Best Vanguard Target Retirement Funds
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Deciding which mutual funds are appropriate for a retirement portfolio requires a good understanding of investment strategies. Vanguard target-date funds do the work of rebalancing over time so investors dont have to. They start with an allocation favoring stocks in the early years of an investors life cycle, typically 90% stocks and 10% bonds.
As an investor approaches his retirement age, Vanguard gradually rebalances its asset allocation in favor of less risky securities, such as bonds and short-term reserves. Vanguard target-date funds come with an average expense ratio of 0.10%. The industry average expense ratio for comparable target-date funds is 0.60%. Beginning in February 2015, Vanguard increased the international equity and fixed income allocations for its target-date funds to provide investors with improved global diversification.
A Portfolio That Adjusts As Participants’ Careers Progress
At Voya, our glide path relative to peers has a higher equity allocation for younger participants to build wealth and a lower equity allocation for participants near and in retirement to reduce risk in those critical years. Younger participants can afford to take on more investment risk in exchange for greater potential returns. However, in the later years, participants are more vulnerable to a market downturn, particularly the day they retire.
The Fund may periodically deviate from the Target Allocation, generally withing the range of +/- 10% relative to the current Target Allocation. The sub-adviser may determine to deviate by a wider margin in order to protect the Fund, achieve its investment objective or to take advantage of particular opportunities. This chart is for illustrative purposes only and may not reflect the current allocations of the Voya Target Retirement Fund Series. This illustration is intended to show how the Voya Target Retirement Fund Series transitions over time.
Notes & Data Providers
Stocks: Real-time U.S. stock quotes reflect trades reported through Nasdaq only comprehensive quotes and volume reflect trading in all markets and are delayed at least 15 minutes. International stock quotes are delayed as per exchange requirements. Fundamental company data and analyst estimates provided by FactSet. Copyright © FactSet Research Systems Inc. All rights reserved. Source: FactSet
Indexes: Index quotes may be real-time or delayed as per exchange requirements refer to time stamps for information on any delays. Source: FactSet
Data on U.S. Overview page represent trading in all U.S. markets and updates until 8 p.m. See Closing Diaries table for 4 p.m. closing data. Sources: FactSet, Dow Jones
Stock Movers: Gainers, decliners and most actives market activity tables are a combination of NYSE, Nasdaq, NYSE American and NYSE Arca listings. Sources: FactSet, Dow Jones
ETF Movers: Includes ETFs & ETNs with volume of at least 50,000. Sources: FactSet, Dow Jones
Bonds: Bond quotes are updated in real-time. Sources: FactSet, Tullett Prebon
Currencies: Currency quotes are updated in real-time. Sources: FactSet, Tullett Prebon
Cryptocurrencies: Cryptocurrency quotes are updated in real-time. Sources: CoinDesk , Kraken
Calendars and Economy:Actual numbers are added to the table after economic reports are released. Source: Kantar Media
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A Portfolio That Adjusts As Participants Careers Progress
At Voya, our glide path relative to peers has a higher equity allocation for younger participants to build wealth and a lower equity allocation for participants near and in retirement to reduce risk in those critical years. Younger participants can afford to take on more investment risk in exchange for greater potential returns. However, in the later years, participants are more vulnerable to a market downturn, particularly the day they retire.
The Portfolio may periodically deviate from the Target Allocation, generally within the range of +/- 10% relative to the current Target Allocation. The sub-adviser may determine to deviate by a wider margin in order to protect the Portfolio, achieve its investment objective, or to take advantage of particular opportunities. This chart is for illustrative purposes only and may not reflect the current allocations of the Voya Target Solution Trust Series. This illustration is intended to show how the Voya Target Solution Trust Series transitions over time.
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Vanguard To Add Target Retirement 2065 Fund For The Youngest Millennial Investors
VALLEY FORGE, PA Vanguard is expanding its industry-leading target-date series with a new option designed for the next generation of investors.1 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 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 behavioral 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 $116 billion to $763 billion in the past 10 years, particularly in the institutional defined contribution market.2
A leader in the DC market, Vanguard also serves as the largest provider of target-date funds with $449 billion assets under management.3 Vanguard estimates that $6 out of every $10 invested in target-date strategies in the U.S. goes to an index-based Vanguard TRF.4 More than 90% of Vanguards 5,900 DC plan sponsors offer TRFs, and nearly all of Vanguards more than 4 million participants have access to these funds.
