Vanguard filed a registration statement with the Securities and Exchange Commission Monday to offer five additional target retirement funds, expanding its current lineup of five funds plus one income fund, which have a total of $10 billion in assets.
The new funds have maturation dates ending at the end of every decade (2010, 2020, 2030, 2040 and 2050), whereas Vanguard's existing target retirement funds mature in the middle of each decade (2005, 2015, 2025, 2035 and 2045).
At the same time, Vanguard is also modifying the portfolios of its target retirement funds in an attempt to increase their returns. First, it will expand the funds' exposure to equities between 10% and 20% and extend that exposure to longer timeframes. For example, equity exposure in the Vanguard's Target Retirement 2035 Fund will rise from 75% to 90%.
The funds will also have between 1% and 2.5% of their assets invested in the Vanguard Emerging Markets Stock Index Fund. Further, the Vanguard European Stock Index Fund and the Vanguard Pacific Stock Index Fund will be added to the portfolios of the Vanguard Target Retirement 2005 and Income funds, increasing the international exposure of these two funds to 10% and 6%, respectively.
"Vanguard Target Retirement Funds have become increasingly popular among individual investors and retirement plan participants," said Vanguard CEO John J. Brennan. "Shareholders are attracted to the simplicity and convenience of having a professionally managed, diversified portfolio of stocks and bonds in a single fund. The introduction of five new funds will enable investors to select a fund that more closely matches their investment time horizon."