Vanguard Target Retirement 2055 Fund Review


What Is The Vanguard Retirement 2055 Fund

Vanguard Target Retirement 2055 Inv – VFFVX – Fund Review

The Vanguard Retirement 2055 Fund is a retirement fund that Vanguard designed for people who intend to retire in 2055, give or take a year or two.

It features investments in both domestic and foreign stocks, small cap and large cap, mortgage-backed securities and corporate bonds in a diversified mix.

Then, these are hedged to protect against fluctuations in currency conversion risks.

Investing In Retirement Funds

Retirement funds are a type of mutual fund. They let investors put their money in a series of stocks and bonds without actually owning shares in those investment vehicles.

Like other retirement-focused accounts, these retirement funds are managed with the idea of producing income with minimal risk. However, unlike other retirement accounts, you can withdraw your money at any time.

Retirement funds come with several other benefits as well. For one, there are effortless in the sense that they maintain an asset mix for you.

Someone else manages the fund. You can just put your money in the account and leave it there.

Plus, while no fund can offer a guaranteed return on your investment, many of these retirement funds have strong track records.

Retirement funds also tend to have target dates. These investment vehicles are weighted more heavily towards stocks when the target date is still decades away. As the target date comes closer, the fund shifts to less risky investments

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What To Expect In The Future

The fund’s long-term strategy is to gradually shift its assets from stocks to bonds until about seven years after the target date is reached, or 2062. At that point, the fund’s holdings should resemble the Vanguard Retirement Income Fund, which is about 30% stocks and 70% bonds.

However, 2062 is 46 years away, so it’s important to know what to expect in the meantime. We can’t predict this with 100% accuracy, but by looking at Vanguard’s other target-date funds, we can get a good idea. Here are some of the other funds and their current allocations:

Target Retirement Date

Investing In The Vanguard Target Retirement 2055 Fund

Vanguard lifestrategy income fund review

For people who invest in the Fund early, this variable approach helps to capture higher returns early on, when investors still have decades before retirement. However, this aggression tapers off as the retirement date nears. The Fund will move into less risky investments, like bonds, so that the principal of the account is not challenged, and the risk is minimal while the money can grow at the rate of inflation or better.

This works well for people who invest early the investment has a chance to grow and the risk of losing everything is minimized as you approach retirement. However, investing in a retirement fund too far after the inception date is a different matter. The allocation is different and your potential to earn a higher return is limited.

If you do not invest in the Vanguard Target Retirement 2055 fund early enough, you are really pursuing a lower risk/lower reward investment because the riskier allocations and management are in the first several years of the fund.

Pay attention to the proportion of the retirement fund that is geared towards higher returns. In some cases, you may find that it serves your needs better to invest in a retirement fund that more closely mirrors your goals.

For instance, you may not want to invest in a 2055 retirement fund if you are not retiring in or near 2055.

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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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How To Reduce Risk

VANGUARD Target Retirement Funds – The BIG PROBLEM With Them!

The risk in a portfolio is dominated by shares because their prices usually fluctuate more, or are more volatile, than bonds. If we want to reduce risk, but still earn a higher return than cash, we would buy bonds. So as we grow older it might make sense to reduce the percentage of our portfolio in shares and move it into bonds. This is the essence of Vanguard Target Retirement Funds.

This graph from Vanguard shows the percentage of their Retirement Fund that is invested in shares and bonds against age. Until our mid-forties the fund keeps 80% invested in equity, then starts to cut back to 50% equity at around retirement age and this falls more steeply to 30% equity from 75 years of age onwards.

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Is The Vanguard Target Retirement 2050 Fund Good

Over the past ten years, the Vanguard Target Retirement 2050 Fund has returned an average of 9.65% per annum. This means that if you had put $10,000 into the account at the end of 2009, you would have had $28,905 in the fund at the end of 2018.

The Vanguard Target Retirement 2050 Funds rate of return has varied drastically in the past ten years. In 2018, the fund declined by 7.9% while, in 2009, its rate of return went as high as 28.31%.

The difference may seem drastic, but would-be investors should keep in mind that these figures are in alignment with the Funds benchmarks.

Long-term investments, like retirement funds, tend to fluctuate over time. They also tend to produce above-average returns over time. While no investment can guarantee a return , the end result could be on-par with a 401, IRA, or other retirement account.

Is The Vanguard Target Retirement 2055 Fund Good

The Vanguard Target Retirement 2055 fund, VFFVX, has performed well over the years.

In its first year, the fund returned 15%. Its annual return percentage has varied wildly since then. The Fund has lost as much as 7.89% in a year and returned over 24% .

Overall, VFFVX has produced an average annual return of 10% since the funds inception. This means that if you had invested $10,000 at the inception of the fund, youd have had $21,443 as of 12/31/18.

While past performance is not indicative of future performance, understanding how the fund has done in the past does give you an idea of how it is being managed.

That said, keep in mind that the Vanguard Target Retirement 2055 fund is not meant to deliver consistent returns. Rather, it is a target-date retirement fund.

This means that the Fund will take its biggest risks early on, then taper that approach to a much more conservative one.

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The T. Rowe Price 2060 Fund allocates 90% to equities and 10% to cash and bonds. While the cost of this target date fund is on the high side at 64 basis points, its five-year performance comes in at 6.78%.

