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Vanguard to Launch New Target Date Funds for Younger Investors

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What You Need to Know

  • Vanguard is launching new TDFs geared to younger investors who have a long glide path.
  • The initial mix of investments will be 90% stocks and 10% fixed income.
  • The 2070 TDFs will be available by mid-2022.

Vanguard, the asset manager with $8.2 trillion, will launch two new target date funds for younger investors. The new products will be available by mid-2022, the company announced Monday.

The Vanguard Target Retirement 2070 Fund and Vanguard Target Retirement 2070 Trusts are designed for young investors who have long time horizons, Hence, the makeup is heavier in equity investments, starting with a glide path of 90% stocks and 10% bonds.

The initial mixture will be made up of 54% U.S. stocks, 36% foreign stocks, 7% U.S. fixed income securities and 3% foreign fixed income securities.

Like other TDFs, as the investor gets closer to retirement age, the exposure to stocks will be reduced while fixed income investments increase. The TDFs’ most conservative mix will be 30% stocks and 70% fixed income.

The Target Retirement 2070 Fund $1,000 minimum initial investment for individual investors is waived for financial advisors, intermediaries and participants in a qualified retirement plan, the company said. The fund will have an expected expense ratio of 0.08%.

“Vanguard’s Target Retirement lineup sets a solid foundation for young investors as they begin their retirement journey by providing a broadly diversified, professionally managed, indexed-based investment portfolio that encourages long-term discipline and seeks to deliver risk adjusted returns over time,” said John James, managing director and head of Vanguard Institutional Investor Group, in a statement.

These new launches dovetail with 2015 “vintage” TDFs that are closing to new investors Feb. 14, 2022, and should be merged into Vanguard Target Retirement Income Funds and Trusts by July 2022.