Vanguard floats new funds of funds

The Vanguard Group of Valley Forge, Pa., today filed a registration statement with the U.S. Securities and Exchange Commission for a new series of mutual funds designed to provide monthly payments to investors in retirement. The proposed Vanguard Managed Payout Funds will be structured as funds of funds, investing largely in Vanguard domestic and international stock index funds, bond and REIT index funds, and inflation-protected securities and money market products. The funds will also have the ability invest in commodities, market neutral investments and absolute return strategies. Each fund is designed to provide level monthly payments throughout each year. Payments will be adjusted each year based on the fund’s performance over the previous three years. Investors will have a choice of three portfolio options. The funds are designed to maintain their scheduled cash distributions without consuming capital over the long term. The estimated expense ratio of the funds is 0.34 %. The funds will not charge a sales commission or a 12(b)-1 fee. Investors may redeem or exchange shares of the funds at any time without charge or penalty, subject to Vanguard frequent-trading policy limits. The Vanguard Group manages more than $1.2 trillion in U.S. mutual fund assets.