Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > Mutual Funds > Target Date Funds

Vanguard Slashes Investment Level for Institutional Target Date Funds

Your article was successfully shared with the contacts you provided.

Vanguard is reducing the plan-level investment requirement for institutional target retirement funds (or target date funds) to $5 million from $100 million effective immediately. The asset manager says the aim of the move, announced Friday, is to “broaden” access to these funds to more 401(k) and 403(b) plans.

The index-based institutional TRFs mirror the glide path and asset allocation of the Vanguard Retirement Funds and have an expense ratio of 0.09%, which the firm says puts it below the target-date fund industry average of 0.60% for Dec. 31, 2019, as tracked by Morningstar.

“Going back to the 1976 launch of the first index mutual fund for individual investors, Vanguard has a long history of expanding investors’ access to low-cost investment solutions,” a spokesperson told ThinkAdvisor.

“Today’s announcement is simply another demonstration of Vanguard’s mission to take a stand for all investors, to treat them fairly, and to give them the best chance for investment success,” the spokesperson added.

The Vanguard Institutional Target Retirement 2050 Fund (VTRLX), for instance, has an average annual return since its inception in 2015 of 9.03%, the firms says. In 2020 through November, the fund had a 14.67% return.

The fund’s total assets as of Oct. 31, 2020, were $19.3 billion, and it had an allocation of 89.3% in stocks, 9.53% in bonds and 1.17% in short-term reserves.

Vanguard is the largest manager in the industry of TDFs, mirroring the growth of these funds that have grown popular in the last several years.

The fund giant states that since 2006, “the increased adoption of [TDFs] has driven a 75% reduction in extreme equity allocations, ensuring more retirement savers are invested in long-term, risk-appropriate investment solutions.”

In fact, during the recent volatility early this year, Vanguard found that 98% of those invested in TDFs “stayed the course.”

Overall, the Valley Forge, Pennsylvania firm manages $6.3 trillion in global assets, with more than 421 funds.

Related on ThinkAdvisor:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.