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December 11, 2020 at 01:48 PM
Vanguard is reducing the plan-level investment requirement for institutional target retirement funds (or target date funds) to $5 million from $100 million effective immediately. The asset manager says the aim of the move, announced Friday, is to “broaden” access to these funds to more 401(k) and 403(b) plans.
The index-based institutional TRFs mirror the glide path and asset allocation of the Vanguard Retirement Funds and have an expense ratio of 0.09%, which the firm says puts it below the target-date fund industry average of 0.60% for Dec. 31, 2019, as tracked by Morningstar.
“Going back to the 1976 launch of the first index mutual fund for individual investors, Vanguard has a long history of expanding investors’ access to low-cost investment solutions,” a spokesperson told ThinkAdvisor.
“Today’s announcement is simply another demonstration of Vanguard’s mission to take a stand for all investors, to treat them fairly, and to give them the best chance for investment success,” the spokesperson added.
The Vanguard Institutional Target Retirement 2050 Fund (VTRLX), for instance, has an average annual return since its inception in 2015 of 9.03%, the firms says. In 2020 through November, the fund had a 14.67% return.
The fund’s total assets as of Oct. 31, 2020, were $19.3 billion, and it had an allocation of 89.3% in stocks, 9.53% in bonds and 1.17% in short-term reserves.
