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Rating:Vanguard Readying Target-Date Funds Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, March 20, 2006

Vanguard Readying Target-Date Funds

by: Armie Margaret Lee

Spurred by investors' growing fascination with target-date funds, Vanguard is planning to boost its stable of target-date offerings. The Valley Forge, Philadelphia-based fund firm on Monday filed a registration statement with the Securities and Exchange Commission for five new funds to be added to its Target Retirement Funds series.

The new funds, which will feature target dates at 10-year intervals from 2010 to 2050, will raise the number of funds in the lineup to 11. Vanguard's existing offerings include 2005, 2015, 2025, 2035, 2045 and Income funds.

"Shareholders are attracted to the simplicity and convenience of having a professionally managed, diversified portfolio of stocks and bonds in a single fund," said John Brennan, chief executive of Vanguard, in a statement, adding that the new funds "will enable investors to select a fund that more closely matches their investment horizon."

The funds will require a minimum initial investment of $3,000 for taxable and IRA accounts.

In the same statement, Vanguard said it is altering the asset allocation models of the Target Retirement Funds.

The change will result in an increased exposure--approximately 10 to 20 percentage points-- to equities over a longer period of time for existing funds.

In an effort to bring more diversification to the funds' exposure in international markets, the firm will add the Vanguard Emerging Markets Stock Index Fund to each of the funds.

It will also add the Vanguard European Stock Index Fund and Vanguard Pacific Stock Index Fund to the Target Retirement 2005 and Income funds.

Although the modifications will result in a higher risk profile for the funds, Brennan said shareholders stand to benefit from broader equity diversification and higher return potential.

The funds have attracted over $10 billion in assets since their rollout in 2003.  

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