A few years ago, while buying wine for a friend’s party, I found a reasonably priced cabernet sauvignon produced by Bogle Vineyards. I work at Vanguard. How could I resist? A clerk assessed my selection and, I kid you not, pronounced it a “good value.”
What’s in a name?
In recent years, Vanguard crew members (as we call ourselves) have labored in Vanguard’s figurative vineyards, founded by a different Bogle some 40 years ago, to produce “good value” for the millions of investors who are saving for a secure retirement, a child’s education, or any of the other financial goals that lead to a better life.
We’ve uncorked new services. We’ve decanted expense ratio reductions. We’ve added new funds to the Vanguard cellar. And we’ve enhanced one of our most popular blends, the Vanguard Target Retirement Funds—diversified portfolios of index fund “varietals” that help working Americans prepare for life beyond the 9 to 5.
New notes in a well-balanced blend
At the end of 2015, 48% of the participants in retirement plans administered by Vanguard invested solely in a target-date fund such as a Vanguard Target Retirement Fund or other professionally managed asset allocation. In 2009, the total was just 25%.
This change has helped address a big problem in workplace plans: inadequate diversification. The same participants whose portfolios once held all cash, all stock, or all company stock now diversify across global stock and bond markets, with portfolio risk levels calibrated to their expected retirement dates.
Last year, Vanguard’s vintners increased the Target Retirement Funds’ allocation to non-U.S. stock and bond market varietals. The greater diversification is intended to moderate the funds’ expected volatility while preserving their expected returns. The new blend adds notes of opportunity and undertones of noncorrelation to a series of funds that has helped retirement savers diversify their portfolios since 2003.
Vanguard’s cellar includes more than the Target Retirement Funds, of course. We offer sturdy, broad-market index funds, lively sector index funds, and actively managed funds with idiosyncratic bouquets.
We all have financial goals, and the Vanguard vineyards offer a variety of funds and services that can help us meet them. So how about a toast? I have just the wine.
Thanks to Christine Kim for her help with this post.
- Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in the Target Retirement Fund is not guaranteed at any time, including on or after the target date.
- Advisory services are provided by Vanguard Advisers, Inc. (VAI), a registered investment advisor.