Skip to Content
Fund Times

Vanguard Strikes Back With Lower Target-Date Fees

New institutional funds to cost 10 basis points; firm also boosts international stake of multiasset offerings.

Vanguard, a longtime leader in low-cost investing, today announced it will roll out a new institutional offering for its Target Retirement fund lineup. With an estimated expense ratio of just 0.10%, the new funds will be the lowest-priced target-date mutual funds available. The move undercuts Fidelity, which currently offers the industry's lowest-priced series, Fidelity Freedom Index. Fidelity has room to fight back, as it is using a waiver to keep fees for that series at 0.16% and its underlying funds cost just 0.09% to 0.11%. Vanguard's new series will also be competitive with, and sometimes cheaper than, other index-based target-date funds offered via collective investment trusts, such as BlackRock’s LifePath Index CIT series. Vanguard also offers less expensive target-date CITs.

Vanguard's new offerings, directed at retirement-plan providers, will require a $100 million minimum initial investment for investment-only clients, though recordkeeping clients will have no minimum requirement. Vanguard's current retail-focused funds charge between 0.16% and 0.18% and require an individual contribution minimum of $1,000. The firm's retail series passes along just the cost of its underlying index funds, but by using Investor share classes rather than the less expensive Admiral or Institutional share classes, there was room for the series to shave expenses. The new series will invest in a mix of those three share classes, which suggests that Vanguard should still have room to lower costs in the future. The announcement of the new institutional series is welcome news for plan sponsors.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.