Scalper1 News
Summary VTINX is a fund-of-funds, but Vanguard does not charge any additional management fee. Globally diversified- about 30% equities, 70% fixed income. The fund’s ten year record puts in the top 10% of its peers. Morningstar has set up a group of mutual fund categories for Target-date retirement funds. These funds often appear in 401k and other retirement plans. A Target-date portfolio provides a diversified exposure to stocks, bonds, and cash for investors who have a specific scheduled retirement date. These portfolios aim to provide investors with an attractive level of return and risk, based solely on the target date. Over time, management adjusts the allocation among asset classes to more conservative mixes as the target date approaches. Morningstar divides target-date funds into the following categories: Target-Date 2000-2010 Target-Date 2011-2015 Target-Date 2016-2020 Target-Date 2021-2025 Target-Date 2026-2030 Target-Date 2031-2035 Target-Date 2036-2040 Target-Date 2041-2045 Target-Date 2050+ Retirement Income Many mutual fund families offer target-date mutual funds that roughly correspond to the Morningstar categories. For example, Vanguard currently offers twelve target-date funds: Target Retirement 2010, Target Retirement 2015, Target Retirement 2020, Target Retirement 2025, Target Retirement 2030, Target Retirement 2035, Target Retirement 2040, Target Retirement 2045, Target Retirement 2050, Target Retirement 2055, Target Retirement 2060, Target Retirement Income In theory, Target Retirement Income is the only one that is not supposed to continually change over time. Each of the other funds gradually evolves until seven years after their retirement income date when they are merged into Target Retirement Income. For example, Target Retirement 2020 will eventually resemble the Target Retirement Income fund in the year 2027. Of course, theory is not always the same as practice. In practice, Target Retirement Income has not been entirely static over the years. There have been several changes since inception: 2006: the allocation to stocks was increased from 20% to 30%, and three foreign stock funds were added. 2010: the allocation to foreign stocks was increased from 6% to 9%, and the three foreign stock funds were consolidated into Total International. 2013: A 14% position in Total International Bond was added, and Inflation-Protected Securities and Prime Money Market funds were dropped and replaced with Short-Term Inflation Index. 2015: The international equity allocation will increase from 30% to 40% of the equity allocation, and the international fixed income allocation will rise from 20% to 30% of nominal fixed income exposure. Overall Objective and Strategy The Target Retirement Income Fund is designed for investors already in retirement. The primary objective is current income with some capital appreciation. The fund currently invests in five Vanguard index funds. The fund holds approximately 30% of assets in equities and 70% in bonds. Fund Expenses The Vanguard Target Retirement Income Inv ( VTINX) is a fund-of-funds, but Vanguard does not change any management fee to assemble the funds for you. The expense ratio is 0.16% only because the five acquired funds. This is 67% lower than the average expense ratio of other mutual funds in this category. Minimum Investment VTINX has a minimum initial investment of $1,000. Past Performance VTINX is classified by Morningstar in the “Retirement Income” or RI category. Compared with other mutual funds in this category, VTINX has had solid performance, largely because of its low expenses. The fund is more defensive than most of its peers, and tends to outperform in weak markets like 2008, while underperforming in very strong years like 2009. These are the annual performance figures computed by Morningstar since 2005. VTINX Category (RS) Percentile Rank 2005 3.33% 3.30% 48 2006 6.38% 7.34% 56 2007 8.17% 4.46% 1 2008 -10.93% -18.06% 6 2009 14.28% 18.36% 80 2010 9.39% 8.94% 42 2011 5.25% 1.60% 9 2012 8.23% 9.01% 67 2013 5.87% 7.36% 56 2014 5.54% 4.36% 19 YTD -0.53% -1.99% 5 Last 5 Years 4.99% 3.67% 10 Source: Morningstar Ten Year Performance Graph VTINX – Current Portfolio Composition Vanguard Total Bond Market II Index Fund 37.3% Vanguard Total Stock Market Index Fund 18.0% Vanguard Short-Term Inflation-Protected Securities Index Fund 16.8% Vanguard Total International Bond Index Fund 16.0% Vanguard Total International Stock Index fund 11.9% The current SEC Yield is 2.06%. Mutual Fund Ratings Lipper Ranking : Funds are ranked based on total return within a universe of funds with similar investment objectives. The Lipper peer group is Income. 1 Yr#92 out of 587 funds 5 Yr#208 out of 457 funds 10 Yr#68 out of 266 funds Morningstar Ratings : The Morningstar category is Retirement Income Overall 4 stars Out of 144 funds 3 Yr 4 stars Out of 144 funds 5 Yr 4 stars Out of 132 funds 10 Yr 4 stars Out of 64 funds Fund Management The fund is managed by three individuals in Vanguard’s Equity Investment Group. Michael H. Buek, CFA, Principal William Coleman Walter Mejman Comments There is a lot of research showing that diversification across regions, asset classes and market capitalizations can enhance long term risk adjusted returns. That is a key idea behind Vanguard’s target date retirement funds which allocate funds according to expected returns and investor risk tolerance based on the number of years left until retirement. Diversification is also useful for those already retired. The Vanguard Target Retirement Income Fund provides a low cost, well diversified balance of income and growth. As of November 30, 2015, the fund had $10.58 billion invested. The fund’s fixed income holdings (around 70%) are well diversified including short, intermediate and long-term governments, agency and investment-grade corporate bonds. In addition, the fund owns inflation-protected, mortgage-backed and asset-backed securities and foreign bonds issued in non-U.S. currencies, but hedged by Vanguard to minimize currency exposure. The stock holdings (around 30%) are a diversified mix of U.S. and foreign stocks including large-caps, mid-caps and small caps. VTINX can serve very well as a core holding in a retirement account, and may also be used in taxable accounts by retired investors when IRA required minimum withdrawals are more than they need for living expenses. VTINX normally pays out quarterly distributions, but Vanguard allows you to set up your own automatic withdrawals as needed. Scalper1 News
Scalper1 News