Vanguard has launched a new target retirement fund for Generation Y investors that is intended to start them on the road to successful investing.
The Vanguard Target Retirement 2060 Fund provides age-appropriate exposure to both domestic and international stocks, as well as domestic bonds all wrapped up in a single low-cost, index based vehicle. The fund will feature broad diversification among major asset classes and low management costs.
This fund is targeted toward Gen Y investors, young adults in their 20s just entering the workforce, whose goal it is to retire in or within a few years of 2060.
As with the other 11 low-cost Target Retirement Funds, the 2060 Fund invests in underlying broad market Vanguard index funds: Vanguard Total Stock Market Index Fund, Vanguard Total Bond Market II Index Fund and Vanguard Total International Stock Index Fund. The asset allocation of the Target Retirement Funds becomes more conservative as they approach the target date.
“Professionally managed, diversified investment programs such as Target Retirement Funds have the potential to help shape the future financial security of many people, including young investors just entering the workforce. By virtue of having a low-cost, mixed portfolio of stocks and bonds suited for their age, they can get a head start on a lifetime of investing,” said Vanguard CEO Bill McNabb.
The Target Retirement Funds found a niche among plan sponsors; nearly 80% of plans at Vanguard offer the series and almost 50% of participants offered the funds invest in them.
An interactive tool is offered on vanguard.com to help investors understand the construction and glide paths of the Target Retirement Funds. Users can obtain a fund’s asset allocation among U.S. and international stocks, nominal and inflation-protected bonds, and cash equivalents for each year through a specific fund’s stated retirement date and seven years beyond. Vanguard is also educating Gen Y investors by using its blog and social media channels, including Twitter and Facebook.