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Vanguard to add Target Retirement 2065 Fund for youngest millennial investors

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Vanguard is expanding its target-date series with a new option designed for the next generation of investors.

The Vanguard Target Retirement 2065 Fund will provide the youngest millennial investors with a low-cost, fully-diversified option to begin saving for retirement as they enter the workforce.
 
Vanguard Target Retirement Funds (TRFs) provide a professionally-managed portfolio comprising broadly-diversified, low-cost Vanguard index funds that offer diversification, inflation protection, risk control, and growth potential.
 
Vanguard investment experts combine both behavioural research and capital markets data to create a glide path strategy that automatically rebalances risk within the portfolio as an investor gets closer to retirement by incrementally decreasing exposure to equities and increasing exposure to fixed-income investments.
 
Target-date strategies have grown dramatically from USD116 billion to USD763 billion in the past 10 years, particularly in the institutional defined contribution (DC) market.
 
“As DC plans evolved over the past 30 years, it became clear that many workers often lack the time, willingness, or ability to be their own investment manager. Moreover, retirement savers need guidance on asset allocation in an increasingly challenging and complex market environment,” says Martha King, managing director of Vanguard’s Institutional Investor Group. “Our research has shown that TRFs have dramatically reduced extreme allocations—either too much cash or too much stock—that can expose investors to undue risk.”


 
Vanguard serves as the largest provider of target-date funds with USD449 billion assets under management.
 
Vanguard estimates that USD6 out of every USD10 invested in target-date strategies in the US goes to an index-based Vanguard TRF.
 
More than 90 per cent of Vanguard’s 5,900 DC plan sponsors offer TRFs, and nearly all of Vanguard’s more than four million participants have access to these funds.
 
The 2065 option will be available to individual investors with a USD1,000 minimum initial investment, and to institutional investors with a USD100 million minimum investment.
 
Both funds are expected to carry low expense ratios of approximately 0.16 per cent and 0.10 per cent, respectively.

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