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Vanguard launches two new low-cost target retirement funds for younger investors


Vanguard has expanded its suite of target retirement funds (TRFs) with the launch of the Vanguard Target Retirement 2060 Fund and the Vanguard Target Retirement 2065 Fund.

These TRFs invest in Vanguard’s low-cost, high-quality equity and bond index funds and Exchange Traded Funds. They help investors take control of their retirement savings by simply choosing one of Vanguard’s 11 TRFs based on their expected retirement date. The TRF automatically adapts the asset mix for different stages of the investor’s journey to and through retirement.
TRFs are likely to appeal to a broad range of investors. They can be included in a tax-efficient pension wrapper, and increasingly investors are considering using an Individual Savings Account (ISA) to save for their retirement. The new Vanguard Target Retirement 2060 Fund and Vanguard Target Retirement 2065 Fund may appeal to individuals just starting out in their career.
James Norton, Senior Investment Planner, Vanguard, says: “The UK public is facing an increasingly complicated route to retirement. Investors have more flexibility and choice, but they often face difficult decisions on how to save and invest in a rapidly changing pensions and investment environment.
“Vanguard’s Target Retirement Funds are designed to help address these challenges, by offering a straightforward fund solution based on investment best practices and managed by experienced investment professionals.”
For those entering the workforce and not expecting to retire until 2060 or 2065, time is a great asset. Seemingly modest savings in a low-cost investment can grow substantially over time, as compounding takes effect. For example, an individual investing GBP100 per month in a Vanguard TRF, charging an ongoing charges figure of just 0.24 per cent, could end up with around GBP135,000 after 40 years. This assumes a 5 per cent growth rate and an investment held on the Vanguard Personal Investor service.
In the US, TRFs have become increasingly popular among individual investors and retirement plan participants. Vanguard has been providing TRFs for over 10 years, and is the largest manager of TRFs in the US, with USD597 billion in US-based target-date assets as at 31 October 2017.
The Vanguard Target Retirement Funds are constructed to embody the investment principles that Vanguard believe provide investors with the best chance of investment success. These principles guide investors to set clear investment goals, develop a suitable asset allocation using broadly diversified funds, minimise costs and maintain perspective and long-term discipline. 

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