard funds, including some of Vanguard's oldest and largest actively managed funds, such as the $59 billion Vanguard Wellington Fund, the $38 billion Vanguard Windsor II Fund, and the $22 billion Vanguard Health Care Fund.

According to the Financial Research Corporation, Vanguard tops the list of fund families in assets under management at $1.473 trillion. This level is up 6% year to date and 20% for the past 12 months as of March 31. 

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