US fund giant Vanguard has launched two additional target retirement funds aimed at younger investors who are just starting out in the workforce.
The two funds, the Vanguard Target Retirement 2060 Fund and the Vanguard Target Retirement 20165 Fund, will invest in “low-cost, high-quality” equity and bond index funds and exchange traded funds.
Vanguard has 11 target retirement funds that investors choose based on their expected retirement date.
Vanguard says those looking to retire in either 2060 or 2065 have time on their side and can potentially see “modest savings” in a low-cost investment grow substantially over time.
The fund manager gives the example of an investor investing £100 each month in a Vanguard TRF with a 0.24 per cent ongoing fee who could end up with around £135,000 after 40 years.
That outcome assumes a 5 per cent growth rate and an investment held on the Vanguard Personal Investor service.
Vanguard senior investment planner James Norton says: “The UK public is facing an increasingly complicated route to retirement. Investors have more flexibility and choice, but they often face difficult decisions on how to save and invest in a rapidly changing pensions and investment environment.”
He says: “Vanguard’s Target Retirement Funds are designed to help address these challenges, by offering a straightforward fund solution based on investment best practices and managed by experienced investment professionals.”