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.
The post Vanguard lowers expenses by merging target-date funds appeared first on InvestmentNews.
Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.