Vanguard has launched a new target-date fund with young investors in mind.
The Vanguard Target Retirement 2060 Fund will provide age-appropriate exposure to domestic and international stocks and domestic bonds for investors who plan to retire and leave the workforce around 2060, which would put them between 18 and 20 years old.
The fund would allocate 63 percent of its funds to the Vanguard Total Stock Market Index Fund, 27 percent to the Vanguard Total International Stock Index Fund and 10 percent to the Vanguard Total Bond Market II Index Fund.
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"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.
Vanguard believes that indexing is a low-cost way to gain diversified market exposure, and for decades has worked with defined contribution retirement plan sponsors to feature index funds among their plans' investment options.
The 2060 Fund provides an automatic way to achieve balanced, age-appropriate stock exposure, addressing concerns by some that young people are not investing in the stock market because of its greater risk and are therefore missing out on its potentially higher returns. Vanguard research shows that young investors in 401(k) and other defined contribution retirement plans have higher equity allocations than those held by prior generations at the same age, largely because of the plans' growing use of automatic enrollment programs and the widespread shift from conservative default investments toward balanced options, such as target-date funds.
Vanguard, headquartered in Valley Forge, Pa., is one of the world's largest investment management companies. Vanguard manages more than $1.65 trillion in U.S. mutual fund assets, including more than $170 billion in ETF assets.
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