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Vanguard's New Target Date Fund Takes Aim at Gen Y'ers

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Gen Y investors will be able to take advantage of Vanguard‘s latest offering, the Vanguard Target Retirement 2055 Fund. Launched Wednesday, August 18, it is a broadly diversified target-date fund designed for the 18-22-year-old crowd.

The fund’s expense ratio is 0.19% and the initial allocation is 90% stocks and 10% bonds. At the fund’s target date, the allocation will shift to 50% stocks/50% bonds, finally reaching 30% stocks/70% bonds seven years after the target date.

The fund offers exposure to U.S. stocks and bonds, as well as international investments. The 2055 Fund invests in other Vanguard funds, which provide exposure to over 6,000 U.S. stocks and 2,000 international stocks.

The fund is designed for a generation that is justifiably wary of the stock market.

“We must encourage younger investors to participate in the financial markets at an early age, save at aggressive levels, keep an eye on investment costs, and maintain a long-term focus,” Vanguard Chairman and CEO Bill McNabb said in a press release announcing the new fund.

The latest fund brings the total number of funds in the Vanguard Target Fund Series to 12. As of July 31, the series had aggregate assets of nearly $67 billion, and one-third of Vanguard defined-contribution participants have at least part of their retirement plan account, if not all, in a target-date fund.


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