For all those young investors out there who are willing to take more risk with their retirement plans because of their longer time horizon, Vanguard has a new fund for you.

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%, compared to the average expense ratio of 1.17% 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% stocks and 10% bonds. The fund will gradually shift to bonds over time, with the expected allocation of 50% stocks/50% bonds when it reaches its target date and will reach an expected final allocation of 30% stocks/70% bonds seven years after the target date, the company said.

“Over the past few years, the stock market has dropped 57%, rallied 86%, and subsequently declined 8%, leading to the potential for an entire generation to become wary of investing,” said Vanguard Chairman and CEO Bill McNabb, in a press release. “We must encourage younger investors to participate in the financial markets at an early age, save at aggressive levels, keep an eye on investment costs, and maintain a long-term focus. Target-date funds may be an ideal vehicle for many of these investors to help position their retirement savings for the long run.”

The 2055 Fund will invest in other low-cost Vanguard index funds and provide exposure to U.S. stocks and bonds, as well as developed and emerging market international stocks, the company said. The fund’s underlying funds invest in about 6,000-plus U.S. stocks and bonds and 2,000-plus international stocks.

Vanguard said that its research helps prevent mistakes, since many plan participants who do not invest in target-date funds may invest too conservatively or too aggressively. In 2009, 11% of all Vanguard participants invested all of their plan assets in fixed income options, while 14% put everything into stocks. Meanwhile, those who are invested in only one target-date fund invested from 61% to 90% of their account balances in equities.

But no investment is without risk and there has been a flurry of concern over target date funds recently. The problems began to surface during the financial meltdown in 2008 when those nearing retirement lost a whopping 23% in their 2010 target-date funds. The problem was those investors who bought the “2010” fund thought as they got closer to their retirement date their asset allocation within the fund got more conservative. A lot of investors who assumed their money was mostly in bonds were shocked to learn that half of their assets were still in equities when they were planning to retire in two years. Critics argue that these funds need to be marketed more clearly and regulated so that investors know what they are buying.

Vanguard Target Retirement Funds had aggregate assets of nearly $67 billion as of July 31, 2010, and $42 billion in target-date fund cash flow, according to Strategic Insight Simfund.