About Vanguard
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The Vanguard Target Retirement 2055 Fund
The Vanguard Target Retirement 2055 Fund offers lifecycle asset allocation for investors with specific retirement dates. This fund is most attractive for investors who just started their careers and have over 40 years before retirement. As the fund is very far from its target date, 90% of its assets are allocated to domestic and international stocks. The remaining 10% of its assets are split between U.S. and international bonds. The fund is likely to stick to such aggressive allocation until 2030-2035 after that, it will start smoothly adjusting its allocation every year toward bonds.
The Vanguard Target Retirement 2055 Fund has an expense ratio of 0.15% and a four-star rating from Morningstar. This fund is most appropriate for investors who desire automatic asset rebalancing at a low cost and who are not planning to retire until between 2053 and 2057.
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Vanguard Introduces Two New Target Retirement Funds
15 November 2017 | News from Vanguard
Toronto, November 1, 2017 Vanguard Investments Canada Inc. today announced its low-cost Target Retirement 2060 and 2065 Pooled Funds are now available to qualified Canadian institutional investors, including plan sponsors.
Vanguard now offers a total of 12 target-date funds in Canada, ranging in retirement years 2015 to 2065, in five-year increments. These target retirement funds, which invest in indexed pooled funds, gradually and automatically shift to a more conservative asset allocation as the target date draws near.
“Plan sponsors and institutional clients are looking for broad-based and low-cost investment strategies to serve the needs of plan participants, including younger investors,” said Jason McIntyre, head of distribution for Vanguard Investments Canada Inc. These funds provide age-appropriate asset allocation in a simple yet sophisticated and low-cost solution for retirement investing.”
Vanguard Target Retirement Fund initial asset allocations
| 70% |
A global leader in target-date funds
In addition to 12 Target Retirement Funds, Vanguard offers 33 ETFs in Canada.
About Vanguard
For more information, please contact:Matt Gierasimczuk
*Source: Morningstar
Important Information
In this material, references to “Vanguard” are provided for convenience only and may refer to, where applicable, only The Vanguard Group, Inc., and/or may include its affiliates, including Vanguard Investments Canada Inc.
The Vanguard Target Retirement 2040 Fund
The Vanguard Target Retirement 2040 Fund offers a one-stop broadly diversified portfolio with a target date between 2038 and 2042. Like other Vanguard target-date funds, this fund invests in four Vanguard index funds with asset allocations of about 85% in equities and 15% in corporate and sovereign bonds.
About 50.20% of the funds assets are allocated to domestic equities, while 33% are dedicated to international equities. There is a 12% allocation in U.S. corporate and Treasury bonds and a 4.80% allocation of international bonds. As the fund is nearly 20 years away from its target date, it will continue allocating more assets to risky securities in the next five to 10 years.
The Vanguard Target Retirement 2040 Fund has an expense ratio of 0.14% and it has a four-star rating from Morningstar. Due to Vanguards larger emphasis on international bonds and international equities, the fund provides broader diversification and better return prospects in the long run, as overseas marketsespecially emerging marketstend to grow faster compared to developed markets.
The Vanguard Target Retirement 2040 Fund is most appropriate for investors whose target retirement is between 2038 and 2042 and would like to invest in one fund and not have to worry about rebalancing until their retirement.
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Which Target Retirement Fund Fits Your Timeline
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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Growth Of A $10000 Investment
For the period 07/29/2020 through 05/31/2022
Ending Value: $12,133.00
The performance quoted in the “Growth of a $10,000 Investment” chart represents past performance. Performance shown is without sales charges had sales charges been deducted, performance would have been less. Ending value includes reinvestment of distributions.
The Vanguard Target Retirement 2025 Fund
The Vanguard Target Retirement 2025 Fund has a target date that ranges from 2021 to 2025. Because the fund is very close to its target date, its portfolio has a large number of bond holdings, which tend to be less risky when compared to stocks.
In particular, the fund invests in various Vanguard equity and bond funds, resulting in a 36.30% allocation to domestic stocks, a 24.20% allocation to international stocks, a 27.70% allocation to U.S. corporate and Treasury bonds, and an 11.80% allocation to international bonds. Domestic equity holdings of this fund are broadly diversified across the entire U.S. equity market.
Over the years, the Vanguard Target Retirement 2025 Fund, and Vanguard target-date funds, in general, tend to focus more on higher-quality bonds and Treasury inflation-protected securities compared to other fund families. This approach provides better protection of capital against volatility and real value erosion.
The Vanguard Target Retirement 2025 Fund has a four-star rating from Morningstar and an expense ratio of 0.13%. As the fund gets close to 2025, it plans to have higher asset allocation to bonds, in the realm of 50%. This fund is most appropriate for investors who are highly cost-conscious and plan to retire between 2023 and 2027.
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