Vanguard plans to expand its low-cost target-date lineup with an array of new mutual funds and trusts for institutional investors by the end of the second quarter, the company announced Feb. 26. Additionally, Vanguard will increase the exposure to international equity and fixed income in several all-in-one funds, including the Target Retirement Funds.
The Vanguard Institutional Target Retirement Funds are expected to be priced 30% lower than the lowest-cost target-date mutual fund option in the industry. The funds will include 12 new target-date funds, with an estimated expense ratio of 0.10% and a minimum initial investment of $100 million.
Along with the new mutual funds, Vanguard will also introduce Target Retirement Trust Select by the end of the second quarter. The Target Retirement Trusts are collective investment trusts that, like the Target Retirement Funds, invest in several Vanguard mutual funds to create a broadly diversified mix of equities and fixed income. Target Retirement Funds and Trusts have identical investment approaches, glide paths and target allocations.
International Equity and Fixed Income Weightings
Vanguard also announced Feb. 26 that it will increase the international equity and fixed income weightings in the Target Retirement Funds and other all-in-one funds to further enhance global diversification and reduce country-specific investment risk. The overall strategic asset allocation of the Target Retirement and LifeStrategy Funds won't change, and the new allocation won't alter the overall glide path of the Target Retirement Funds. The investment allocation changes to the higher weightings in international equities and fixed income are expected to be completed by year-end 2015.
