VIEW TARGET-DATE STRATEGY LANDSCAPE: 2023
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|Vanguard Target Retirement Series|
|Corporate ownership structure||Vanguard is investor owned****|
|Inception date (oldest share class)||10/27/2003|
|Firm TDF market share AUM†||37%|
|Glide path||Through retirement|
Most investors have multiple goals throughout their lifetime, and the Vanguard Life-Cycle Investing Model (VLCM) factors in each complex, interconnected decision about saving, spending, and asset allocation.
While made up of multiple inputs, our framework focuses on investor retirement outcomes and aims to strike a balance between two primary objectives of investment portfolios: growth to provide wealth to meet retirement spending needs and stability to provide comfort in volatile markets, particularly for those near or in retirement. Our Strategic Asset Allocation Committee, composed of global investment leaders from across the firm, meets regularly to review our investment methodology, debate investment strategies, and coordinate any changes with Vanguard’s Advice Policy Committee, thereby ensuring a consistent approach to meeting the retirement needs of TDF investors.
Leveraging the VLCM, we use the glide-path results representing different lifestyle personas in retirement to evaluate its sufficiency in supporting the income needs associated with each persona.
We examine three distinct retirement goals:
In designing a glide path that supports investors’ needs and aligning it with their retirement age, risk tolerance, and other characteristics, our glide-path approach is most aligned with helping ensure clients have the savings necessary to maintain their lifestyle through retirement. Our glide path design incorporates elements of that analysis so we have a better picture of what an actual average investor looks like and how we can tailor the design to that investor.
Our research team constantly tests the model to make sure our assumptions reflect real-world conditions (be they robust market returns, inflation, or volatility), include a range of possible asset classes, and reflect the needs and wants of modern-day retirement savers. We have a responsibility to investors who rely on this glide path to help carry them through retirement. We take that very seriously.
In general, our Target Retirement Fund investors:
Vanguard Target Retirement Funds and Trusts can help bring financial well-being for participants and fiduciary well-being for you. Our approach to building TDFs ensures that the wide range of investors who count on TDFs to secure their retirement have an investment solution well positioned to meet their needs.
In evaluating the benefits of TDFs in retirement plans, we focus meeting long-term goals for retirement income sufficiency:
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*Sources: Vanguard and Morningstar, Inc., as of 6/30/2022. Our Target Retirement Funds with a 10-year track record or longer (2055 and earlier vintages in Investor Shares), on average, ranked in the 78th percentile among peer groups for 10-year returns through mid-2022. Vanguard Target Retirement Income Fund ranked 29th out of 107 peers; 2020 Fund, 19th out of 96; 2025 Fund, 19th out of 129; 2030 Fund, 26th out of 133; 2035 Fund, 28th out of 124; 2040 Fund, 20th out of 133; 2045 Fund, 16th out of 123; 2050 Fund, 20th out of 131; and 2055 Fund, 22nd out of 98. Only competing funds with a 10-year history were included. Results will vary in other time periods. Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. Investment returns and principal value will fluctuate, so investors' shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. For the most recent performance, visit our website at vanguard.com/performance.
**Source: Vanguard and Morningstar's Target-Date Strategy Landscape: 2023
***DC assets are based on AUM in both Vanguard-administered plans and those administered by others. Other figures are based on AUM market share of the TDF industry. Sources: Vanguard and Morningstar, Inc., as of December 31, 2022.
****Vanguard is investor-owned, meaning the fund shareholders own the funds, which in turn own Vanguard.
†Vanguard and Morningstar, Inc., as of December 31, 2022.
††Vanguard and Morningstar, Inc., as of September 30, 2022.
Disclosures and notes
For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.
Investments in Target Retirement Funds/Trusts are subject to the risks of their underlying funds. The year in the Fund/Trust name refers to the approximate year (the target date) when an investor in the Fund/Trust would retire and leave the work force. The Fund/Trust will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. The Income Fund/Trust and Income and Growth Trust has a fixed investment allocation and is designed for investors who are already retired. An investment in a Target Retirement Fund/Trust is not guaranteed at any time, including on or after the target date.
Vanguard is responsible only for selecting the underlying funds and periodically rebalancing the holdings of target-date investments. The asset allocations Vanguard has selected for the Target Retirement Funds are based on our investment experience and are geared to the average investor. Regularly check the asset mix of the option you choose to ensure it is appropriate for your current situation.
Vanguard Target Retirement Trusts are not mutual funds. They are collective trusts available only to tax-qualified plans and their eligible participants. Investment objectives, risks, charges, expenses, and other important information should be considered carefully before investing. The collective trust mandates are managed by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc.