Vanguard Institutional Target Retirement 2045 Fund


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VANGUARD Target Retirement Funds – The BIG PROBLEM With Them!

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The Vanguard Target Retirement 2045 Fund Overview

Vanguard Target Retirement 2035 Fund (VTTHX)

Vanguard’s Target Retirement 2045 Fund is suitable for investors who plan to retire between 2043 and 2047, and the company explicitly markets it to anyone who plans to retire in that time frame. The fund is large and cheap, with $29.7 billion in AUM and an expense ratio of 0.15%. Under Morningstar’s style boxes, it ranks as a large blend with high credit quality and moderate interest rate sensitivity.

Vanguard touts the fund’s “sophisticated portfolio construction methodologies and efficient trading strategies,” although the fund really just tracks near a few well-known benchmarks. Its primary benchmark is the Target Retirement 2045 Composite Index, but it also closely tracks the Dow Jones U.S. Total Stock Market Index.

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  • All funds in this target date series

    A target date fund series consist of around 10 or 12 different funds, each with their own “target date” marketed at different age demographics. We use the 2050 fund to assign ratings to target date fund series – this is the fund that would be marketed to savers looking to retire around the year 2050. As time progresses and this “target date” approaches, the portfolio mix of the fund shifts away from stocks and towards bonds and other less-risky investments. Usually, the mix of stocks in the portfolio stays the same across a target date fund series, meaning if you are invested in a fund from this target date series that is dated closer to today than 2050, you’re likely invested in the same companies flagged above, but you may have lower levels of exposure. We currently only have detailed results for the 2050 version of this target date fund series.

    All tickers for this target date series

    Tickers for each shareclass available from every fund in this target date series.

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    Portfolio And Selection Process

    The Vanguard 2045 Retirement Fund is a fund of funds, meaning its portfolio is comprised of the shares of four other Vanguard index funds. As of 2021, it consisted of approximately 90% stocks and 10% bonds, with a smattering of assets in cash or other instruments. Approximately 54% of its equity holdings were domestic and the rest were foreign.

    Like all Vanguard target-date mutual funds, the Target Retirement 2045 Fund evolves and molds along a glide path, which is an illustration of the gradual shift from equities to bonds as the fund approaches de facto maturity. With more than two decades remaining until 2045, the Vanguard Target Retirement 2045 has a long enough window to remain equity-focused. By 2040, just five years until its target, the bond portion of the portfolio will climb past 40% of total assets.

    Which Target Retirement Fund Fits Your Timeline

    Vanguard Target Retirement Funds are Flawed

    Use our table to find the fund that best fits you.

    Fund name

    *Vanguard Target Retirement Funds average expense ratio: 0.12%. Industry average expense ratio for comparable target-date funds: 0.55%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2020.

    Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.

    These fund suggestions are based on an estimated retirement age of approximately 65. Should you choose to retire significantly earlier or later, you may want to consider a fund with an asset allocation more appropriate to your particular situation.

    All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Investments in bonds are subject to interest rate, credit, and inflation risk.

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    A Vanguard Company Overview

    Vanguard is the premier name in low-cost passively managed mutual funds and exchange-traded funds . Its passive S& P 500-tracking mutual fund, introduced in 1976, revolutionized the way investment companies approach pooled products. Still, relying on the guiding principles established by founder John Bogle, the company remains one of the more unique and trusted names in finance.

    As of 2021, Vanguard was the second-largest asset manager in the United States, after Blackrock, with more than $7.2 trillion in total assets under management worldwide.

    Structurally, the company is an odd private/public hybrid. As a privately held company, investors cannot directly purchase shares of the Vanguard Group. Instead, shareholders of its mutual funds are the actual owners of the company. An investment in a Vanguard fund thus doubles as a direct investment in the larger company.

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