Home Adviser Fund Update When Should You Own a Target Date Fund? Published January 13, 2017 Vanguard Targets Millennial ‘Retirees’ Last week, Vanguard announced plans to introduce a new target-date fund, Target Retirement 2065, which is intended to give the youngest members of America’s workforce a retirement savings vehicle of their own 48 years before they’ll presumably need to be drawing on it. The fund is expected to launch at the beginning of the third quarter this year. Like Vanguard’s other Target Retirement funds, the investor shares will have a $1,000 minimum investment and an estimated expense ratio of 0.16%. The institutional shares, which will likely be most popular in large, employer-sponsored plans that carry Vanguard’s Target Retirement series, require a $100 million minimum investment and are expected to charge 0.10% in fees. Target Retirement 2065’s initial asset allocation will be comprised of the following Vanguard funds: Total StockA financial instrument giving the holder a proportion of the ownership and earnings of a company. Market Index (54%), Total International Stock Market Index (36%), Total BondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. Market II Index (7%) and Total International Bond Index (3%). This matches the allocations of the current lineup’s four most stock-tilted funds: 2060, 2055, 2050 and 2045. Vanguard markets the Target Retirement funds as designed to be a convenient, set-it-and-forget-it retirement savings solution, a premise we at Adviser Investments don’t quite see eye-to-eye with. The basic idea is that you simply pick the fund that most closely aligns with your expected year of retirement and let Vanguard do the rest. Initially, the funds own mostly stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. funds, and as the date in the fund name approaches, the portfolio shifts more toward bondsA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates.. Seven years after the target date, Vanguard will fold each fund into Target Retirement Income. And that’s the plan for Target Retirement 2010, which Vanguard will “retire” by merging its assets into Target Retirement Income on July 7. We expect to see this cycle—one Target Retirement fund disappears while a new one is launched—now in its second iteration, every five years. At Adviser Investments, we strongly believe that saving early and often for retirement gives you the best chance to do so comfortably. We also understand the appeal of a quick and easy single-fund solution. For new investors starting with a small sum, the low minimums and fees on the Target Retirement funds make them a good stepping stone toward a custom-fit portfolio in the future. However, we think people with more at stake, who have worked hard to build their retirement nest egg, can do better. Why? Because in our experience, one-size-fits-all often adds up to a poor fit. And that’s where target-date funds fall short—they consider “when investors plan to retire” as the only basis on which to allocate their investments over time. There’s no accounting for risk toleranceThe amount of loss an investor is willing to absorb in their investment portfolio., future spending needs or other financial goals along the way. We also believe that people are better served over the long-term by investing in diversified portfolios of actively managed funds that are far more selective than simply buying the market. At Adviser Investments, we do not build one-size-fits-all portfolios. We build portfolios to better enable our clients to secure their financial future and achieve their individual investment objectives. Helping our clients reach those goals as securely as possible is our primary concern and our only job. About Adviser Investments Adviser Investments is a full service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process., institutions and foundations since 1994, and have more than 3,500 clients across the country and over $6 billion in assets under management. Our portfolios encompass actively managed funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., socially responsible investments and tactical asset allocation strategies, with particular expertise in Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. Our minimum account size is $350,000. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868. This material is distributed for informational purposes only. The investment ideas and expressions of opinion may contain certain forward-looking statements and should not be viewed as recommendations, personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. Past performance is not an indication of future returns. The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. We do not provide legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. The Barron’s rankings consider factors such as assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. This award does not consider client experience and is not indicative of future performance. Editors at the Financial Times bestowed “elite” status on 300 firms in the U.S., as determined by assets under management, asset growth, longevity, compliance record, industry certifications and online accessibility. © 2018 Adviser Investments, LLC. All Rights Reserved.