T. Rowe Prices target date fund owns more than 20 different mutual funds to implement its investment strategy.

Of the funds that made our list, T. Rowe Price takes the most aggressive approach at retirement. Its 2020 fund has a 60% weighting in stocks. While some would argue that 60% is too aggressive for a retiree, its consistent with research on the 4% rule. The fund, however, continues to reduce equities in retirement, ending with an equity allocation of about 35%.

The Success Of Vanguard Target Retirement Funds

MassMutual RetireSmart

Vanguard has found success with the series of target-date funds by offering a low expense version for the retirement market. The initial investment minimum is $1,000, so the funds appeal to individual investors and 401 participants. The Vanguard Group offers a well-managed fund selection with a strong performance history. The automatic rebalancing of the portfolio is also an important feature.

The Pension Protection Act of 2006 included target-date funds as a qualified default investment alternative . Retirement plan sponsors can use these funds as a default investment for participants who do not make an investment election.

For investors who want a one-stop investment selection or a set-it-and-forget-it approach to investing in their retirement, the Vanguard Target Retirement Funds are an easy choice. They are especially appealing to young investors who are just starting a career and may not have the time or expertise to critique various investment choices.

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Are Target Retirement Funds Good Investments

They can be. They offer the convenience and benefits of diversification. Plus, they provide smart, automatic rebalancing of their asset allocations to match investors’ changing risk tolerance. Investors who have just started their careers could have an allocation that aggressively seeks growth and high returns.

As their careers progress, their target retirement funds will rebalance allocations of assets to focus on less risky securities and protect value. Of course, no investment is without risk. Investors should plan to review their target retirement fund performance, allocation, and fees at least annually.

What’s In It A British Twist

For the UK version of the Target Retirement Funds the portfolio has been tweaked to be more appropriate for UK investors. The glide path still dials down the risk as the fund’s target date approaches, but the precise composition of the fund is different to the US version. UK investors will invest in sterling and so take no currency risk if they buy UK stocks and bonds. UK markets for stocks and bonds are much smaller than those in the US, so inevitably UK investors wanting a diversified portfolio that reflects market size rely more heavily on “foreign” assets.

Initially the funds are dominated by equity and the purple swath shows the allocation is mostly in global ex-UK equity shares. As the fund draws nearer to the target date the proportion of shares decreases and the proportion of bonds increases. The bronze colour at the top representing global ex-UK bonds now starts to dominate. These foreign bonds are currency-hedged. The reason for this is that bonds are intended to reduce the risk of this portfolio. The currency risk of sterling would swamp the relatively small risk of bonds so the fund buys insurance to get rid of the currency risk just as if US bonds were bought in US dollars and European bonds were bought in euros. The fund will pay for this insurance but Vanguard obviously considers this a worthwhile cost.

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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: 0.11%. Industry average expense ratio for comparable target-date funds: 0.49%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2021.

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.

A Bit More Sophisticated: Risk Capacity

Vanguard UK Investments – Target Retirement Funds Review

Greg Davies of Oxford Risk suggests that we should take a slightly more dynamic and tailored approach to risk based on a combination of risk tolerance and risk capacity. For example if we add up our total list of assets including our property investments, our art collection, our vintage cars, then we might get a very different picture of our risk capacity. Here is Oxford Risk’s definition of risk capacity in a blog:

Risk Capacity is the extent to which an individual can cope with potential losses, having considered their financial circumstances and the aims and aspirations that comprise their investment objectives. It differs from risk tolerance in that the coping in this case is not only subjective and figurative, but tangible How much can you really afford to lose, or, to put it as an upside, How much can you really afford not to gainAndre Correia, Oxford Risk

As a person ages they may accumulate enough wealth that the standard glide path is not applicable because they could quite easily ride out a fall in their investments while carrying on with their life meeting their costs quite comfortably. If that is the case their glide path may look more like this:

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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 retirement funds, this fund invests in four Vanguard index funds with asset allocations of 80.4% in equities and 19.6% in corporate and sovereign bonds.

About 49% of the fund’s assets are allocated to domestic equities, while 31.8% are dedicated to international equities. There is a 13.6% allocation in U.S. corporate and Treasury bonds and a 6% allocation of international bonds. As the fund is close to 20 years away from its target date, it will continue allocating more assets to risky securities during the next five to 10 years.

The Vanguard Target Retirement 2040 Fund has an expense ratio of 0.08%, as of February 12, 2022, and a four-star rating from Morningstar. Due to Vanguard’s heavier 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 has a 10-year return of 9.85% and a minimum investment requirement of $1,000. It’s most appropriate for investors who plan to retire between 2038 and 2042 and who’d like to invest in one fund that manages rebalancing until their retirement.

Growth Of A $10000 Investment

For the period 12/21/2015 through 10/31/2022

Ending Value: $16,159.00

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.

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Is Vanguard Target Retirement 2055 Fund A Strong Mutual Fund Pick Right Now

If you’ve been stuck searching for Mutual Fund Equity Report funds, consider Vanguard Target Retirement 2055 Fund as a possibility. VFFVX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

History of Fund/Manager

Vanguard Group is responsible for VFFVX, and the company is based out of Malvern, PA. Vanguard Target Retirement 2055 Fund debuted in August of 2010. Since then, VFFVX has accumulated assets of about $28.55 billion, according to the most recently available information. The fund’s current manager, William Coleman, has been in charge of the fund since February of 2013.


Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 6.79%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 5.89%, which places it in the middle third during this time-frame.

Risk Factors


Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $1.

Bottom Line

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