Vanguard Target Retirement Funds Open to Investors
VALLEY FORGE, PA, October 27, 2003 -- Vanguard today began accepting investments into its six new Target Retirement Funds, a series of low-cost, funds-of-funds that provide investors a simple solution for investing for retirement. Five of the funds feature a different target retirement date (2005, 2015, 2025, 2035, 2045), and they gradually and automatically shift their underlying fund mix to a more conservative asset allocation as the retirement date draws near. Vanguard Target Retirement Income Fund is designed for those investors currently in retirement.
Unlike most fund-of-funds sponsors, Vanguard will not levy an additional layer of charges for managing the underlying funds. Vanguard® Target Retirement Funds will have expenses (based on their underlying funds) ranging from 0.21% to 0.23% ($2.10 - $2.30 for every $1,000 invested), significantly lower than the 1.33% ($13.30 for every $1,000 invested) industry average (source: Lipper). The asset allocation mixes for each of the Target Retirement Funds are:
----------------------------------------------------------------------
Fund Name Initial Allocation
(Will Shift Over Time)
Stocks / Bonds / Reserves
----------------------------------------------------------------------
Target Retirement Income Fund (1) 20% / 75% / 5%
----------------------------------------------------------------------
Target Retirement 2005 Fund 35% / 65% / 0%
----------------------------------------------------------------------
Target Retirement 2015 Fund 50% / 50% / 0%
----------------------------------------------------------------------
Target Retirement 2025 Fund 60% / 40% / 0%
----------------------------------------------------------------------
Target Retirement 2035 Fund 80% / 20% / 0%
----------------------------------------------------------------------
Target Retirement 2045 Fund 90% / 10% / 0%
----------------------------------------------------------------------
(1) Allocation is static
The Target Retirement Funds will complement Vanguard's existing series of life-cycle funds--Vanguard LifeStrategy Funds. Broadly, life-cycle funds provide a well-diversified investment solution in a single fund.
However, life-cycle funds follow one of two approaches - targeted maturity funds, which shift their asset allocation from aggressive to conservative over time (i.e., Vanguard® Target Retirement Funds), and static-allocation funds, which maintain a defined asset allocation, with investors determining which portfolio mix is appropriate at any given time (i.e., Vanguard® LifeStrategy Funds).
"Recent consumer behavior studies have shown that many investors can become overwhelmed by a choice of too many funds, and that can hinder or even deter people from investing for retirement," said Catherine Gordon, Principal - Vanguard Investment Counseling and Research Group. "Life-cycle funds eliminate this choice overload by providing a one-fund solution to retirement savings."
Because of their simplicity, low-costs, and broad diversification, life cycle funds appeal to a broad range of investors seeking a single choice option, including younger individuals just starting their retirement programs, as well as those looking for an ideal vehicle for their IRA or company retirement plan rollover. Life-cycle funds are also popular options within 401k and other defined contribution programs. Vanguard's Investment Counseling and Research Group has issued a new study, "Funds for Retirement: The 'Life-Cycle' Approach," to help plan sponsors select between the two types of life-cycle funds.
The Vanguard Group, headquartered in Valley Forge, Pennsylvania, is the nation's second largest mutual fund firm and a leading provider of company sponsored retirement plan services. Vanguard serves some 17 million shareholder accounts and manages nearly $650 billion in U.S. mutual fund assets, including more than $180 billion in employer-sponsored retirement plans. Vanguard offers 118 funds to U.S. investors and 35 additional funds in foreign markets.
Vanguard funds are offered by prospectus only. Prospectuses contain more complete information on risks, distribution charges, and other expenses and should be read carefully before you invest. Prospectuses can be obtained directly from The Vanguard Group.
###
401khelpcenter.com, LLC is not the author of this press release and is not associated or affiliated with any firm or organization mentioned unless otherwise noted. Use of any information obtained from this press release is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.
