“They follow the same descent path methodology and the same asset allocation,” Ms. Wegemann wrote. “The investment objective, strategies, policies and overall portfolio management once the funds are merged will remain the same. “
The merger of the funds is also expected to “reduce operational complexities for plan sponsors and intermediaries and result in additional portfolio management and operational efficiency, as well as economies of scale, which may result in additional cost savings for plan sponsors. investors over time, ”Ms. Wegemann added.
For 401 (k) sponsor clients, Vanguard will reduce the minimum required investment to $ 100 million, compared to $ 250 million for its Vanguard Retirement Trust II program, a target date series based on collective investment trusts.
Vanguard offers five target date series based on collective investment trusts. Ms. Wegemann declined to provide details on the other four. As of August 31, assets under management stood at $ 504.9 billion for the five, but it did not provide an assets under management figure for Vanguard Retirement Trust II.
The CIT-based target date series are not affected by the merger of the mutual fund-based series.
On Tuesday, Vanguard also added a new income tax-based target date series called Vanguard Target Retirement Income and Growth Trust. It is now available for qualifying defined contribution plans.
“The higher equity allocation (50%) of the new retirement trust is intended for participants whose wealth, risk tolerance and / or additional sources of income allow for higher discretionary spending in retirement,” Vanguard said in a press release.
“The new trust is designed to be an optional alternative to the lower (30%) equity allocation of Vanguard Target Retirement Income Trust – most appropriate for participants whose primary investment objective is stable income adjusted for time. inflation to cover basic living expenses. Said the press release.
As participants approach the age of 65, Vanguard will provide them with “tools and advice to help them determine which trusted option is best for their needs,” the press release said. The aim is to “enable more participants to remain in their 401 (k) plan upon retirement and continue to benefit from institutional pricing and fiduciary oversight.”