Vanguard is going after retirement fund investors in a big way by offering them lower costs.
The company is expanding its low-cost target-date fund offerings with a dozen new funds in its equally new Institutional Target Retirement Fund lineup.
The new funds, with an estimated expense ratio of 0.10 percent, are expected to be available to institutional investors at the end of the second quarter of 2015.
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Institutional investors that are interested will have to kick in a total minimum initial investment of $100 million for the privilege, though. (Individual participants have no minimum requirement; just plan sponsors are bound by the minimum.)
Target-date funds, of course, have risen in popularity over the past few years, mostly through 401(k) plans, and Vanguard said that more than half of participants in its clients' plans invest in one. In addition, the company said that 86 percent of its 401(k) and other defined contribution plans offer a target-date fund.
Vanguard said its all-in-one funds are getting something of a makeover, too.
Both its Target Retirement Funds and the LifeStrategy Funds are going to see their international equity allocation rise from 30 percent to 40 percent. In addition, the international fixed-income allocation will be increased from 20 percent to 30 percent.
"International holdings are a valuable diversifier in a balanced portfolio, giving shareholders exposure to return streams that don't move in lockstep with the U.S. markets. It has become easier to capture these diversification benefits as the costs of international investing have decreased," Tim Buckley, Vanguard's chief investment officer, said in a statement.
The overall strategic asset allocation and glidepath of its Target Retirement Funds will not be changing. The additional international exposure is also not expected to change the expense ratios of the Target Retirement Funds, which range from 0.16 percent to 0.18 percent. Investment allocation changes are expected to be complete by the end of the year.
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