Subscribe

Vanguard lowers expenses by merging target-date funds

website

The expense ratios will drop from an average of 12 basis points to 8 basis points.

Vanguard Group Inc. is merging its institutional target-date funds into its Target Retirement Funds family, which it expects will result in lowering the funds’ expense ratios to 0.08%.

The average expense ratio of TRF funds currently is 0.12%, according to the company’s website, which says the industry average expense ratio for comparable target-date funds is 0.55%.

In addition to lowering expense ratios, Vanguard said the move will lower its minimum investment requirement for the Vanguard Target Retirement Trust II program to $100 million from $250 million. In addition, it said it will launch a Vanguard Target Retirement Income and Growth Trust for each of its Target Retirement Trust programs. The new trust’s higher (50%) equity allocation in retirement is intended for participants whose wealth, risk tolerance, and/or additional sources of income allow for higher discretionary spending in retirement, the company said in a release.

The TRF mergers are expected to be completed in February 2022. The merged funds will retain the same investment strategy, asset allocations and glide path.

Related Topics: ,

Learn more about reprints and licensing for this article.

Recent Articles by Author

Fiduciary commitment should be table stakes

Speed and nature of new DOL rule has left many in the insurance industry fuming, losing sight of the impact on ordinary investors

Cresset adds two J.P. Morgan teams overseeing $5B

The two groups were among several former First Republic teams whose exits from J.P. Morgan were announced Friday.

Ascensus buying Vanguard small-business retirement offerings

The company is acquiring the Individual 401(k), Multi-SEP, and SIMPLE IRA plan businesses from Vanguard.

Raymond James adds advisor from Wells Fargo

South Florida-based advisor had been overseeing $105 million in client assets at Wells.

Dimon says AI could be ‘transformational’

JPMorgan Chase's CEO says AI's impact on the economy could equal that of the steam engine.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print