Vanguard launches its Target Retirement 2055 Fund

By Gary Linnell

ProWEB Wire (Industry News)


On Tuesday Vanguard launched the Vanguard Target Retirement 2055 Fund, a target-date fund for investors between 18 to 22 years old who plan to retire on or around 2055.

This fund is in addition to Vanguard's 11 other target-date offerings. The expense ratio of the fund is expected to be 0.19 percent, compared to the average expense ratio of 1.17 percent for a target-date fund in that peer group as of July 2010, according to Lipper, Inc.

Because younger investors can afford to assume higher risk given their longer time horizon until retirement, the fund's initial allocation is approximately 90 percent stocks and 10 percent bonds.

The fund will gradually shift to bonds over time, with the expected allocation of 50 percent stocks/50 percent bonds when it reaches its target date and will reach an expected final allocation of 30 percent stocks/70 percent bonds seven years after the target date, the company said.