Vanguard Expands Target Retirement Lineup for Youngest Retirement Investors

News provided by

Jan 10, 2022, 09:41 ET

VALLEY FORGE, Pa., Jan. 10, 2022 /PRNewswire/ -- Vanguard today announced plans to launch Vanguard Target Retirement 2070 Fund and Vanguard Target Retirement 2070 Trusts. The newest vintage in Vanguard's industry-leading Target Retirement lineup, the 2070 Fund and Trusts are designed to provide the youngest members of the workforce with an all-in-one, low-cost portfolio solution as they begin saving for retirement.¹

"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.

The 2070 option is designed for younger investors with long time horizons that enable them to withstand equity market risk and benefit from decades of potential growth and compounding. Informed by more than four decades of investment management expertise and behavioral research, Vanguard Target Retirement's glidepath begins with a significant equity allocation (90% stocks, 10% bonds). Over time, as an investor approaches retirement, the glidepath gradually reduces exposure to equities and increases exposure to fixed-income investments. The portfolio reaches its most conservative allocation seven years after retirement (30% stocks, 70% bonds). Vanguard Target Retirement 2070 Fund and Vanguard Target Retirement 2070 Trusts will launch by mid-2022 with the following asset allocation:

Underlying Asset Class	Initial Allocation
U.S. stocks	54%
Foreign stocks	36%
U.S. fixed-income securities	7%
Foreign fixed-income securities	3%

Vanguard Target Retirement 2070 Fund will be available to individual investors with a $1,000 minimum initial investment. The fund's investment minimum is waived for financial advisors, intermediaries, and for participants in a qualified retirement plan. The fund is expected to have an expense ratio of 0.08%, representing one-fifth the cost of the average target-date fund.²

Vanguard Target Retirement 2015 to retire

The 2015 vintage is approaching the end of its lifecycle with an asset allocation of 70% bonds and 30% stocks, mirroring the allocation of Vanguard Target Retirement Income, and will close to new investors on February 14, 2022. To maximize portfolio management and cost efficiencies for shareholders, the firm plans to merge Vanguard Target Retirement 2015 Fund into Vanguard Target Retirement Income Fund and Vanguard Target Retirement 2015 Trusts into Vanguard Target Retirement Income Trusts. The mergers are anticipated to be completed in July 2022.

Dedication to improving retirement outcomes

Vanguard's unique investor-owned structure has enabled the firm to consistently return value and pass on economies of scale to Target Retirement investors in the form of lower-costs, expanded access, and continued innovation.³ As part of Vanguard's commitment to further improving investors' retirement outcomes, Vanguard announced a series of enhancements to its Target Retirement lineup and retirement income capabilities that are expected to result in an estimated $190 million in savings to Target Retirement investors.⁴ As part of these enhancements, Vanguard launched an additional retirement income solution for eligible defined contribution plans, Vanguard Target Retirement Income and Growth Trust. Designed as an opt-in alternative to Target Retirement Income, Target Retirement Income and Growth provides a higher equity allocation upon retirement (50% stocks, 50% bonds) and is designed for investors whose wealth, risk tolerance, and/or additional sources of income allow for a higher risk tolerance in retirement.

Investments in Vanguard Target Retirement Funds and Trusts are subject to the risks of their underlying funds. The year in the fund or trust name refers to the approximate year (the target date) when an investor in the fund or trust would retire or leave the workforce. The fund or trust will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. Vanguard Target Retirement Income Fund and Trusts and Vanguard Target Retirement Income and Growth Trusts have fixed investment allocations and are designed for investors who are already retired. An investment in a Target Retirement Fund or Trust is not guaranteed at any time, including on or after the target date.

About Vanguard
Vanguard is one of the world's largest investment management companies. As of November 30, 2021, Vanguard managed $8.2 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers 421 funds to its more than 30 million investors worldwide. For more information, visit vanguard.com.

All figures as of November 30, 2021 unless stated otherwise.

For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission (SEC) but has not yet become effective. The SEC has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is considered a criminal offense. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

All investing is subject to risk, including the possible loss of the money you invest.

There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Diversification does not ensure a profit or protect against a loss.

Vanguard Target Retirement Trusts are not mutual funds. They are collective trusts available only to tax-qualified plans and their eligible participants. Investment objectives, risks, charges, expenses, and other important information should be considered carefully before investing. The collective trust mandates are managed by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc.

Vanguard Marketing Corporation, Distributor.

¹ Vanguard and Morningstar, as of September 30, 2021. Vanguard is the largest TDF manager in the industry.
² Morningstar, as of December 31, 2020
³ Vanguard is investor-owned, meaning the fund shareholders own the funds, which in turn own Vanguard.
⁴ Estimated savings is inclusive of expected savings realized by Target Retirement Trust minimum investment reduction to $100 million from $250 million and anticipated expense ratio reduction of Target Retirement Funds to 0.08% (8 basis points). Expense ratio savings reflects difference between prior and current expense ratios multiplied by average AUM. Average AUM is based on daily average assets during a month, which are then averaged over the 12-months of the fiscal year.

SOURCE Vanguard