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Vanguard Cuts Target Date Fund Fees

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Vanguard is lowering the expense ratio of its Target Retirement Funds to 0.08%, the investment management firm with $8.5 trillion in global assets announced Monday. That is one-fifth the cost of the average target date fund, Vanguard says, citing Morningstar data from 2020.

The change is effective immediately.

The firm announced in September it was merging its Target Retirement Funds and Institutional Retirement Funds and cutting fees. Average expense ratios were 0.12% for the former and 0.09% for the latter, a Vanguard spokeswoman told ThinkAdvisor at the time.

The series covers 89% of the global, publicly traded market, according to Vanguard.

The TDFs will “retain the same investment strategy, asset allocation and glide path,” the firm stated.

In early February, Vanguard cut expense ratios for seven actively managed mutual funds and one index ETF. This was after a wave of reduced fees comes after a similar announcement in  December.

The asset manager said the active mutual fund fee reductions earlier this month resulted in investor refunds of $4.4 million.