Vanguard Institutional Target Retirement 2050 Institutional

Vanguard Institutional Target Retirement 2050 Fund Institutional Shares Profile

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100 Vanguard Boulevard Malvern, 19355, PA, United States

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How We Make Money

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

Why Is Vanguards Tdf Performance Wider Relative To Its Respective Composite Benchmarks

While index-based TDFs are constructed with index funds, they are not index funds themselves therefore, they are not managed like index funds. The benchmark implementation and rebalance policies for Vanguard Target Retirement Funds and Trusts seek to emphasize investor outcomesreducing costs, delivering the expected asset allocation experience, and increasing investor wealthover the optics of tightly tracking an uninvestable benchmark.

While other TDF strategies that rebalance monthly can give the appearance of tighter tracking to a benchmark, they also risk substantial variations from the target strategic asset allocation between rebalances. We rebalance our benchmark daily because we believe it provides the best representation of the glide path each day of the month.

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Reevaluating The Pursuit Of Growth And Income

In the traditional view, balanced investing seeks some combination of long-term growth from stocks along with income from bonds that can provide diversification and less price volatility.

Over the long term, U.S. stocks and most international markets have delivered their end of the bargain. Meanwhile, fixed income yields have drifted lower in recent decadesand so bond fund investors have enjoyed the growth in principal caused by falling yieldsand therefore historically high total returns.

However, the benchmark 10-year U.S. Treasury note has yielded below 1% for most of 2020an unprecedentedly meager level of income that is below the Federal Reserve’s 2% target. Even the 30-year Treasury’s yield has stayed below 2% since the COVID-19 pandemic hit the United States. Yields from corporate bonds are also at unusually low levels.

It’s true that yields could sink further. After all, yields on U.S. Treasury Inflation-Protected Securities have been predominately negative for months, and even yields on 1-month and 3-month T-bills went underwater briefly in March 2020.

Also, some non-U.S. bond markets have supported negative yields. In fact, the European Central Bank has kept its key lending rates below zero. Still, the Federal Reserve has expressed skepticism that it would facilitate nominal U.S. yields going below zero, which implies U.S. rates don’t have much further to fall.

Figure 1. Lower interest rates have pushed expected bond returns lower over the next 10 years

Why Bonds Still Matter In A Low

Interest rates for most fixed income investments are at historically low levels. That means bond prices are correspondingly high. There isn’t much more room for yields to fall, which means investors are unlikely to see robust total returns from bonds, at least for the next several years. It’s no surprise, then, that investors and investment professionals wonder: Is it time to rethink the role of bonds in diversified portfolios, including target-date funds ?

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The Case For Bonds Is Still Solid

Taking the long-term view, it’s clear that no matter what the stock and bond markets are doing in any given quarter or year, a diversified portfolio of investment-grade bonds remains the best way to provide some equilibrium for long-term balanced investments such as TDFs. Bonds have proven through every economic and market cycle to be reliable as a steadying influence in reducing the negative volatility that stocks inevitably experience from time to time.

And yes, while regularly reinvesting income from bondswhich TDFs do by their very natureisn’t providing as much of a boost as before, bonds’ presence helps put investors in position to benefit when interest rates rise.

However, we never assume that history guarantees the future. Our ongoing research continuously evaluates the most sensible portfolio construction strategies for meeting investors’ long-term goals, particularly those related to retirement. Those goals are not uniform among investors, of course. While some investors want to simply supplement other retirement income sources with a basic stipend for essentials, others may want to maintain a lifestyle that requires a higher level of income. Still others are more focused on leaving a legacy to heirs or other beneficiaries. We continue to consider strategies and tactics that can be implemented to best accommodate the variety of goals that retirement investors express.

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Indexes for VCMM simulation

How Did Vanguard’s Tdfs Perform During 2020’s Market Volatility

They performed better than peer averages. An integral part of our TDF design is to deliver strong performance while limiting volatility during market drops. For instance, Vanguard Target Retirement Income Fundthe fund in the series where you want the most protection against volatilityoutperformed the Morningstar Target-Date Income Averages not just for 2020, but during the past four steep downturns.

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How We Use Your Personal Data

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

• Verify your identity, personalize the content you receive, or create and administer your account.
• Provide specific products and services to you, such as portfolio management or data aggregation.
• Develop and improve features of our offerings.
• Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Are There Alternatives Worth Considering

These time-tested diversification benefits from bonds hold true even as we acknowledge, as noted earlier, the increased likelihood of historically low bond returns going forward. Nonetheless, some investors still wonder: Are there prudent or reasonable investments that could be used in place of high-quality bonds to enhance diversification or increase income within TDFs?

The search for alternatives is not a simple task. There are inevitable trade-offs that must be considered. Here are some available strategies and their possible negative consequences:

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Transparency Is Our Policy Learn How It Impacts Everything We Do

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

Wed like to share more about how we work and what drives our day-to-day business.

Why Fx Volatility Is Likely To Stick Around

The Healthcare of Ontario Pension Plan, one of the largest pension plans in Canada, has named James Keohane as president and CEO, effective 2012, Pensions & Investments reports. He will take up his new responsibilities from John Crocker, who is retiring at the end of December.

Currently, Keohane is CIO and senior vice president, investments, at the $35.7 billion defined benefit plan. Vice president, derivatives and fixed income David Long will take up part of Keohanes duties as senior vice president and CIO, asset liability management, derivatives and fixed income. Jeff Wendling, currently vice president, public equities and external management, will be senior vice president and CIO, equity investments.

Click here for the story from Pensions & Investments.

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What Distinguishes Vanguards Tdfs From The Competition

1. Were investor owned. Fund shareholders own the funds that own Vanguard, removing the conflict of interest when reporting to another party. We return value to our 30 million owners, not to an outside firm.

2. We designed our TDFs to help the greatest number of participants successfully reach their retirement goals. Our glide path optimizes asset allocation to balance risk and reward along their journey.

3. Vanguard Target Retirement Funds on average have performed in the top quartile among their peer group for 10-year returns.3

3 Sources: Vanguard and Morningstar, Inc., as of 6/30/2022. Our Target Retirement Funds with a 10-year track record or longer , on average, ranked in the 78th percentile among peer groups for 10-year returns through mid-2022. Vanguard Target Retirement Income Fund ranked 29th out of 107 peers 2020 Fund, 19th out of 96 2025 Fund, 19th out of 129 2030 Fund, 26th out of 133 2035 Fund, 28th out of 124 2040 Fund, 20th out of 133 2045 Fund, 16th out of 123 2050 Fund, 20th out of 131 and 2055 Fund, 22nd out of 98. Only competing funds with a 10-year history were included. Results will vary in other time periods.

How We Approach Editorial Content

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investors point of view. We also respect individual opinionsthey represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.

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